Daily news - 15 Oct

Cosco shares sink on analyst downgrade
Cosco Corp – The sell-down in Cosco shares on credit concerns has left one of the last two non-penny S-shares on the brink of going under the one dollar mark. Some dealers attributed the fall to a downgrade in target price by Credit Suisse to 55 cents from $1.20, with an 'underperform' rating. Yesterday, Cosco shares held up above $1.20 in the morning trading session before plummeting in the afternoon session to close at a two-year low of $1, which was a 16.7% slump from Monday. It was the second most actively traded stock with 78.42m shares changing hands. Credit Suisse said in a report published yesterday that it expects Cosco shares to drift lower towards its estimated trough value of 55 cents on concerns over shipbuilding demand, risk of order cancellations and delivery delays. Analysts pointed out that the current credit condition could squeeze demand for new shipbuilding and raise the risk of order cancellations by clients that are held back by tighter credit lines. Recent news of Cosco's Norwegian client MPF filing for bankruptcy also stoked more fears among investors who were already concerned about weak orderbook growth and rising competition, analysts said.

DBS venture in India to shut branches, slash jobs
DBS Group – DBS’s joint venture in India, Cholamandalam DBS Finance, will close more than a quarter of its branches because of a sharp slowdown in demand. A DBS spokesman said due to the decision by the Chola DBS board and major shareholders to focus more on vehicle finance, asset management, corporate lending and home equity, Chola DBS is closing 75 branches within its personal loans business. The Times of India daily said yesterday that Chola DBS would shut 75 of its 260 branches and lay off up to 200 of its 1,800 staff. The newspaper quoted an e-mail message sent to staff by the company's managing director, Atul Pande, who said that the company faces 'unprecedented challenges'. The e-mail message - which the paper said it has a copy of - blames 'great turbulence' in the financial services industry and an economic slowdown for a drop in demand for personal loans. DBS bought a 37.48%-stake in the financial services company in 2005. India's Murugappa Group holds another 37.48%. The rest is owned by public shareholders. DBS Group chief executive Richard Stanley said at the PBD Singapore international conference last week that the bank has 'very big' ambitions for its operations in India. DBS plans to have 10 branches and some 500 staff in the country by year-end, he said.

OCBC banks on continued China growth
OCBC Bank – Will continue to invest in China, despite the current financial market turmoil, said its China chief yesterday. Leong Wai Leng, who joined the bank as chairman of OCBC China last December, said that the country's growth will not be stopped by the crisis now sweeping financial markets worldwide. But Ms Leong said that there will be “some changes in the economic composition”. Some low value-added industries will be allowed to fail, she said. There will also be a shift from very labour-intensive industries to higher value-added industries. She said that’s a natural progression for economies and China will seek to make some of that transformation over the next few years. Debt and equity capital markets there will also continue to grow, Ms Leong said. Government think-tanks and regulators have 'invested a tremendous amount of time' on developing the financial markets there, she added. The bank now has a presence in seven cities. It plans to expand its current 10 outlets - including sub-branches - to 12 to 15 over the next few years, she said. It aims to focus on two main areas - expanding its retail banking segment aimed at the mass affluent, as well as growing its corporate banking business, which is targeting mid-size as well as larger Chinese companies.

Source: Kim Eng