SG Market (15 Jul 14)

US Market: US shares ended higher, lifted by better-than-expected earnings from Citigroup and a flurry of healthcare M&A deals. The DJIA gained 112 pts to 17,055 (+0.6%), while the S&P 500 advanced 10 pts to 1,977 (+0.5%) and the Nasdaq Composite added 25 pts to 4,440 (+0.6%). The VIX or measure of market volatility retreated 2.2% to 11.82. Banking giant Citigroup rallied 3% as stronger trading revenue and lower credit costs helped 2Q profit beat estimates even as it reached a US$7b settlement to resolve government claims regarding the sale of mortgage-backed securities before the 2008 financial crisis. This led other financial shares higher including Morgan Stanley (+1.3%), Goldman Sachs (+1.3%), BofA (+1.2%) and JPMorgan (+0.9%). Facebook (+2.4%), Netflix (+2.9%) and Amazon (+2.6%) paced gains in Internet stocks. Apple climbed 1.3% on a broker upgrade, while the DJ Transportation index rose 0.7% to a record. But utility stocks dipped 1.2%. Newmount fell 2.4% as gold tumbled 2.3%, the most in almost seven months. Among M&A activities in the healthcare sector, with Dublin-based Shire Pharmaceuticals succumbed to a higher £31b offer from US drugmaker AbbVie (-0.2%) while separately, Mylan (+2.1%) is buying over Abbot Lab’s (+1.3%) branded generic business outside the US in a US$5.3b deal. Goldman Sachs raised its S&P 500 forecast for 2014 to 2,050 from 1,900, citing rising earnings, faster economic growth and low T-bond yields will push equities higher as investors seek better returns. The S’pore market may take cue from the strong finish on Wall Street and firm morning trades in Tokyo (+0.7%) and Seoul (+0.8%), with the STI heading towards the upside objective of 3,310 with immediate support at 3,270. Stocks to watch: *Noble: Together with EIG Global Energy Partners, has formed Harbour Energy – a company that will own and operate upstream and midstream energy assets globally. Noble will be the preferred offtake and marketing partner of Habour Energy, while EIG will serve as manager of the company and oversee the acquisition of assets. Habour Energy will be initially funded with US$150m from Noble and US$50m from EIG, and subsequently intends to raise at least another US$2b from a few institutional investors. *Ezion: Received a letter of a intent for a contract valued up to ~US$146m over a five-year period including extension options, to provide a service rig to be used by a Southeast Asian based national oil company to support its oil & gas activities in Southeast Asian waters. The service rig is expected to be deployed by 3Q16. *ST Engineering: Its aerospace arm has clinched $520m worth of orders in 2Q14 covering airframe, component and engine maintenance, freighter conversion, cabin modification, engine wash and pilot training. The contracts include a five-year deal with a regional US carrier for the heavy maintenance of 42 Embraer E-170 and E-175 aircraft at its US facility. For the quarter, the unit redelivered 229 aircraft for airframe maintenance and modification work. *Sembcorp Industries: Increased stake in Thermal Powertech Corp India, which is developing a 1,320MW coal-fired power plant in Andhra Pradesh, India, by another 16% to 65% at a cost of $83.7m. Commercial operation of the first unit is scheduled to commence in 4Q14 with the second unit expected to be completed in 2015. *Otto Marine: Secured charter contracts worth ~US$404m in 1H14. Otto’s order book stood at ~US$450m as at 30 Jun ’14, with an average contract tenor of 3 to 5 years. *CSE Global: Bagged two projects worth a combined $27m, involving i) the supply of telco and CCTV equipment support services for a customer’s offshore facilities in the Bayu Undan field located in the Timor Sea and at the Darwin LNG plant, and ii) an order for a chemical injection system for a deepwater floating production facility in the Gulf of Mexico. *Miyoshi Precision: MOU with Promise New Energy Development to set up a 55% JV to develop, manufacture and sell light electric vehicles in China. The company is currently embarking on an active corporate restructuring exercise to turn around its financial performance. *CNA: Signed MOU with Jilin Mailong Xuntong Electronic Products (JME) to install and maintain traffic monitoring and CCTV systems in Jilin province, China. *Oxley: Terminated its proposed acquisition of land in Kuala Lumpur, after the purchase was cancelled by the M’sian government, and the group has been fully refunded the deposit of RM8m. *SIIC Environment: Completed its 1b share placement to placement agents Jefferies and Credit Suisse at $0.158/share. *LionGold: SGX has granted extension of time for LionGold to announce its upcoming results – until 6 Nov ’14 for 1QFYMar15 and until 5 Dec ’14 for 2QFY15.