SG Market (07 Mar 14)

Morning Bites The street celebrated a 5-year bull run on Thursday, as the S&P500 closed at an all-time high of 1,877, clocking a stellar 180% return since its 6th Mar’09 low. Sentiments were buoyed by better than expected jobless claims data and the ECB’s decision to keep rates unchanged, although trading volume was muted as investors remained cautious on tensions between Ukraine and Russia after Crimea’s parliament voted to join Russia, and ahead of Friday’s US non-farm payrolls data. Separate data also showed that factory goods orders in Jan’14 fell 0.7% versus a forecast for a 0.5% decline. The Nasdaq gave up earlier gains and closed with a slight loss, dragged by sharp declines in biotechs, while financial shares rallied 0.7% to close at its highest level since Sept’08 as analysts touted an improvement in bank capital levels ahead of stress tests. Regional markets opened higher this morning, with the Nikkei up 0.9% and Kospi up 0.3% as at 8.40a.m Taking cue regionally, the STI is expected to open higher, although the on-going “Ukraine/Russian saga” is likely to impede any meaningful gains. Interests will likely remain on the China water-focused stocks, following yesterday’s strong share price momentum. The trend channel resistance can be found near the 3,150 level, with downside support seen at 3,092 (50d simple moving average). Stocks to watch: *Jardine Strategic: FY13 results came in at the higher end of estimates. Net profit fell 7% to US$1.7b, although revenue inched up 2% to US$61.4b. Subsidiaries Hongkong Land, Dairy Farm, and Jardine Matheson led the revenue increase, offset by Astra International. HK Land (+44.2%) revenue was buoyed by its commercial and residential activities, while Dairy Farm (+7.7%) saw sales growth across all divisions. Astra (-3.7%) was weighed by currency translation on weakening rupiah, but otherwise delivered strong revenue in rupiah terms. Final dividend of US18¢ takes total dividend for FY13 to US25.5¢ (FY12: US24.0¢) *Ho Bee: Entered into an agreement with Nomura Properties to acquire a freehold property in London for £171m (S$361.5m), at a net yield of 5.5%. The 276,792 sf Grade-A office building located in a prominent island site in the western core of the City of London known as 1 St Martin’s Le Grand has an average lease of 12 years, with fixed rental uplift on half the income in 2019. *LionGold: Has entered into a partnership with CBMI Construction Co, to modify, commission, operate and manage its gold processing plant in Ghana, marking the group's first appointment of its Chinese partner subsequent to the MOU signed in Sept'13. The partnership was formed to improve the return profile of Owere Mines’ gold tailings agreement with B&C Gold (B&C). LionGold owns a 77% interest in ASX-listed Signature Metals, which in turn has a 70% stake in Owere Mines, Ghana. *Rex International: Indirect subsidiary Masirah Oil has become the first to announce an offshore oil discovery in the east of Oman, following 30 years of exploration activities in the area. During a 48-hour test, hydrocarbons were flowed to the surface and the well achieved light oil flow rate of up to 3,000 stock tank barrels per day (stb/d) with no water production. Separately, Masirah Oil announced that the Ministry of Oil and Gas in Oman has granted the concession extension to the group to proceed with the second phase of its work programme for Block 50 Oman. *REITs: Minister of Trade and Industry Teo Ser Luck, announced in parliament yesterday that the government could intervene if it sees evidence of any collusion or the abuse of market dominance by any landlord, including REITs. The government aims to publish more comprehensive shop rental data this year in an attempt to make rental pricing more transparent.