MobileOne surges on bid hopes
RATE-RISE jitters cast a long shadow over Asian trading for a second day running today after the release of more strong US data suggested a monetary tightening could come this summer.
But Singapore telecoms company MobileOne (M1), part held by Britain's Cable & Wireless, forged higher after posting a decent set of figures.
Shares in the group, which controls about one-third of Singapore's intensely competitive mobile market, gained two cents or 1.4% to S$1.42 after it reported first-quarter net of S$47m (£15.6m), up 26% and comfortably ahead of analysts' expectations.
The principal driver of the gain was a drop in corporate tax payments. The company, which is the country's second-largest telecoms player after state-linked Singapore Telecommunications, cautioned that it was still facing higher costs to attract new subscribers.
Although the local outlook for M1 remains tough, the company does have its fans.
Observers reckon the venture could fall prey to a takeover bid from a larger international rival seeking to expand, and some investors hold the shares on this speculative ploy.
Possible suitors include Australia's Telstra, Malaysia's Telekom Malaysia, and SK Telecom of South Korea. M1 is regarded as a good catch as it has a strong share of the country's younger generation, customers who are likely to use new add-on services in future.
A sell-out would make sense for M1's quartet of founding shareholders, who between them hold 40% of the company. In addition to C&W, these comprise state-linked media group Singapore Press Holdings (SPH); Keppel Telecommunications & Transportation, a unit of local conglomerate Keppel; and Hong Kong telecoms group Pacific Century Cyberworks.
M1 shares have climbed over the past year but not by a great margin. They are 6.9% up over the past 12 months, and have waned considerably since striking a high in February of this year of S$1.61.
The wider market was a touch softer as fears of higher interest rates became more potent. The trigger was a 1.7% rise in US consumer prices last month compared with the year-ago period. SPH, one of M1's four founders, gave up 10 cents or 0.5% to S$20.80. Its stable of newspaper holdings makes it a swift beneficiary when macro-economic growth prospects start to brighten, but a victim when rate rises loom on the horizon.
There was, however, support for several blue-chip shares at current levels, suggesting that plenty of investors were hoping for a bounceback when the rate fears abate, possibly in the week's final session.
Singapore Airlines maintained its altitude at S$11.20, as did leading lender DBS Group at S$14.20. United Overseas Bank even eked a 10 cent or 0.7% gain to S$13.70. The Straits Times index was trimmed by 11.46 points or 0.6% to 1858.21.
Japanese equities were ravaged as the backward step on Wall Street triggered a bout of heavy profittaking in Tokyo and the Nikkei 225 plunged 297.78 points to 11,800.4.
The losses came across the board with banks - stars of a recent rally - taking a tough knock. Lender UFJ slid 34,000 yen or 4.3% to 756,000, while larger rival Mizuho Financial traded at 531,000 yen, down by 19,000 yen or 3.5%.
Hong Kong shares dropped in line with the regional weakness. The Hang Seng Index fell 166.87 points or 1.3% to 12,502.99 points.
