Thursday, March 20, 2014
SG Market (20 Mar 14)
Morning Bites US shares were rattled after Fed Chairwoman Janet Yellen indicated that hikes to interest rates could come as soon as six months after the Fed ends its stimulus program. The S&P500 fell 0.6% to close at 1,861. Post the two-day FOMC meeting, the central bank reduced its bond buying program by another US$10b, with a view for the Fed Taper to be concluded by year end. In deciding when to raise interest rates, the Fed dropped the 6.5% unemployment rate as a guideline, and said it would instead consider a wide range of economic indicators. Latest forecasts by the Fed show that the benchmark rate, now close to zero, would rise to at least 1% by end 2015 and 2.25% by end 2016, of the following year, higher than previously forecast. The accelerated schedule for the rate hikes took the markets by surprise, with commentators predicting more follow-through selling in Asia. On the other side of the globe, investors are also starting to worry about a slowdown in China’s growth, after the RMB fell to a one-year low. News reports of another potential Rmb3b default by the largest private steel maker in Shanxi may spark fears of a systemic credit crisis in China’s shadow banking landscape. Regional markets are lower this morning, with the Nikkei and Kospi both declining 0.6% as at 8.40am. Similarly, the STI is expected to trade down today. Downside support at 3,025 (Dec ’13 trough). Near term, the index may range trade between 3,025 and 3,133. Stocks to watch: *Albedo: Refutes M’sian media reports that its planned RTO deal is off. In its reply to SGX’s query on trading activity, management clarifies that the parties involved “have not reached any mutual agreement... to terminate the proposed acquisition.” *GLP: To lease 53,000 sqm to a leading fast-moving consumer goods (FMCG) company at GLP Park Hefei Hi-Tech in Anhui, lifting the property occupancy to 100%. *Vibrant: Its effective 30% owned unit has acquired a ~89,000 sqm prime High Tech Industrial Park development site with a total estimated GFA of ~67,400 sqm in Changshu High Tech Industrial Park in Jiangsu for Rmb28.8m via a public land auction. The project is slated for completion in 2Q15, and is targeted to be leased to small and medium-sized auto parts companies from Europe and/or the US. *Otto Marine: Secured US$21m charter contracts for its offshore support vessel, which will be deployed to work in Vietnam and Australia for a major offshore construction project. *Asia-Pacific Strategic Investment: Proposed issue of 16.5m non-listed warrants to Sim Chek Tong at an exercise price of $0.423 per share. *HG Metal: Sale of shares by CEO Goh Kian Sin (26.6% deemed stake) to certain purchasers including Chairman Yap Xi Ming. *Starhill Global REIT: Divested Holon L Property, a retail property in Tokyo for ¥1,0b (~$12.8m), representing a 6% premium to latest independent valuation. Holon L accounted for 0.4% of SGREIT’s portfolio by asset value. *Tigerair: Completed the 40% shareholding sale in Southeast Asian Airlines (SEAir) to Cebu Air. *Interra Resources: Completed the development for well YNG3266 in the Yenangyaung oil field in Myanmar, where it has a 60% working interest.