CapitaMalls Asia shares rose to a two-month high in Singaporean trading after the company was chosen to replace Cosco Corp. Singapore in the Straits Times Index following the conclusion of a half-yearly review, reported Bloomberg.

The changes will take effect from March 22, according to a statement yesterday from Singapore Exchange, compiler FTSE Group and Singapore Press Holdings Fund managers who benchmark their holdings of Singaporean equities against the Straits Times typically buy additions and sell deletions in order to mirror the stock index.

CapitaMalls Asia, a unit of Southeast Asia’s biggest developer CapitaLand, gained 1.3% to $2.37 today, the highest level since Jan 14. Cosco Corp., China’s second- largest publicly traded shipbuilder, lost 2.4% to $1.23.

“In terms of market capitalisation, Cosco has fallen quite significantly compared to CapitaMalls,” said Pearlyn Wong, Singapore-based investment analyst at Bank Julius Baer Co., which manages about US$350 billion ($489 billion). “Property has always been a popular sector, whereas shipbuilding has fallen out of the radar. It’s just reflecting what’s going on in the real world.”

CapitaMalls Asia, which owns and operates shopping malls in the Pacific Rim and India, has a market value of $9.2 billion, according to data compiled by Bloomberg. Cosco Corp.’s value has plunged to $2.75 billion from $17.68 billion on Oct. 29, 2007, when the stock closed at a record.

CapitaMalls Asia on Feb 3 reported full-year profit after tax and minority interest of $388 million, more than triple the previous year’s $116 million. The company is 66% owned by CapitaLand.

Cosco Corp. posted on Feb 22 its second consecutive decline in annual profit after shipowners canceled orders or sought delivery delays as the credit crisis made it difficult to raise funds to pay for vessels. The company’s share price has plunged 84% from its 2007 record.

“Cosco’s removal from the index is partly because it hasn’t fared very well over the past year-and-a-half in terms of its earnings and in terms of its stock price,” said Rohan Suppiah, an analyst at Kim Eng Securities in Singapore. “The problem for Cosco is because they had a lot of orders in the bulk carrier segment for new ships to be built and that market has fallen off a cliff.”

 

Written by Bloomberg

Friday, 12 March 2010 18:28