SG Market (21 Nov 13)

Market Roundup: US stocks extended losses into the third day after Fed minutes indicated that the central bank may scale back its monetary stimulus in the coming months as the US economy improves. Ten-year Treasury yields gained 9bps to 2.8%, while gold declined and the dollar strengthened. Policy makers expect economic data to show improvements in the labour market, which will warrant trimming the pace of bond purchases in the near future. This is backed by St Louis Fed President James Bullard suggesting that tapering is on the table in Dec even as most market watchers still believes the Fed will likely delay a decision till Mar 2014. In economic news, retail sales rose 0.4% in Oct, beating forecast of a 0.1% rise, while the consumer price index dipped 0.1% against a expectation of a flat result. Meanwhile, sales of existing homes fell 3.2% to a 5.12m annual pace last month, just about meeting estimates. With conflicting signals coming out of the Fed and no real impetus arising from the recent corporate results season, the STI is likely to drift for a while longer within its 3,180-3,234 trading band. Stocks to watch: *Keppel Corp: Secured a contract from Ensco to build a repeat KFELS Super A Class harsh environment jackup rig worth US$265m, scheduled for delivery in 2Q16. Ensco has an option to order another similar rig. This brings Keppel’s year-to-date newbuild orders to $6.7b. *CapitaLand: Placed out 115.7m Australand shares (20% stake) in a secondary placement exercise, priced at A$3.685 apiece. This reduces CapitaLand’s effective interest in Australand from 59.1% to 39.1%. CapitaLand will receive $485.3m in proceeds, but will book a loss of $127.5m, mainly due to FX translation losses and hedging reserves. No material impact to the group’s NTA as the losses were already accounted for in equity, but pro forma 9M13 EPS will be reduced from $0.166 to $0.13. *Genting HK: Among selling shareholders involved in a secondary public offering of shares of US-listed Norwegian Cruise Lines (NCL). GENHK, the majority shareholder with a 37.5% stake, is proposing to offer up to 12.65m NCL shares (6.2% of share base). NCL last closed at US$32.75, which suggests GENHK could crystallize up to US$414m (US5.2¢) from the divestment. *SIIC Environment: As flagged in Oct, SIIC has agreed to purchase a 50% stake in Shanghai Pucheng Thermal Power Energy for Rmb530m. This marks the group’s first endeavor into Shanghai’s waste-to-energy sector, and will almost double its current water processing design capacity to over 2,000 tpd. Upon completion of the acquisition, 9M13 EPS is expected to rise form Rmb2.38¢ to Rmb3.03¢. *Rex Int’l: Its 65% owned subsidiary Lime Petroleum has received approval from the Norway authorities to acquire a 10% interest in each of two offshore licenses from North Energy ASA wef 29 Nov 2013. The transaction, first announced in Sep ’13, is a result of the cooperation agreement between Lime and North Energy. Both concessions are located in the Barents Sea. Data analysis using Rex Virtual Drilling technology indicates presence of hydrocarbons in these concessions, and findings are supported by previous technical discovery of oil and gas one of the licenses. *Hoe Leong: Awarded a 3+2-year chartering contract for its platform support vessel from a major Saudi upstream oil company. The vessel will be deployed to support marine operations for transport of supplies and cargoes in the Arabian Gulf. *Loyz Energy: Majority shareholder, Lionel Lee purchased 13.5m shares at $0.42 each through a married deal, lifting his stake to 28.2% from 24.8%.