The Baltic Dry Index

The Baltic Dry Index, a measure of shipping costs for commodities, fell last week as a four-month Argentine farmers' protest curbed Atlantic cargoes.

For those invested in shipping related stocks, you may want to keep track on this via:

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The Edge 19 July 08 - Beating The Credict Crunch

The recent spike in credit spreads caught a lot of investors off guard but there are products now available, even in the private bank market, that can offer a good hedge against short-term credit spread widening.
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Oil prices retreat, but fears of rebound remain

After shooting up at blinding speed, the price of crude oil has come down even faster - plunging US$10.50 a barrel in just two days. This reversal and a quick rally late yesterday following a Nigerian pipeline explosion have got the market confused.

'It's anybody's guess where prices will head next,' one trader said, while another economist believes that this is just a temporary respite and 'not a tipping point yet'.

After hitting an all-time high of over US$147 a barrel just last Friday - and threatening to breach US$150 - crude oil had slipped to just over US$134 in Asian trade yesterday afternoon, following the slide in New York on Tuesday and Wednesday.

This meant relief for some and fresh worries for others. Singapore Airlines' stocks gained 38 cents or 2.6 per cent from the latest oil price fall to close at S$15.06. Meanwhile, the stocks of alternative energy players were hit. Biofuel/palm oil stock Wilmar fell 23 cents to S$4.31, while Straits Asia, which has coal mine assets, closed at S$2.78, down 15 cents.

In London, oil rose above US$136 a barrel yesterday as investors resumed buying after the recent sharp drop and boosted by fresh cuts to Nigerian oil output.
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Exposure to Fannie and Freddie drags Asia down 16 July '08

Stocks in Asia plunged yesterday as investors reacted to news that the largest banks in the region had billions of dollars invested in debt securities issued by crisis-hit US mortgage giants Fannie Mae and Freddie Mac.

Reports of depositors queuing to withdraw their money from failed US mortgage lender IndyMac Bank on Monday also revived fears that more US banks could collapse, sending shivers through the wider financial sector.

In Japan, the Nikkei-225 index ended 2 per cent lower as banking and insurance stocks tumbled after local business daily The Nikkei reported that the country's three biggest banks, including Mitsubishi UFJ Financial Group, had some 4.7 trillion yen (S$60 billion) worth of exposure to debt securities issued by Fannie Mae and Freddie Mac as at end-March.
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Healthway Medical- Post IPO Review

This is a disaster to many retail investors in IPO.

Healthway Medical, share offer price at 36 cents and closed at the lowest 22.5cents on the debut day. A cool 37.5% loss in just one day!

What disturbing me are reading these lines prior to the opening on 4 July 2008:

What a good news! Despite all the bearish condition, this IPO has gained 6.6 times over subscription! But what has happen on 4 July 2008 is a clear reflection of a different story: The stock promptly dropped after opening bell at 24 cents and finally settled at the lowest 22.5 cents at the closing bell.

This stock is clearly overpriced at more then 27 times price earning ratio (PER) when its peers trading at lower then 13 times. The closing price of 22.5 cents valued the company at 17 times PER.

I am not too sure how 449 good investors have pooled the fund to subscribe 6.6 times the disaster shares. Lack of education probably the only reason to blame.

The only extraordinary advantage of this company is that they have one of the most handsome CEO in Singapore.

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Heng Long & Healthway Medical IPO Review

After making a small fortune from strong debut of Mencast, the overall market sentiment has worsen dramatically. In fact, Mencast itself has plunged below IPO price significantly lately.

There are 2 IPOs on the table now: Heng Long International and Healthway Medical.

Heng Long International is one of the largest independent tanneries of crocodilian leather in the world. The valuation is slightly high with PE ratio of 8.2 times and I have no intention to second guess the consumer spending pattern for luxury goods under high inflation environment. This IPO debut is predestine to open below water.

Healthway Medical is the owner of a network of over 80 clinics, which consist of both primary healthcare clinics and specialist wellness clinics. The valuation is exorbitantly high at over 27 times. Their peers currently traded at an average not more then 13 times now. The prospect of health care is bright in Singapore but we cannot expect 50% to 100% jump in profit every years to justify the valuation. In this bear market, I am not going to invest my money into any company with high PER. When I realized that some have effective cash cost of just 0.73 cent in compare to 36 cent, I am not interested at all anymore. This IPO will have the same fate like other recent IPO. I do expect the debut at below IPO price, subsequently plunge below 20 times PER in very short term and finally find equilibrium with its peers at 13 times. Finger cross for those applied.

Avoid these two IPOs. I believe we will see under subscription in this round. Out of these two, Healthway Medical is the worst candidate. The current market has no strength to support any new IPO, even with good fundamental and prospect.

Healthway Medical is scheduled to commence trading on 4th July 2008 and Heng Long International on 9th July 2008.
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