SG Market (14 Mar 14)

Morning Bites US stocks reversed early gains and closed sharply lower on relatively high volume, dragged by renewed jitters about the conflict in Ukraine and signs of a slowdown in China. The S&P500 sank 1.2% to close at 1,846, and featured its worst intraday performance since early Feb. Tensions escalated after newswires reported that Russian forces were conducting new military operations near the Ukrainian border, while latest data on China’s industrial production, retail sales, and fixed asset investments fell short of expectations, stoking concerns about slowing economic growth. Technology and industrial sector stocks, generally seen as economically sensitive sectors led the decline, while all 30 components of the Dow finished the day lower. In other economic data, initial jobless claims fell 9k to 315k versus consensus of 330k, while retail sales climbed 0.3% in Feb, slightly higher than the 0.2% gain expected. Weighed by the dismal performance overnight, the early regional indices are all in the red this morning. As at 8.20am, Nikkei (-2.5%), ASX (-1.4%) and Kospi (-0.6%). Similarly, the S’pore market is likely to get off to a weak start this morning. The STI has fallen back to the 3,027 – 3,113 trading range, and may trend lower following yesterday’s break below the 50day moving average support. Stocks to watch: *HPH Trust: To sell a 60% stake in Asia Container Terminal (ACT) in Hong Kong for HK$2.5b. The buyers are Cosco Pacific (40%) and China Shipping Terminal Development (20%), the port affiliate of container liner CSCL. Accordingly, HPHT stands to book a pre-tax disposal gain of HK$125m. The new strategic alliance will enable the four berths at ACT and COSCO-HIT (a 50/50 JV between Cosco Pacific and HPHT) to be operated as one contiguous 1,380m long berth, which would allow the servicing of multiple mega vessels simultaneously. *Olam: All-cash voluntary conditional general offer of $2.23 per share by consortium of Breedens (a subsidiary of Temasek), Aranda, and the Olam founding family shareholders. Minority shareholders will have the flexibility to tender all, part or none of their Olam shares. The consortium, which holds a combined 52.5% stake in Olam, prefers to keep the company listed. *Global Premium Hotels: Chairman Koh Wee Meng intends to make a voluntary unconditional cash offer for GP Hotel shares at $0.33 per share. Koh holds a 59.1% stake, and intends to maintain the listing status of GP Hotels. *Fragrance: Proposed a dividend-in-specie of all its 550m shares in GP Hotels to shareholders, to take place after the close of the above cash offer for GP Hotels. Accordingly, every 1,000 Fragrance shares will entitle the shareholder to receive 80 GP Hotel shares. *Parkway Life REIT: to acquire two nursing homes and an extended-stay lodging facility for the elderly in Osaka for a combined purchase price of ¥3b ($37.4m), 6% below the aggregate valuation of the properties. The acquisition, scheduled for completion by Jun ’14, is expected to generate an accretive net property yield of 7.3%. Funding will be via a 6-year committed and unsecured JPY loan facility of up to ¥3.5b, with an all-in funding cost of ~1.65% pa. Post-acquisition, the REIT’s aggregate leverage will rise from 33.2% to 35%. *CapitaLand: its wholly-owned serviced residence unit, The Ascott has secured contracts to manage its first property in Myanmar, Somerset Kabar Aye Yangon, and its third property in Wuhan, Somerset Zhuankou Wuhan. In addition, Ascott has opened its first property in Frankfurt, Citadines City Centre Frankfurt, and will open Ascott Sentral Kuala Lumpur next week, and Ascott Midtown Suzhou in Apr. *TT Int’l: Habitat, a French manufacturer and specialist in designer homeware and interior décor, has signed a 15 –year master franchise agreement with a subsidiary of TT Int’l to initially open four stores in S’pore, Indonesia, Taiwan and Brunei and eventually expand across the Asia-Pacific region. The first Habitat store in the region is scheduled to open by end of 2014 in BIG BOX, a mega retail warehouse project that TT Int’l is currently developing. *F&N: Capital reduction of $0.42 cash per share approved by the High Court. Ex-entitlement date on 24 Mar ’14.