Friday, June 20, 2014
SG Market (20 Jun 14)
US Market: US shares edged higher with the S&P extending its record run as investors weighed ongoing violence in Iraq with solid economic data amid optimism over the Fed’s latest policy statement. The DJIA eked out 15 pts to 16,921 (+0.1%), while the S&P 500 added 3 pts to 1,959 (+0.1%) but the Nasdaq dipped 4 pts to 4,359 (-0.1%). Markets briefly lost ground after President Obama offered to send up to 300 military advisors to help Iraq counter an insurgency and take targeted action if necessary. Oil prices ended higher with Brent crude pushing above US$115 per barrel. Reaction to positive economic news was muted. The Conference Board’s index of leading economic indicators rose for the 4th straight month in May, showing the economy gained momentum following the slowdown at the start of 2014. Factory activity in the Mid-Atlantic region also grew at a faster pace than expected in Jun, while the Philadelphia Fed’s business activity index climbed to 17.8 from 15.4 in May, topping forecasts. Meanwhile, initial jobless claims slipped 6,000 to 312,000 last week, sign of steady progress in the labour market. Among stocks in focus, Blackberry jumped 9.7% after reporting a narrower loss than expected, while supermarket chain Kroger gained 5.1% after raising its full year forecast. Open-source software developer Red Hat rose 3.8% after its 1Q sales and profit beat estimates and guided for higher earnings in FY15. But Coach slumped 8.9% after the luxury handbag maker forecast a prolonged slump in sales at its North American stores. Rival Michael Kors lost 1.6%. S’pore shares are losing momentum despite the record-breaking rally on Wall Street with the STI trapped between its 20 and 50-day moving averages marked by 3,287 and 3,263 respectively. A downside break of 3,263 could take the index lower to the next support at 3,220. Stocks to watch: *SIA: 100% owned low-cost carrier Scoot has signed a JV with Nok Airlines. Both companies will invest THB2b (~$80m) each to acquire existing airline Pete Air, which will be renamed NokScoot. SIA and Nok will each own a 49% stake, with Nok management holding the remaining 2% in NokScoot, which will be based in Don Mueang Int’l Airport, and will operate on medium and long-haul international routes. The new airline is subject to regulatory approvals. *Genting S’pore: Plans to build a casino in South Korea have stalled as ground-breaking in Jeju Island scheduled for 24 Jun has been postponed to allow the company the opportunity to brief the newly-elected governor of Jeju and his team on the casino's development plans and its contribution to Jeju Island. *EuroSports Global: Proposed to acquire 60% stake in each of Autoinc Sports, Autoinc Lifestyle and Birel S’pore for $1.5m. In addition, EuroSports will pay an additional $0.3m earn out amount, subject to certain profit targets being met, to be satisfied by new shares issued at $0.0303 each. The target companies, owned by Benjamin Solomon Tan, are involved in the trading, maintenance of luxury automobiles, and retail, maintenance and storage of go-karts. *Asiatravel.com: Refers to the article Äsiatravel jumps as talk of Alibaba interest returns” published in the Business Times yesterday. The company reiterates that it is in varying stages of discussions with several potential parties to explore strategic collaboration and/or M&A, but there is no certainty that any agreement may materialize. *KS Energy: 80% owned subsidiary KS Drilling will sell its KS Orient Star 1 rig for US$84.88m, an excess of US$45.24 above book value. *KrisEnergy: The deed of assignment to transfer Neon Energy’s 42% working interest in Indonesia Tanjung Aru PSC to KrisEnergy has been formalized. Upon completion, KrisEnergy will hold 85% working interest in the field. *Geo Energy: Proposed to acquire a stake in Borneo Int’l Resources (BIR) from Indonesian national Lenny Limanto for US$55m. BIR holds the mining licences for two coal concessions in South Kalimantan. The deal is subject to due diligence and a number of conditions precedents, and has a long stop date of 12 months. *Cosco: 51% owned Cosco Zhoushan has delivered two bulk carriers of 64,000DWT to an European buyer. *Amarda Group: Proposed placement of 1.44b new shares at an issue price of HK$0.05 each. Net proceeds raised will be used for potential acquisitions, investments and working capital.