Thursday, December 19, 2013

SG Market (19 Dec 13)

Market Roundup: US stocks surged, sending the Dow (+293 pts, +1.84%) and S&P 500 (+30 pts, +1.66%) to record highs as investors welcomed the Fed’s surprise decision to trim its stimulus as a vote of confidence for the economy and commitment to low interest rates for a considerable time. Starting Jan, the Fed will taper its monthly bond purchases to US$75b from US$85b now in a first step towards unwinding its easy money policy amid an improving labour market, while keeping interest rate near zero. The move effectively removes investor uncertainty over the timing of the pullback. Fed officials also predicted the unemployment rate will fall to as low as 6.3% by the end of 2014. The rally adds to what has already been a historic run for stocks with the S&P 500 up almost 27% this year. With the economic recovery picking up steam, market strategists are predicting that equities will continue their rise in 2014 with gains of 6-8% from current levels. Earlier, housing starts jumped 22.7% in Nov to a 1.09m annualized rate, its highest level since Feb 2008 and permits for future projects held near a five-year high, indicating the pick-up will be sustained well into 2014. The US Senate also cleared a US$1.01t budget deal to lower the US Deficit over 10 years and ease US$63b in automatic spending cuts. The VIX Index or benchmark fear gauge sank 15% to 13.8, its biggest decline since Oct. Ten-year Treasury yields added 4bps to 2.88%, while the greenback surged to a five-year high against the yen and climbed versus most major currencies. Oil and coffee drove gains in commodities. Asian bourses in Tokyo (+1.6%), Soeul (+0.7%) and Sydney (+0.9%) opened higher in reaction to the win-win news from Wall Street with the STI primed to test its resistance at 3,100 from an oversold position. Downside support remains at 2,990. Stocks to watch: *Rex Int’l: 64.2% owned subsidiary Caribbean Rex is acquiring the remaining 25% stake in the South Erin Block in Trinidad & Tobago, which is currently producing an average of 50 bpd of oil from four shallow wells. Caribbean Rex retains a 100% interest in Inniss-Trinity and 20% interest in the Cory Moruga block, which will increase to 51% after completion of its drilling obligations. *ST Engineering: Its land systems arm ST Kinetics is setting up a Brazilian manufacturing unit to further grow the market presence of its LeeBoy brand of road construction equipment in Brazil and South America. LeeBoy Brazil will acquire the manufacturing assets from Brazilian construction equipment firm Ticel for $9.2m. *Yoma: Formed a 20/60/20 JV with Sumitomo Corp and First Myanmar Investment, to distribute and service Toyota’s Hino brand trucks and buses in Myanmar. Hino Motors is the largest manufacturer of heavy and medium duty trucks in Japan. This collaboration will further broaden Yoma’s burgeoning automotive interests in Myanmar. *Mermaid Maritime: Awarded a subsea construction support services contract for its dive support vessel in the Gulf of Thailand. The contract will commence in May 2014 for a term of 200 days with estimated value of US$32m and comes with options for two additional years. *Pacific Radiance: Exercised its option to build two high-spec PSVs scheduled for delivery in 4Q15. This brings the group’s newbuild programme to 19 vessels in all. The acquisitions will be internally funded, using the new proceeds of $150.6m raised in its Nov IPO. *UPP: Terminated its 75/25 JV agreement with Myan Shwe Pyi Ltd to undertake quarry-related operations and engineering services in Myanmar after extending the long-stop date three times in the past 18 months. *China Print Power: Proposed placement of 41.8m shares at HK$2.60 ($0.42) apiece, ~5% discount to last close. Maximum net proceeds of HK$106.4m will be used for potential acquisition activities and general working capital. *CapitaMall Trust: Issued $100m 7-year 3.15% fixed rate notes, part of its $2.5b multicurrency MTN programme.

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