SG Market (10 Dec 13)

Market Roundup: US stocks edged higher, sending the S&P 500 to a fresh record in a quiet day as traders weighed the timing of any cuts to the Fed’s monetrary support amid budget negotiations in Washington. According to a Bloomberg pool, 34% of economists predicted that Fed policy makers will start withdrawing stimulus at a Dec 17-18 meeting, up from 17% in a Nov survey. Speeches from a number of Fed officials on Mon suggested that the central bank may be closer to tapering than previously thought. St Louis Fed President James Bullard floated the idea of a modest reduction in the Fed’s bond-buying next week. His Dallas counterpart Richard Fischer backed scaling back bond purchases at the earliest opportunity, while President of Richmond Fed Jeffrey Lacker indicated that a Dec taper was on the table. Investors are also getting increasingly comfortable with the idea that tapering is not such a bad thing as it may indicate that the economy could be on firmer ground. Wall Street was also tracking budget discussions on Capitol Hill with congressional negotiators nearing a deal to trim automatic spending cuts and break a 3-year fiscal deadlock by 13 Dec. The S’pore market ended steady yesterday, buoyed by higher prices in regional bourses on upbeat China trade data but sentiment remained very tentative with gainers edging out losers 210 to 186. Having broken below its 3,160 support, the STI is now expected to consolidate within the next trading band bounded by 3,100 and 3,160. Technical indicators have fallen to oversold levels with 14-day RSI dipping to 31. Stocks to watch: *Raffles Education: Established a 70/30 JV with Langfang He Ying Property Development Co into which the group will inject its land use rights and properties in Langfang Development Zone, Hebei, China. At the same time, He Ying has granted a irrevocable put option to Raffles Edu to sell its 70% equity interest in the JVC for Rmb700m ($143.8m). The group stands to reap a potential gain of $27.4m from the asset disposal under the put option, which will raise its pro forma FY13 NAV by 2.2¢ to 43.7¢. *Popular: 2QFY14 net loss was $0.05m, contrasting a $1.73m net profit a year earlier despite achieving higher revenue to $136.5m (+12.5%) from its property (+167%) and retail/distribution (+8%) divisions. But property losses from sale of two units at 18 Shelford, higher advertising and promotion expenses from greater number of book fairs, increase in overheads and warehouse costs to support the expanded retail and publishing businesses and finance charges no longer capitalized cut into its bottomline. NAV was 12.56¢ as at Oct 13. *CCFH: Unveiled its new business strategy for children’s apparel brand JJL Kids by adopting a “fast-fashion” approach (quick introduction of designs from fashion runway to stores) and plans to introduce new designs every season to stay ahead of competition. The group is also harnessing JJL Kids’ e-commerce platform to capitalize on China’s online shopping demand. JJL Kids now has 325 point-of-sales across China vs 110 in 2012.