SG Market (03 Feb 14)

Market Roundup: US stocks ended the week and month with deep losses following a selloff on Fri, prompted by continuing unease over emerging markets and a number of earnings disappointments. The VIX or gauge of investor anxiety rose 6.5% to 18.41, up 34% this year. Emerging markets extended their worst start to the year since 2008 as outflows picked up pace amid Fed tapering and signs that China’s economy is slowing. Argentine bonds tumbled on concerns that government measures from devaluation to rate increases will not improve the country’s deteriorating debt position. Russia’s rouble retreated. A batch of poor earnings from Amazon (-11%), Mattel (-12%), Chevron (-4.1%) and MasterCard (-5.1%) set the downbeat tone early in the session. Investors also found little solace from consumer spending which climbed 0.4% in Dec but incomes stagnated, pushing the saving rate to its lowest level in almost a year. Consumer sentiment declined to 81.2 in Jan from 82.5 a month ago, in line with estimates. The Chicago PMI fell to 59.6 from 60.8 in Dec. S’pore market is braced for yet another day of red ink as both Tokyo (-0.5%) and Seoul (-0.6%) opened lower. Downside support is seen at the Aug ’13 low of 2,990, which also represents the 50% retracement from the 2,528 to 3,452 rally from Oct ’11 to May ’13. Stocks to watch: *Swiber: Clinched five contracts worth a combined US$235m. Three of the contracts (US$145m) were awarded to the group for works that will be executed in Latin America and SE Asia. The remaining two contract wins (US$90m) were awarded to Swiber’s associate and JV company, for services to be executed in SE Asia. The contracts will commence immediately and are expected to be completed in the next two years. *Religare Health Trust: Proposed to acquire a clinical establishment in Mohali, northwest India, for $58.2m. The 355-bed hospital, which commenced operations in Jun ’01, serves as a hub for a number of smaller, secondary hospitals in the surrounding areas. RHT intends to finance the acquisition mainly with debt. On completion of the deal, RHT’s aggregate leverage is expected to rise from 6.6% to 13%, leaving debt headroom of $375m for further acquisitions. The acquisition is expected to lift pro forma DPU from 3.55¢ to 3.75¢. *Sembcorp Industries: Signed a conditional agreement to acquire 45% of NCC Power Projects (NCCPP), which is currently building a 1,320MW coal-fired power plant in Andhra Pradesh, India, adjacent to the site of an existing power plant investment. This project will double SCI’s power generation capacity in India. Construction is ~30% completed and is expected to come onstream in early 2016. SCI’s investment stake will amount to ~$175m. *Kreuz: Filed a court application to sanction the scheme of arrangement for the takeover offer at $0.80 per share. Accordingly, the expected last day for the trading of Kreuz shares is 19 Feb ‘14. *Stratech Systems: Secured its first such contract to upgrade the iFrerret infrastructure at Changi Airport for airfield surveillance. *GRP: Proposed to issue 27.8m new shares (4.75% of enlarged share capital) at $0.10 to Teo Tong How. Net proceeds of $2.8m will be used for new market expansion, new business development plans and new projects. Teo is the Chairman and Managing Director of the Hong How Group, a real estate developer and investor. *Armarda: 3QFY14 net loss widenedy to HK$13.4m (+63% y/y), despite chalkinh in higher revenue of HK$3.8m (+60%) mainly contributed by the trading of IT equipment (75% of revenue, +40% y/y) and RFID chips (17% of revenue, nil in previous year). Bottomline was weighed down by various operating expenses, exacerbated by share of associates’ losses of HK$2.5m from HK$0.1m a year ago. NAV at Dec ’13 stood at HK$0.089. *Rex: Trading halt