SG Market (18 Jul 14)

US Market: US shares tumbled with the broad-based S&P 500 posting its biggest one-day percentage drop since Apr on a heavy selloff amid intensifying geopolitical tensions in Ukraine and Mid-East, headlined by a Malysian plane crash. The DJIA fell 161 pts to 16,977 (-1%), while the S&P 500 sank 23 pts to 1,958 (-1.2%) and the Nasdaq Composite lost 63 pts to 4,363 (-1.4%). The VIX or Wall Street’s fear gauge surged 32% to 14.54, its highest level since Apr 2013. Equities initially fell after the US and EU imposed sanctions against Russian banks, energy companies and defence firms in the latest attempt to end its support for Ukraine rebels. Adding to the pressure, Israel began a ground invasion in Gaza, stoking concerns of a widening conflict. Markets extended losses after a Malaysian B777 aircraft was shot down near the border, killing at 298 passengers on board. The disaster sparked a flight to safety in safe haven assets like gold (+1.4%) and US government bonds, pushing down 10Y Treasury yields to 2.47% (-7bps). Economic data showed housing starts unexpectedly declined in Jun to a nine-month low but initial jobless claims dropped to 302,000 last week, suggesting further healing in the labour market and Philadelphia Fed’s factory index improved. Airlines slumped the most with Delta Air Lines (-3.4%), American Airlines (-4.1%), United Continental (-3.5%) and Boeing (-1.2%) all dropping. Energy and inustrials also retreated at least 1.5%. News of the plane crash overshadowed a busy day of corporate results. Chipmaker Sandisk (-14%), fast food chain Yum Brands (-6.9%) and toymaker Mattel (-6.6%) all tanked as sales fell short of estimates. Morgan Stanley dipped 0.6% despite beating expectations by a wide margin. Among the gainers, UnitedHealth rose 1.6% on sales that beat estimates. Microsoft rallied 1% on news of 18,000 job cuts. Google (+1.6%) and IBM (+1.3%) rose after the close, after reporting quarterly results which were ahead of estimates. Weighed by the rising geopolitical risks and elevated US markets, the S’pore market is likely to open lower with downside support for the STI seen at 3,270. Stocks to watch: *CapitaCommercial Trust: 2Q14 distributable income spiked 7.6% y/y to $64.1m and DPU climbed 5.3% to 2.18¢, as gross revenue climbed 3.2% to $65.8m and NPI grew 3.5% to $52m. The positive results were buoyed by a 3.4% rental reversion, savings from lower interest expenses and release of retained income for distribution. Portfolio occupancy remained healthy at 99.4%, with long weighted average lease to expiry of 7.8 years. Gearing of 28.8%, with 2.4% average debt cost and a term to maturity of 4 years. NAV stood at $1.67. *GLP: Signed two new lease agreements totalling 23,000 sqm with two leading third-party logistics providers in China, which are seeking to strengthen their distribution capabilities in Central and Northern China amid increasing demand from the consumer goods industry. *StarHub: Signed three new partnerships yesterday - i) a seven-year deal with Sports Hub to become the National Stadium’s official telco partner, and to get the branding rights to the South West gate entrance, ii) a five-year deal to be the official broadcaster for the Women’s Tennis Association (WTA), and iii) a five-year deal to become the official telco partner of the BNP Paribas WTA Finals Singapore tournament this Oct. *Wing Tai: Chairman Cheng Wai Keung tells The Business Times that the group will not undertake delisting as a way to avoid paying extension charges for unsold units, under the current Qualifying Certificate (QC) rules for foreign housing developers. *Super: Ranked 31 out of Singapore’s Top 100 Brands in 2014 (2013: #40) with a brand value of US$201m (2013: US$150m) by Brand Finance. *Sheng Siong: Granted extension of lease from HDB for its Woodlands’ Centre Road till 30 Jun ’17. *Hiap Hoe: Says the Next Insight article dated 16 Jul was misleading and the rate of sales is not true. Company clarified that its Melbourne project was 85% sold in one week. *Sing Post: MAS has given approval for Alibaba to become a substantial shareholder under the Money-changing and Remittance Businesses Act. *Jaya: In response to SGX’s query on recent trading activity, company highlighted that the speculation of a reverse takeover from a Business Times article is unfounded.