SG Market (10 Jul 14)

US Market: US shares rebounded from a two-day slide as optimisim over corporate earnings overshadowed Fed meeting minutes signaling an end to its five-year stimulus effort in Oct. The DJIA gained 79 pts to 16,986 (+0.5%), while the S&P 500 advanced 9 pts to 1,973 (+0.5%) and the Nasdaq Composite added 28 pts to 4,419 (+0.6%). Markets initially turned lower after minutes of the latest FOMC meeting indicated the central bank plans to wind up its asset purchases in Oct but it reaffirmed that a rate hike is not imminent as long as projected inflation rate continued to run below the 2% longer term target. Policy makers however expressed concern that investors could be growing complacent on the economic outlook and that the central bank should monitor excessive risk-taking. Investors however were quick to brush aside this, and instead chose to focus on Alcoa’s (+5.7%) better-than-expected earnings on the strength of its aluminum smelting business. Among other stocks in focus, Facebook rose 3.5% on bargain hunting, while American Airline rose 4.3% after raising its 2Q margin forecast on strong travel demand. This lifted other carriers Southwest Airlines (+1.9%) and Delta Air Lines (+1.4%) About 130 companies in the S&P 500 are scheduled to release its earnings over the next two weeks, incuding Citigroup, JPMorgan, Goldman Sachs and Johnson & Johnson. Estimates by Bloomberg suggest that earnings for the S&P 500 companies in 2Q probably rose by ~5%. S’pore market is likely to remain range-bound with no clear directional moves from Wall Street and tracking mixed openings in Tokyo (-0.1%) and Seoul (+0.1%). Underlying supports for the STI are seen at 3,270/3,220 with near term resistance at 3,310. Stocks to watch: *Starburst: Strong response for its IPO, priced at $0.31/share. Notable investors in the placement tranche of 48m shares include Alan Wang's Asdew Acquisitions (10m) and Eastspring Investments (6m). Post-offering, Starburst will have a share base of 250m. The counter debuts today at 9am. *SIA Engineering: Formed 49/51 JV based in S’pore with Boeing, called Boeing Asia Pacific Aviation Services, to provide fleet maintenance and engineering services to airlines in the Asia-Pacific and beyond. Contracts for service under the new partnership have already been signed by Scoot and SIA. *Unionmet: 2QFY14 net loss of US$2.2m vs net profit of US$0.3m a year ago, dragged by a one-off disposal loss of US$1.9m due to write-down on assets. Revenue however, improved 10% to US$6m mainly from trading in aluminium and zinc and related products. Management expects the trading business to be challenging and will continue to seek to diversify into property development and oil blending and distribution. *GSH/Serial System: GSH is selling its entire trading and distribution business, comprising GSH Franchising, GSH Corp (FE) and GSH (Mid-East) to Serial for FY14 NAV plus US$2.4m. The sale is in line with GSH's intentions to diversify into the property business and building construction & materials in China and Asean. For Serial, the acquisition will help the group expand its upstream product lines and ranges, as well as customer base. *Technics Oil & Gas: Awarded contracts worth $6.2m involving the supply of gas booster compressors for production facilities, and gas compressor skids for the FSO Vapor Recovery Project in Vietnam. *CNMC Goldmine: Its Sokor gold project produced 4,356.47 oz of gold dore bars in Jun, the highest monthly output since the start of gold production in Jul ‘10. *Miyoshi Precision: Disposing its unoccupied factory cum office building (0.57ha) located in Senai for RM4.7m. *Noble: Reported to have submitted the only valid bid to supply PetroEcuador with 360,000 barrels of A-1 jet fuel. *Delong: Disclosed that Executive Chairman and controlling shareholder Ding Liguo remains in confidential discussions with various parties in relation to a possible transaction involving Delong shares. *Goodpack: Received consent from holders of all but one of its six series of bonds, to waive certain conditions, in relation to the proposed takeover by KKR.