SG Market (06 Jan 14)

Market Roundup: US stocks closed mixed in a choppy session as investors weighed comments by Fed officials on stimulus and the economy’s strength. Amid thin volumes, the markets saw some portfolio balancing and a little bargin hunting after Thu’s selloff. Stocks perked up after outgoing Fed chief Ben Bernanke highlighted that headwinds are abating and called for continued monetary policy accommodation to spur the economy. But the markets quickly gave up the gains after Fed Bank of Philadelphia President Charles Plosser warned that the central bank may have to be aggressive in raising interest rates. Separately, Richmond Fed President Jeffrey Lacker told a forum that the Fed will scale back its stimulus as the labour market improves. The FOMC will release its minutes to its last policy meeting on Jan 8 and meet again on Jan 28-29. Investors also digested Dec car sales from Ford, GM and Chrysler, which mostly fell short of expectations. A big issue going into results season this month is whether the 4Q GDP pick-up will carry over into earnings. According to Bloomberg estimates, earnings for S&P 500 companies are expected to grow 5.2% in 4Q13. Following its 4% advance since mid-Dec, the STI finally succumbed to technical selling last Fri and retreated back below its 3,160 support level, which has now become its immediate resistance. With technical indicators all pointing to a short term reversal, downside support now lies at the 3,100 level. Stocks to watch: *Tiger Airways: Confirmed that it is currently negotiating a proposed transaction involving 40% associate Tigerair Philippines following media reports that Cebu Air is in talks to buy over the loss-making Philippine carrier. However, no definitive agreement has been signed yet. *OUE: Recived the eligibility-to-list letter from SGX for its proposed IPO of OUE Commercial Trust, which comprises OUE Bayfront. The offering is however subject to prevailing market conditions, regulatory approvals and the evaluation of all relevant considerations. *OCBC: According to newswires, OCBC has emerged as the frontrunner in the potential takeover of Wing Hang Bank after submitting binding bids for the Hong Kong’s sixth largest bank. However, reports suggest that OCBC has offered less than the 2x P/B and the two parties are now discussing ways to to bridge the valuation gap. *CapitaMall Trust: Signed option to sell Westgate Tower to a consortium, comprising Sun Venture Homes and Low Keng Huat, for $579.4m. The consortium has up to 24 Jan 2014 to exercise its option. Westgate Tower is the 20-storey office component of the Westgate integrated development located in Jurong Gateway. The tower has 304,963 sf of net saleable area and is targeted for completion in late 2014. *AusGroup: Proposed placement of 96.1m new shares (17% of enlarged share capital) @ $0.168, a 11% discount to its last close. Net proceeds of $15.2m will be used to support the collateralization for the group's future bonding requirements (50%) and the remaining for general working capital. *Sound Global: Exit offer of $0.70 has been declared unconditional after the offeror received 56.55% valid acceptances. Trading in the counter will resume until 10 Jan 2014, while the exit offer will remain open for acceptances until 4pm on 17 Jan 2014. The expected date of delisting from the SGX-ST will be on 27 Jan 2014. *Otto Marine: 90%-owned subsidiary, Go Marine Group, entered into an agreement to sell seven vessels to RSOV Marine for US$10m. RSOV Marine is 29% owned by Otto’s Executive Chairman and controlling shareholder Yaw Chee Siew. *See Hup Seng: Completed its $42.4m acquisition of Hetat Group via $31.8m cash and issue of 42.5m shares @ $0.2493. Established in 2003, Hetat does design, engineering and construction of steel, aluminium and glass structures and also provides labour and equipment to fabricate and install modules for oil rigs. The steel engineering company has a 195,000 sf steel fabrication plant in Tuas and an order book of $46m with projects in S’pore, Malaysia and Mongolia. *Croesus Retail Trust: Established a US$500m Euro Medium Term Note programme with DBS Bank and UOB. Net proceeds from the issue of notes will be applied for financing acquisitions and/ or investments, asset enhancement works and/ or refinancing its existing debt and general corporate purposes. *China Hongxing: CEO Lan Zhongming resigned for personal reasons to spend more time with his family.