SG Market (12 Dec 13)

Market Roundup: US stocks fell for a second day, suffering their biggest drop in two months as a congressional budget accord spured bets that the Fed could scale back its stimulus next week. The broad-based S&P 500 shed 1.1% to close below its milestone 1,800 level. The VIX or Wall Street’s so-called fear gauge spiked 11% to 15.42 for it sharpest advance since 15 Oct. Investors focused on the provisional budget deal announced late Tue, which gave the Fed another reason to pare its easy monetary policy at its Dec 17-18 meeting. Fiscal uncertainty has been one of the factors holding back the central bank, apart from the employment situation. Markets are of the view that the Fed is closer to taper in Dec because of improving economic data and clearing of the budget impasse. However, the budget compromise, which still needs to pass through the Republican-dominated House and Democrat-controlled Senate, did not address the US debt ceiling, setting up another fiscal showdown after Feb. The market was also sold down on profit taking following the record run and some disappointing earnings reports. Following the weak opening across Asia this morning with Tokyo (-1.2%), Seoul (0.6%) and Sydney (-0.9%), the STI is expected to breach through its 3,050 immediate support and head towards the next objective at the 2,990 base, set in Aug, which also represents the 50% Fibonacci retracement of its Oct 11-May 13 rally. Stocks to watch: *Keppel Corp: In response to positive feedback and strong enquiries, Keppel is building a new CAN DO drillship. When completed in 2016, the GustoMSC designed drillship is expected to be a state-of-the-art deepwater exploration, development and completion drilling vessel. The group is now in the midst of securing a firm contract for this drillship unit. *SPH: Co-investing US$10m in Magzter, a NY-based global digital magazine store which has >16m users from more than 200 countries and carries a global catalogue of thousands of magazines in over 30 languages. It is used by global publishers such as Conde Nast, Newsweek, Bloomberg, Haymarket and SPH and will provide SPH with a new delivery platform for content creation and distribution. *Swiber: Disposed its entire 33.3% stake in associate, PJW 3000, which owns a construction barge, for US$52m. The group will reap a gain of US$16.6m from the sale and enhance its proforma 9MFY13 NTA by US$0.029 to US$0.902. *Vibrant Group (formerly Freights Links): 2QFY14 net profit jumped 55.4% y/y to $11.3m while revenue inched up 5% to $44.9m. The revenue increase came from its logistics business in warehousing operations & logistics, chemical storage & logistics and freight forwarding. Bottomline was lifted by the gain recognized from re-measurement upon the change of Figtree Holdings from financial asset to associate, offset by mark-to-market adjustment on fair value securities and FX losses. *Armarda: Joining hands with 45% owned China Satellite Mobile Communication Group and Thuraya Telecoms to develop next generation satellite communication products for China and global customers. The group and CSMCG will secure manufacturers and fund product design and development costs, while Thuraya will promote the mobile satellite communication devices to its worldwide clients. *China XLX: Proposed cash exit offer of $0.40/share by Pioneer Top Holdings with the intention of delisting thereafter. *Vallianz: Received shareholders’ approval for the grant of 500m non-transferable share options to Swiber and issue of US$35.2m capital securities to Rawabi. The additional funding will allow the group to pursue its fleet extension plan, long-term charters, and allow it greater access to a wider customer base in present and new markets. *Devotion Energy: Received approval-in-principle for its proposed voluntary delisting @ $0.19 apiece. *Consciencefood: Last day of trading today before suspension, pending completion of compulsory acquisition.