A 70-POINT rise in the December futures contract on the Dow Jones Industrial Average, a 1.7 per cent rise in Hong Kong's Hang Seng index and a firm opening Europe-wide yesterday led traders here to bet heavily on Wall Street opening the week with a bang. The subsequent buying targeted mainly banks and propelled the Straits Times Index up 56.62 points to 2,783.85 in moderate volume of 1.85 billion units worth $1.8 billion, excluding 15 million in foreign currency issues.

Brokers were generally surprised at the size of the rise but attributed it to programme trading in anticipation of similar gains in the US, a pattern which has by now become familiar to market watchers here.

Among the actives was Genting Singapore, which for several months now has been in play for a variety of reasons and thanks to several 'buy' calls from brokers.

BNP Paribas was the latest to issue a positive report on Genting. BNP said in a Nov 16 report that it was not surprised that Genting's Q3 results showed a net loss and recommended that investors ignore the numbers and instead focus on the opening of its casino, which is expected to be in January next year, two months ahead of its rival Marina Sands.

'We rate Genting a 'buy' with a target price of $1.35 offering 19 per cent upside,' said BNP. 'This is based on a mixed multiple valuation methodology, according differing valuations on the different parts of Genting's businesses.'

This includes using 14x EV/EBITDA (enterprise value/earnings before interest, taxes, depreciation and amortisation) for Singapore casino operations and 8x EV/EBITDA for UK casino operations. Genting yesterday closed unchanged at $1.13 with 65 million traded.

Along similar lines was OCBC Investment Research's 'buy' on Tat Hong despite the latter reporting a 70 per cent drop in Q2 profit to $6.7 million year-on-year. In arguing that there appears to be light at the end of the tunnel, the broker said that earnings recovery is expected to be supported by improvements in both equipment sales and rental in H2 2010, while inorganic growth is likely to be a key driver for the group's medium-term growth.

'We have trimmed our fair value estimate to $1.12 from $1.15 on lower earnings estimates and maintain our 'buy' rating on stock,' said OCBC Investment Research. Tat Hong ended one cent higher at $1.

Among other reports of interest was Kim Eng's 'hold' on Fraser & Neave (F&N) which recently reported better-than-expected results thanks to its property operations. However, Kim Eng said that F&N is 'walking a tightrope' as it has been unable to replenish its landbank. 'At the current price, F&N is trading close to our RNAV (revalued net asset value) of $4.23,' said Kim Eng. The stock closed six cents firmer at $3.94.

In its latest Hong Kong Economics dated Nov 15, Morgan Stanley said that the economy sustained positive sequential growth for the second straight quarter in Q3, but this was of a fragile nature.

'However, much of the incremental improvement is attributed to change in stocks (+5.1 per cent of GDP) and public sector construction activity (+34.4 per cent year-on-year), confirming our earlier concerns regarding the sustained weakness in exports and the widened trade deficit, and leaving us sceptical about the quality and sustainability of the Q3 growth,' said MS.

It said that although it remains positive about the Hong Kong economy over the medium term, it is less so for next year because of the uncertainties surrounding how various global central banks are to withdraw their stimuli.