SG Market (07 Jul 14)

US Market: US shares extended a selloff with small caps and Internet stocks suffering sharp declines on investor concerns that equities are vulnerable to a severe pullback. The DJIA dropped 118 pts to 16,907 (-0.7%), closing back below the 17,000 level, while the S&P 500 shed 14 pts to 1,964 (-0.7%) and the Nasdaq Composite slumped 60 pts to 4,391 (-1.4%). The VIX Index that tracks market volatility jumped 5.7% to 11.98, recording its biggest two-day rally since Apr. With no major economic data on tap, investors took the chance to cash in their profits, with the recent surge pushing valuations to four-year highs, raising concerns of more profit-taking in the coming weeks. In Europe, signs that the economic recovery is losing momentum sent stocks lower for a third day. UK manufacturing slumped the most in 16 months in May, while German exports contracted more than expected. Further damping sentiment, Goldman Sachs joined JPMorgan and BoT-Mitsubishi UFJ in bringing forward the timing for Fed rate increases after data showed the economy is rebounding and labour market is improving. Sahres of Internet (-3%) and biotechnology (-2.2%) companies were battered for a second day afer investors dumped the biggest winners of the bull market. Twitter (-7%) led the plunge in tech stocks which also saw big losses in Facebook (-3.9%), Netflix (-3.4%) and Google (-1.9%). Bank shares retreated 1.2% with Goldman Sachs (-1.7%) and JPMorgan (-1.6%) dropping to one-month lows. Casino stocks also traded lower after Deutsche Bank lowered its estimates on Las Vegas Sands and comments from MGM China's Pansy Ho on travel trends in Macau created a ripple of worry. Among other stocks in focus, Dow component Boeing fell 1.3% after S&P warned that the closure of US Export-Import Bank could harm the group’s long-term credit profile, while Nike lost 1.3% after ending its sponsorship of Manchester United. The US kicked start its 2Q earnings season after the market close, with bellwether Alcoa gaining 1.5% in after trading hours, after reporting net income of US$138m from US$118m loss a year ago or 50% above estimates. Profits for S&P 500 companies are expected to climb 5% and sales up 3% in 2Q. S’pore market are likely to drift lower, tracking the tumble on Wall Street and early morning weakness in Tokyo (-0.5%) and Seoul (-0.5%). Underlying supports for the STI tipped at 3,270/3,220 and near term resistance at 3,310. Stocks to watch: *Yoma: 70% owned Myanmar Motors has entered into a 30/70 JV with Mitsubishi Corp to set up First Japan Tire Services Co. to provide sales support for Bridgestone tires in Myanmar. *SIIC Environment: Placing out 1b new shares (10.4% of enlarged share base) at $0.158 apiece. Net proceeds of $154.8m will be used to finance the group's expansion, for working capital and to repay existing borrowings. *Sinjia Land: Subscribing for a $2m convertible loan note issued by Barons Vista, ultimately owned by Singapore businessman Lim Beng Siang. Barons Vista is undertaking a proposed development of residential properties (including single family homes, paired homes or duplexes or townhouses) and commercial properties (including offices, a hotel and a mall) in North Dakota, US. *Low Keng Huat: Exercised options to purchase 36 balance units at Balestier Tower for $63.9m *SGX: Launched the SGX Liquidity Hub at HKEx Data Centre in Hong Kong, with five firms on board. Separately, SGX’s derivative unit, SGX-DT opened its HK branch yesterday to focus on serving customers keen on using its suite of Asian derivative products. *HL Global: Completed the acquisition of Augustland Hotel, which owns the 269-room Copthorne Hotel Cameron Highlands. *Vibrant: Completed the purchase of Cecil House at Cecil Street. *Noble: Issued 1.9m shares to CEO Yusuf Alireza and 5m shares to Executive Director William James Randall, in lieu of their bonuses for last year. *Singapore Land: Received approval-in-principal from SGX to delist.