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SINGAPORE (THE BUSINESS TIMES) – Sembcorp Marine (SembMarine) shares rallied nearly 13% on Monday (Nov 23) thanks to strong turnover, and market watchers attributed the rise to “short cycles,” an increase in crude prices, broader optimism about vaccines and renewed hopes of a merger.
Within the first two hours of trading, the accountant shot up to 15 cents, gaining 1.7 cents or 12.7 percent. As of 12:30 p.m., the stock had trimmed some gains and was trading at 14.5 cents, an increase of 1.2 cents or 9 percent.
SembMarine’s advance has outperformed the market’s key Straits Times Index, which is up 0.9% so far.
Trade activity at the counter was also higher with 217 million shares taken and worth nearly $ 31 million, making it the fifth most active of the day at noon.
“Rising crude oil prices are helping to fuel interest in Sembcorp Marine. While this is all part of the broader vaccine optimism that has helped assets, sensitive to both risk and growth prospects, to go up at the beginning of the week, “” said Pan Jingyi, IG’s senior market strategist.
He added: “With the hope that the rollout of the vaccine in December will eventually lead to widespread vaccination, a recovery in demand has been anticipated in the crude oil market, and thus in its related industries. From a perspective Technically, prices have also been on their 50-day moving average, exhibiting a bullish signal. “
Crude prices firmed up during the Asian session on Monday, led by continued optimism from last week about the progress of coronavirus vaccine developments and implementation. The encouraging news has fueled hope that economic activity can recover and, along with that, demand for energy, despite the continued increase in Covid-19 cases in many countries. Brent, the key global oil benchmark, rose 0.4%, while West Texas Intermediate rose 0.2%.
Some suspect another factor that may be driving SembMarine’s stock: the major shakeup at conglomerate Keppel Corp and more specifically the appointment of Chua Hsien Yang as head of the mergers and acquisitions group, a newly created position.
Chua, currently CEO of Keppel DC Reit Management, has extensive experience in the real estate and hospitality fund management industries, including mergers and acquisitions (mergers and acquisitions), and will drive Keppel’s M&A strategy, more precise and disciplined, the company said in a statement.
Keppel previously said that its offshore and marine unit, affected by the oil slide caused by the pandemic, was under a strategic review where “all options, both organic and inorganic” were being considered.
That, plus leadership changes at Keppel, which primarily includes a person dedicated to driving mergers and acquisitions, could once again fuel speculation of a mega-merger between two rig-building giants Keppel Offshore & Marine and SembMarine, a expected and expected but still to happen. consolidation.
“In the current climate – increasing competition and recession – I don’t see these two companies ending up alone forever. It is not unreasonable for the market to read it (Keppel’s latest designation) as one with an eye toward consolidating the industry.” . said a market observer.
He added: “But it takes two hands to clap. There will be challenges. This will not be a merger of equals, but more of an acquisition. Will Sembmarine accept it?”
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