Something strange is going on. Tech stocks have rallied and rallied in Singapore (sector up about 5% today alone) but Creaf has barely moved in a week. Strange, given the fact that contract manufacturers are getting PEs of around 20x, large PCB companies around 14x, and semiconductor equipment makers around 12x (down from a heady 24x a few months back).
I would hang on to Creaf for dear life, as whatever is holding it down would of course push it up come harvest time. Don't be fooled by the apparent lack of interest. Singapore electronics stocks are ROARING back into business.
One catalyst, which even a big manipulator cannot hold back, is the very high likelihood of a share buyback. Once this is approved (it could come as soon two weeks from now when the Singapore budget is presented). Many companies in Singapore are in favour of buybacks, inluding Singapore Airlines (which is run by a former Cabinet Minister, by the way).
Creaf CEO Sim Wong Hoo has also expressed frustration at the undervaluation and volatility of Creaf stock, and would very likely buyback the US-based stock. He could also split the stock in Singapore as it's currently one of the most expensive in the market in absolute terms. Share buybacks was one of the 55 suggestions given by the sub-committee on Singapore's financial competitiveness which gave its recommendations this week.
Trust me, Singapore is one place where the mere mention of policy change by government or government-linked parties means something could happen tomorrow. People here have come to learn not to fool with the government when it comes to policy. Just ask the property speculators of 1996 - they're still reeling from the sudden and decisive prick to the bubble. The government tried asking people nicely not to spend all their time churning the market but that didn't stop them. Then suddenly on May 15th 1996, blam! capital gains taxes with immediate effect. The rules are still in effect and private property prices have dropped 17% since then. Transactions have dropped 43%. There has been no let up. No exceptions, no feet-dragging, no nonsense, no pork barrels, no lobbyists. The controlled deflation is one reason for Singapore being spared much of the currency crisis.
The same thing will happen to share buybacks. It could happen like tomorrow. And same goes for all the other 54 recommendations. |
