SG Market (07 Apr 14)

US shares were down sharply Friday with the S&P500 closing 1.3% lower at 1,865, despite touching a record high of 1,897 intraday. Stocks initially opened higher spurred by positive nonfarm payrolls data which showed that employers added 192,000 jobs in Mar, following 197,000 hires in Feb and just shy of the 200,000 forecast, with the unemployment rate unchanged at 6.7%. However the market sold off in the later part of the day, led by momentum shares such as the high growth tech and biotech names. The Nasdaq closed down 2.6% for its second worst performance of the year at 4,128. In the region, the Nikkei and Kospi are down 1.6% and 0.4% respectively, this morning. Amid the lack of local corporate news flow, expect the STI to take cue from the developed markets to open in a similarly muted fashion. On the daily charts, the STI trend remains positive; however watch for the RSI indicator approaching an overbought level. Momentum may carry the STI towards the 3,240 (200day moving average peak in Oct ’13) near term resistance, but expect the index to pull back thereafter to consolidate at lower levels. Stocks to watch: *Ezion / JK Tech: Ezion has proposed to buy a 29.8% stake in JK Tech, which may eventually result in a reverse takeover (RTO) of the latter, and JK Tech’s transformation into an oil & gas exploration & production (E&P) player. Accordingly, JK Tech will issue 42m new shares to Ezion at $0.09 each, in exchange for 1.85m new Ezion shares at $2.0445 each. JK Tech will also raise net proceeds of $4.2m via the issue 13m new shares at $0.135 a piece to investment company SF Ventures and privately place out another 20m new shares at $0.135 each. Finally, JK Tech will also issue 260m share options to Ezion and 65m options to SFV that have a conversion price of $0.09 each. If the options are fully exercised, Ezion will become the majority shareholder of JK Tech with 64.8% of enlarged share base. *Oxley: Has engaged advisers to explore the possibility of restructuring its overseas property development business, which includes a spin-off of the business on SGX's Catalist board. *Forterra Trust; GLP will purchase Beijing Logistics Park from Forterra Trust for a share sale consideration of $22.2m (Rmb109.1m). The property is a logistics warehouse with total gfa of 75,145 sqm located in Beijing’s Shunyi District, adjacent to Beijing Int’l Airport. The proposed sale is expected to result in a net gain of $13.2m for Forterra. Forterra will deploy the net proceeds towards the cost of development of The Place (formerly known as The HQ). Post sale, Forterra’s pro-forma NAV will rise from $4.68 to $4.74. *XMH: Secured an aggregate US$3.6m worth of contracts. The first comprises the group’s maiden Vietnamese contract for more than 24 units of Mitsubishi marine engines, with another 10 units expected to be secured within the next two months. The second contract is for a low speed Akasaka main engine for use in a Pertamina tanker, scheduled for delivery around Dec ‘14. *Gaylin: Leased a ~440,000 sf land parcel at Tanjung Langsat Industrial Complex, Johor Bahru to Johor Corp for total consideration of RM10.1m. *Noble: Has increased its stake in US firm Inflection Energy by 1.09ppt to 28.29%. *JES: Auditor opines that the group’s financials (FY13 net loss of Rmb0.5b and current liabilities exceeding current assets by Rmb373.6m) indicate material uncertainty that may cast significant doubt on JES’ ability to continue as a going concern. *Z-Obee: Management changes – i) Mr Lai Hui has replaced Mr Wang Shih Zen as CEO, ii) Mr Liu Jintao has replaced Mr Jerome Tham as independent non-executive Director and chairman of the Remuneration Committee, iii) Ms Yang Jian Hui has been appointed as an authorized representative of the company.