SG Market (18 Jun 13)

SG Market: S’pore shares are likely to continue their technical rebound from oversold levels following the bounce on Wall Street in a choppy session as investors await the Fed to provide more clarity on when it might start winding down its monthly US$85b bond purchases before a two-day policy meeting beginning this Tue. The FOMC will release a statement on Wed, followed by a news conference by Ben Bernanke. The general expectation is that the Fed chief will attempt to calm fears of aggressive tapering, while leaving scope for letting some air out of the monetary balloon. The recovery by US stocks was supported by economic data that showed manufacturing in the New York area in Jun climbed to the highest level since Mar and homebuilder confidence soared to a seven-year high. However, gains were pinned back in the afternoon after the Financial Times reported that the Fed is likely to signal that it is close to reducing the stimulus program. The STI is hovering just below its 200—day moving average at 3,191 and a sustained move above this key technical indicator may signal that a technical recovery is underway with the next resistance seen at the 3,230 level. Downside risk remains at around the 3,100-3,110 zone. It would be interesting to see if the STI can hold above the 200-day moving average at 3,188 after bouncing off the key technical indicator yesterday. A downside break would be bearish for the market at least for the mid-term with the next support seen at 3,088. While the blue chips remain under pressure, there are however pockets of strength in the Myanmar-linked stocks and some Iskandar-related plays. Stocks to watch for: *SIA: Passenger load factor fell 1.2ppt in May to 74.6% as traffic rose 1.3% and capacity increased at a faster 3.1%. Load factors eased across all regions with Europe and South West Pacific hardest hit. Cargo traffic was 5.1% lower even as capacity was cut 3.8%, driving load factor down by 0.8ppt to 62%. *Lian Beng: Secured a $85m contract for the construction of a 12-storey office block and 11-storey car park, including alterations to an existing office block. Work will commence in Jun 13 with project completion expected in 26 months. *Mencast: Awarded a three-year contract (plus one year renewal option) by offshore rigbuilder Keppel FELS for the provision of general underwater services, including inspection, maintenance, installation and survey works. The contract period is from 1 Jan 2013 to 31 Dec 2015. *Cityneon Holdings: Won $5.7m worth of contracts for Singapore’s F1 Grand Prix. Deal is for two packages to supply and provide furniture, fittings and equipment, and marquees and associated equipment for the night race event. The contract period is for three years from 2013 to 2015, with an option to renew for another two years from 2016 to 2017. *TEE Int’l: Its 49% owned associate Global Environmental Technology Co formed a 30/50/20 consortium with Cisco Engineering and Lam Water Solution after clinching a Bt209.8m ($8.6m) contract from Bangkok Metropolitan Administration to manage and control the water level at the Makkasan Water Catchment area. Contract started 1 May and will run for three years. TEE's effective interest in the consortium is 14.7%. *GRP: Proposes to diversify its core business to include property investment and development. The group does not plan to restrict the new property business to any property segment or specific geographical market. For a start, it will focus on the Asean region and Myanmar given the growth prospects and will also explore joint ventures and strategic alliances when the opportunity arises. *Tuan Sing: Awarded tender for the collective sale of Gilstead Court (Novena/ Newton district) at $150.2m. The freehold property has a site area of ~75,500 sf. With a plot ratio of 1.4, this translates to $1,292 psf ppr. No development charge is payable. Tuan Sing intends to develop a high-end project at this site. *Roxy-Pacific: Acquiring a 78,030 sf freehold site in Tampines (Yi Mei Garden) for $136m. Based on the existing plot ratio of 2.1 under the 2008 Master Plan, the price translates to a land cost of $830 psf ppr. *Seroja Investments: Terminated its joint venture with Louis Dreyfus Armateurs. The JV is involved in international dry bulk shipping, transporting outbound cargoes from Indonesia and other shipping-related activities. *UIC/SingLand: UIC bought 311,000 Singapore Land shares between 12 and 13 Jun at average prices of $8.52 and $8.29 respectively. The purchase increases UIC's stake in Singapore Land to 80.12% from 80.04%.