When one door closes, another opens — that could be the case with Keppel Corp. Once the largest builder of jack-up rigs in the world, Keppel has to look for businesses that can fill the gap in its earnings as economies move to a low carbon environment. It may have found just the thing to fill this gap. During the company’s 1QFY2020 call with analysts and media, Keppel’s management indicated that electric vehicle (EV) infrastructure is a significant opportunity. The Singapore government has launched its Green Plan 2030. By that year, the target number of EV charge points in Singapore will be more than doubled. Keppel plans to target meaningful market share. In addition, it has a target of producing 7GW of power from green energy by 2030.
Technically, Keppel’s share price could strengthen. The stock rebounded off the confluence of its 50- and 100-day moving averages at $5.25 in the week of April 19 to 23. Resistance and breakout is at the twice tested $5.50 level. At present, volume expansion — which is required for a successful breakout — is absent. Nonetheless, the moving averages are rising. In addition, quarterly momentum has turned up and is now facing its own resistance and breakout level at its moving average and equilibrium line. Keppel should attempt a breakout as soon as quarterly momentum breaks out. This stock is unlikely to follow the old investment adage, “sell in May and go away”. This is because quarterly momentum is likely to move into a rising phase in the next few weeks. The 2021 high was $5.73 on a closing basis, and this may pose resistance. A successful break above $5.50 indicates a measuring objective of $6.10.
Sembcorp Industries has been on a steady uptrend since the end of the “circuit breaker” period in June and July last year. There was a period when it was range bound, from the start of the year to April 1, following which prices have resumed their steady but gradual upclimb. Earlier, it appeared as though prices could have formed a bull flag, but this is unlikely now. However, resistance remains at $2.21. A successful break above this level provides a vertical measurement of $2.52. Support appears at $2.11, failing which any upside is unlikely.
Sembcorp Marine’s indicators have strengthened after a temporary consolidation. The 50-, 100- and 200-day moving averages are turning up simultaneously, which is a positive signal. Quarterly momentum is starting to resume its upclimb. In addition, annual and two year momentum indicators are turning up from oversold lows. If their upturn persists, prices should be able to challenge the twice tested 21 cents level successfully to test 27 cents, a target indicated when the counter broke above 15.5 cents.
See also: STI’s upside from breakout remains valid as risk-free rates fade, but stay watchful for FOMC
Elsewhere, property-related stocks are consolidating. Singapore Land Group is at a support at $2.80. While it has met its upside objectives from an earlier break above a multi-month base formation, prices could head towards the $3 roundophobia resistance level. Quarterly momentum has strengthened, and this may support higher levels.
The Straits Times Index (STI) had a much calmer last week of April compared to its previous week, gaining around 18 points steadily through the week. At current levels of 3,220 to 3,222, the index is at the upper end of a very narrow sideways range. Technically, the STI’s quarterly momentum is struggling as it attempts to stabilise in mid-range. In addition, short term stochastics, 21- day RSI and ADX are falling. ADX is down to 26 from a high of 41 in March. A falling ADX indicates the lack of a strong trend. However, DIs have turned positive, limiting any decline. These indicators suggest that the STI may not be able to stage a clear break above the 3,220 to 3,222 level in the immediate term.
The original break above the narrow 3,071 to 3,118 range in the week of March 15-19 still remains valid as does the upside of 3,368 to 3,377 but this may take a longer time frame to achieve. If investors do decide to “sell in May and go away” in the US and Europe, Asian markets could fall into a slumber for a few week
