SG Market (04 Jun 13)

SG Market: S’pore shares may show some stability following the Wall Street rebound on Super Tuesday as investors weighed downbeat manufacturing and construction spending readings on the Fed’s next moves. In an inverted logic, bad news is now viewed as good news as it means that the Fed is less likely to taper its monetary stumulus. Reflecting the mixed sentiment, the 10-year Treasury yield was little changed at 2.13% after climbing as high as 2.19% earlier in the day. The private sector ADP employment data on Wednesday could give a clue as to what the Friday’s all-important monthly jobs report will reveal. Having corrected 5% from its intra-day high of 3,465 set on 22 May, the STI has pulled back from its grossly overbought situation just two weeks ago and seems likely to re-enter the 3,230-3,320 flat trading zone established during the Jan-Apr period. Assuming that the uptrend remains intact, tt is typical for the index to go into a 6 to 8-week consolidation phase after breaching below its 50-day moving average. Only a move above the 50-dma at 3,350 would reassert its medium term uptrend. Stocks to watch for: *Global Logistic Properties: Leased 13,000 sqm at GLP Park Beijing Airport to SPH Keyuan Pharma, a subsidiary of Shanghai Pharma. This takes the total space leased to Shanghai Pharma to 36,000 sqm in four locations across Beijing, Shanghai and Suzhou. *Halcyon Agri: Acquiring Malaysian rubber processor Chip Lam Seng (CLS) for RM63m ($25.7m) to more than double its potential production capacity to over 300,000 tpa. CLS currently operates two natural rubber factories in Ipoh located near major ports, which produce various grades of rubber. The acquisition will allow the group to diversify its revenue base, offer clients a second origin of rubber and broaden its earnings base. *Asian Micro/Oxley Holdings: Entered into non-binding MOU to acquire to Oxley Global, which may result in a reverse takeover. Oxley is the holding company of the Oxley Group, which is a fund management, private equity and multi-family office firm focusing on real estate, power generation, natural resources and infrastructure across the Asia-Pacific. It also jointly manages Cambridge Industrial Reit with asset under management of over $1b. No further details on the transaction deal at this point in time. *NH Ceramics: Announced proposed acquisition of BlackGold Asia Resources and BlackGold Energy for US$150m, which will results in a reverse takeover by the vendors, who will collectively own 83.2% of the company. The sale consideration will be satisfied via the issue of 3.18b new shares at $0.059 each, including 254.2m shares allotted to UOB Kay Hian as payment for arranger fees. The target companies own 53,000 ha of coal concessions in the Riau province of Sunatra and the transaction would enable the NHC to gain entry into Indonesia's growing coal mining industry. Post-deal, NHC will undergo a five-into-one share consolidation. *SGX: Securities and derivatives activities grow in May. Total securities turnover was $37.3b (+45% y/y, +22% m/m) with daily average trading value of $1.8b (+52% y/y and +28% m/m). Bond listings almost tripled to $21.9b, while total futures and options volume was a record 11m contracts (+59% y/y, +13% m/m). *First Reit: Extended the leases for two of its properties – Pacific Healthcare Nursing Home @ Bukit Merah and Pacific Healthcare Nursing Home @ Bukit Panjang, both for another 10 years till Apr 2027. *WE Holdings: Dr Toh Soon Huat, founder of Novena Holdings, has purchased 20m shares or 2.95% stake at $0.11 each from Singyasin SMC Technologies, the investment vehicle of the group chairman, Terence Tea. The group intends to leverage on Dr Toh as a strategic investor, tapping his extensive business contacts and experience in Myanmar. Following this transaction, Terence Tea will see his holdings reduced from 10.25% to 7.3%. *Federal International: Agreed to sell its 40% stake in Federal JWR Energy to PT Petroflexx Prima Daya for US$3.6m. Federal had in 2004 originally invested $0.2m for its 40% stake in FJWR. The investment in FJWR is currently carried at nil value. The divestment is part of the group’s continued efforts to restructure non-core activities.