SG Market (27 Dec 13)

Market Roundup: US stocks continued their bull run of 2013 with the blue-chip Dow Jones Industrial Average climbing for the 6th straight session to its 50th record high this year amid window dressing as a drop in weekly jobless claims boosted optimism about the economy. Historically, markets tend to advance between Christmas and New Year’s Day due to portfolio adjustments for maximizing tax benefits, good investor mood during the holiday season and the absence of short selling in light trading with most traders away on vacation. In a positive sign for the economy, initial jobless claims declined by 42,000 in the latest week to 338,000 from an adjusted 380,000 the previous week. Other stronger-than-expected economic data had raised confidence in the US outlook after the Fed announced on 18 Dec that it was scaling back its easy monetary policy. In the bond market, the 10-year Treasury yield hit 3% before pulling back to 2.99%. In the tug-of-war between accelerating economy and accelerating interest rates, the market seems to come to terms that rising rates mean the economy is doing better, which is a healthy sign. The VIX Index or so-called fear gauge slid to 12.33, its lowest level in more than a month and has dropped 32% this year, it biggest annual decline since 2009. Twitter jumped 4.8% to US$73.31, extending its gain to 76% this month on speculation that the microblogging site has room to expand its digital advertising sales. But Blackberry slid 8.8% on news that co-founder and co-CEO Mike Lazaridis has dropped a plan to buy the company. In Japan, the Nikkei pushed above 16,000 and closed at its highest level since 2008 as the yen weakened against the dollar on hopes that the BoJ will press ahead with its stimulus to end 15 years of deflation but China’s Shanghai Composite fell 1.6% on disappointment over the lack of additional cash injections by the central bank. The S’pore market may extend it mini Santa rally on selective buying with near term objective for the STI set at 3,160 and immediate support at 3,100. Stocks to watch: *SIA: Formalised its proposed JV with Tata by forming a new company called TATA SIA Airlines with SIA owning 49%. *HLH: Entered into five-year joint operations agreement with Zhong Fu International Investment to cultivate, process, and produce cassava (or maize and sugarcane) at HLH’s 9,985 ha of farmland plantation in the Kampong Speu Province in Cambodia. Annual payment by Zhong Fu will be in the form of cassava produce amounting to US$3m for each of first two years (2014-15) and and US$4m each for next three years (2016-18). *Memtech: Received Rmb14.5m in fire insurance claim for its fire outbreak at its touch screen factory in Nantong in Feb 2013. The claim payment would be booked in its 4Q13 results. *GKE Corp: Issued profit guidance that it expects to report a net loss for 1HFY14 mainly due to finance charges incurred for new acquisitions and higher direct costs arising from increase in staff and depreciation expenses. Group is expected to announce its results on or before 14 Jan. *Asia Power: Asia New Energy (ANE) extended its voluntary conditional cash offer of $0.16 each to 10 Jan. To-date, ANE has 82.34% valid acceptances for its offer.