SG Market (17 Dec 13)

Market Roundup: US stocks rallied from the open as upbeat economic reports and mega corporate deals boosted optimism ahead of the two-day FOMC meeting starting today. A measure of manufacturing activity in the New York region rebounded in Dec, while US PMI expanded to 54.4 in Nov. Industrial production climbed 1.1% in Nov for its biggest gain in a year, while 3Q productivity jumped 3%, indicating solid improvements in business activity. Sentiment was also bolstered by manufacturing data in the euro area, which reached a 31-month high in Dec, led by Germany although China’s manufacturing setor grew at a slower pace. It appears that markets may be anticipating the Fed to lay the groundwork for tapering but do not expect any cutbacks in Dec. The consensus view is that any winding down of stimulus will only come from a position of strength when the economy is self-sustaining. With 10 days remaining in 2013, the stock market enters a period where equities tend to outperform the rest of the year. According to Bloomberg, the S&P 500 has gained 1.2% on average in the last 10 days of the year since 1928. In S’pore, hopes for a Santa Claus rally are starting to fade as traders are reluctant to take positions before a key Fed decision this week. The STI remained trapped in oversold territory above the 2,990 support but capped by its fibonacci resistance at around the 3,100 level. Stocks to watch: *Global Logistic Properties: Pre-leased 35,000 sqm of space at GLP Park Liantang in Shanghai to Haier Logistics, which will use the facilities as its Eastern China distribution centre to meet rising demand from both retail and e-commerce customers. This marks the extension of its strategic partnership with the world’s largest appliance group, which currently uses 28,000 sqm at GLP Park Jiaonan in Qingdao. *Keppel Corp: Secured five contracts worth $150m, which comprise FPSO and FSO projects from Armada C7 (JV between Bumi Armada and Shapoorji Pallonji), Apache Energy and EMAS AMC, as well as construction of two submersible barges for Smit Shipping. This brings the new orders bagged year-to-date to $7b. *SIA: Passenger load factor fell 0.7 ppt y/y in Nov to 77% as traffic declined 0.4% as capacity grew 0.5%. Loan factors softened across all key markets except Americas and Europe especially in West Asia and Africa (-3.8 ppt) which saw capacity injection on India routes. Cargo traffic dropped 2.1%, while capacity rose 1.4%, depressing load factor by 2.3 ppt to 63.8%. Carrier cautioned that the operating environment remained challenging and efforts to stimulate demand to boost loads will continue to place downward pressure on yields. *LionGold: Raised its resource estimate at its Ballarat Gold Mine in Australia from 263,000 tonnes @ 8.5g/t grade to 411,000 tonnes @ 8.5g/t for 112,200 oz of gold, representing a 55% increase from previous estimate. Since Sep 12, the Ballarat mine has produced 200,000 tonnes @ 7.8g/t for 51,000 oz of gold, of which 29,000 oz was produced for the Apr-Nov 13 period. *First Resources: Reported Nov 2013 CPO production of 57,914 tons (+18% y/y, -11% q/q) and palm kernel (PK) production at 13,136 tons (+14.1% y/y, -11% q/q). CPO extraction rate was flat at 23.3%, while PK extraction rate dipped slightly to 5.3% from 5.5% For 11M13, CPO production was 538,836 tons (+12%) and PK production was 123,523 (+10%) *ICP: Proposed renounceable non-underwritten 1-for-1 rights issue @ 0.1¢ apiece, to be followed by a 10-into-1 share consolidation. Net proceeds of $12.5m will be earmarked to fund existing business, as well as an entry into new business ventures (90%), while the balance will be used for general working capital purposes.