SG Market (03 Jan 14)

Market Roundup: US stocks kicked off its first negative start to a year since 2008 as investors locked in solid gains from 2013 on a new tax year with sentiment dented by weak manufacturing data from China. Market watchers noted that investors likely took the first day of trading in 2014 as an opportunity to rebalance portfolios after the market’s superlative rally last year, sending the S&P 500 up nearly 30%. The retreat came amid concerns about manufacturing growth in China after its official purchasing managers’ index slipped to a four-month low of 51 in Dec from 51.4 in the previous month. In the US, the ISM factory index slipped to 57% from Nov’s 57.3%, which was its highest since Apr ‘11. A positive reading on jobless claims, which fell 2,000 to 339,000 last week failed to cheer investors. The day also got off to a bad start after Wells Fargo downgraded technology giant Apple (-1.4%) over its profit margin outlook. The poor start is a reminder that trading in 2014 may not be as smooth as last year. According to the Stock Trader’s Almanac, the last 40 times the S&P 500 rose in the first five days of Jan, the market subsequently ended higher on 34 times with an average gain of 13.6%. The market’s worst performance was in 2008 when the S&P 500 lost 5.3% in the first five-day period and closed 38.6% lower that year. Market strategists are forecasting equity returns to slow this year with a year end target of 1,950 for the the S&P 500, representing a 5.5% gain. Analysts are also projecting 116 stocks in the index to decline in 2014, the least optimistic estimate in nine years. But many still view this sell-off as an overdue technical correction and not the start of a bear tend. Investors may want to get a hold on the fundamentals and outlook of companies once the earnings season gets underway, which will dictate the direction of the market. Having made a symmetrical V-shape recovery of its losses since early Dec, the STI is likely to snap its nine-day winning streak as it enters into overbought territory. Topside resistance for the index is at 3,226 (50% fibonacci retracement), while immediate support lies at 3,160. Stocks to watch: *Sarin Tech: Disclosed that Hari Krishna Exports of India has placed orders for four additional Galaxy/Solaris systems in 4Q13, which will bring to 12 the number of systems owned by the diamond manufacturer. *Ezion: Acquiring 100% of Teras Conquest 4, which owns a multi-purpose self propelled jack-up rig with a six-year chartering contract (wef Feb ’13) for US$32.5m ($41.2m) via the issue of 18.4m new shares @ $2.2407. The transaction will enhance its 3Q13 NTA/share to US$0.8099 from US$0.7916 and 9M13 EPS by 2¢ to US0.13. *Soilbuild Construction: Awarded a $26.8m contract by Soo Kee Jewellery to build their new seven-storey HQ at Changi Business Park Vista. This is the fourth Changi Business Park project won by the group and brings its latest order book to $389.5m. Construction is expected to commence this month with completion by 2Q15. *Aspial: Marks its first major overseas foray with the acquisition of 383 King Street in Melbourne, Australia for A$41.5m. Located opposite Flagstaff Gardens and near to Queen Victoria Market and the central shopping area, the property is a nine-storey office building with a lettable area of 13,136 sqm. The group is cuurently exploring options to redevelop the property for mixed commercial and residential use. *Interra: Commenced drilling of development well TNG 3264 in the Yenangyaung oilfield in Myanmar where it has a 60% interest. Results of the drilling and completion are expected to be out in six weeks. *Noble: Disposed its 25% interest in associate Thunderbird Power Holdings for US$10.8m vs its book value of US$5.2m.