Wilmar's amazing rise fronts '07 growth story

Stock market cap up 33.5% in the year; Wilmar left banks behind

The Singapore stock market ended 2007 sharply higher despite the turbulence in the second half of the year, driven by explosive growth in the energy, commodities and marine sectors.


Trading for the year ended yesterday with the total market capitalisation at $797.8 billion, up 33.5 per cent or $200 billion from $597.8 billion at the end of 2006.

Over the month of December, the total market capitalisation of Singapore-listed companies rose 1.1 per cent or $8.3 billion from $789.5 billion at the end of November.

The Straits Times Index (STI) of blue-chip stocks ended the year 16.6 per cent higher at 3,482.30, after rising 1.1 per cent yesterday. For the month, the index was down 1.1 per cent.

A global boom in the demand for oil, food and other commodities saw companies in the traditional and alternative energy sectors as well as shipping and logistics chalk up some of the largest gains in 2007.

The single biggest gainer in dollar terms was Wilmar International, an Indonesian palm oil business that listed here in July 2006 through a reverse takeover. Its market capitalisation rose an astonishing $28.3 billion in 2007 to $34.4 billion at the end of trading yesterday - roughly five-and-a-half times what it was at the end of 2006.

The enormous gain means that Wilmar is now the second largest company listed on the Singapore Exchange, ahead of the banking groups.

SingTel - still by far the largest company listed here - ended the year worth a massive $63.6 billion, after the telecommunications group's market capitalisation rose 22.1 per cent or $11.5 billion in 2007.

The stock market also got a boost from several reverse takeover deals. The largest of these was Indofood Agri Resources, the new entity that emerged after Indofood Sukses Makmur - owned by Indonesian tycoon Anthoni Salim - injected some $390 million worth of oil palm plantations and edible oils and fats refining businesses into Sesdaq-listed CityAxis Holdings.

The backdoor listing - completed last January - and the subsequent doubling in IndoAgri's share price enlarged the market capitalisation of the listed entity from $51.3 million at end-2006 to $3.5 billion at the end of trading yesterday.

A third palm oil group - Golden Agri-Resources - also saw enormous gains. Its market capitalisation grew by $7.95 billion over the year to $10.6 billion - four times what it was at the end of 2006.

Coal mining group Straits Asia Resources saw its market capitalisation balloon from $608 million to $3.4 billion in just 12 months, after it secured new mining licences in Indonesia.

Meanwhile, Hong Kong- based Noble Group, which supplies commodities ranging from coffee and sugar to coal and steel, saw its market capitalisation rise to $6.3 billion, from just $2.65 billion at the end of 2006.

Shipping groups such as STX Pan Ocean, Cosco Corp, and Neptune Orient Lines also saw large gains, as did steelmaker FerroChina.

Notably absent among the large gainers this year were the banks.

As investors around the world struggled in the second half to unravel losses on debt securities linked to sub-prime mortgage loans in the US, uncertainty over the value of such securities held by banks here saw the bank stocks give up most of their earlier gains.

In fact, DBS Group - the largest of the three Singapore-listed banks - saw the largest drop in market capitalisation by dollar value during the year among the stocks listed here. Its market capitalisation fell 8 per cent or $2.7 billion to $31.4 billion at yesterday's close, behind Wilmar's $34.4 billion.

After DBS, Singapore Airlines shed the most weight, its market capitalisation slipping 5 per cent or $1.1 billion to $20.6 billion.

Some $25 billion of the 2007 year-end market capitalisation came from more than 60 new listings during the year, including property, shipping and business trusts.

Of the existing listings, roughly three stocks gained for every one that fell in market cap over the year.

Other major beneficiaries of the global boom in the oil and gas and construction sectors included crane rental company Tat Hong Holdings, which saw its market capitalisation swell from $533 million to $1.73 billion, and marine engineering firm Swiber Holdings, whose market cap quadrupled from $349 million to $1.46 billion.

And in a year that saw trading volumes rise to record highs - sometimes overwhelming the SGX's computer systems - SGX's own market capitalisation soared to $14.3 billion, more than double the $6 billion it was worth at the end of 2006.

Analysts say that stock prices are likely to stay volatile in early 2008, as investors wait for companies to report their 2007 fourth-quarter results to assess the impact of higher oil prices and slowing economic growth in the US on their profits.

Beyond that, many forecast that economic growth in Singapore will remain strong in 2008. This, together with further interest rate cuts expected in the US and Europe, should keep the stock market rising in 2008, albeit at a slower pace than last year, say analysts.