NOL Shares Drop Amid Rumors Of Rating Revision

Shares of Neptune Orient Lines (NOL) fell almost seven percent in heavy trade last Thursday on talk there was some re-rating of the stock following changes in the MSCi index. The shipping group was down 15 cents or six percent at S$2.28 after hitting a low of S$2.26 earlier. Volume was a heavy 12.19 million shares. NOL had lost 10 percent of its value since the start of last week where it stood at S$2.54. "The selling has been very heavy since the start of the week. There is also an earnings downgrade by houses like Salomon Smith Barney," a broker said. A few houses have been downgrading the stock on concerns over higher bunker charges, but some analysts said it might be too early to state the actual impact on NOL. Sebastian Heng, analyst at DBS Securities, said higher bunker charges were not new and more importantly, they were not a significant part of NOL's cost structure. "There could be some concerns over higher bunker charges. But the other possibility is some re-weighting going on among funds following changes to the MSCI index," Elizabeth Cheng, analyst at ABN AMRO said. The Morgan Stanley Capital International index was recently adjusted giving higher weightings to Singapore banks and Singapore Airlines following the merger of their respective foreign and local share tranches. Cheng said funds, which track the index would probably have to make adjustments in their portfolio and this could have been at the expense of other index stocks like NOL. Another compelling reason to sell NOL would be to lock in gains as the stock has outperformed the market. NOL is the top performer on the Singapore bourse this year chalking up a gain of more than 350 percent and one of three companies where the stock has run up in excess of 300 percent. - (Reuters)