SG Market (23 Sep 13)

SG Market: S’pore shares are likely to consolidate its gains after US stocks tumbled last Fri as concerns grew that a budget showdown and potential Fed stimulus cuts may pose a threat to economic growth. Emerging-markets shares dropped, gold retreated the most in 11 weeks and oil slid to a one-month low. The blue-chip DJIA shed 185 points (1.2%) to 15,451, while the broad-based S&P 500 dropped 12 points (0.7%) to 15,451, near the upper end of its trend channel. Investors braced for a bruising face-off in Washington over budget cuts and a debt ceiling that threatens to shut down the government on 1 Oct with the White House likely to veto a House bill to fund the government through to mid-Dec on condition that President Obama scrap his healthcare reforms. The Treasury will also exhaust its ability to borrow funds in mid-Oct and the Democrat-led Senate will present its funding alternative this week. Markets were also unnerved by Fed official James Bullard comments that the central bank made a close call not to reduce its bond purchases last Wed and suggested that a small tapering is possible next month if economic data improves sufficiently. Reports this week on 2Q GDP, consumer confidence and new home sales may give more evidence of the pace of economic growth and the likelihood of Fed winding down its easy money policy. Investors will also be eyeing HSBC/Markit flash manufacturing PMI for China this morning for indications of a China recovery. With technical indicators in overbought territory, the STI is expected to breach its 200-day moving average at 3,235 and attempt to close the yawning gap at 3,204, set last Thu. Overhead resistance is seen 3,275 (Jul high). Stocks to watch for: *Rex Int’l: 41% owned HIREX Petroleum has entered into a collaborative agreement with Bass Strait Oil Company to use Rex’s virtual drilling technology for exploration opportunities in the Gippsland Basin, one of Australia’s most prolific hydrocarbon regions. Depending on the prospects, HIREX may acquire a 51% participating interest in the permit and the JV may commit to drilling an exploration well in 2014/15. *YHM: Secured a 3+2-year contract with a value of up to US$183m to provide a semi-submersible rig to support the oil and gas activities of a SE Asian-based national oil company in the Andaman Sea. The rig will be upgraded and refurbished and is expected to be deployed between end 2013 and early 2014. *SGX: Signed MOU with Bank of China to explore joint development of Rmb products and services, promote SGX products in China and educational programs. BOC will also look into expanding its role in SGX’s markets. *Keppel Corp: Officially opened a new shipyard in Azerbaijan, jointly developed by Keppel O&M (10% share), State Oil Co of Azerbaijan Republic (65%) and Azerbaijan Investment Co (25%). Built at an estimated cost of US$470m, Phase I of the new 62-ha Baku Shipyard will be able to undertake up to 100 repairs and conversions per annum when operating at full capacity. Plans for Phase 2 include the construction of a graving dock with added facilities for offshore projects. Meanwhile, group sold its 50% stake in Keppel Kazakhstan for US$32.5m and a one-off gain of US$7.7m. *Grand Banks Yachts: Received approval in-principle from SGX for the listing of up to 57.7m rights shares at an issue price of $0.22 for each rights share, on the basis of 1 rights share for every 2 shares held in the company.