SG Market (18 Aug 14)

US Market: US stocks pared early losses to end mixed as renewed violence in Ukariane sparked a rally in oil prices and energy producers. The DJIA dropped 51 pts to 16,663 (-0.3%), while the S&P 500 finished flat at 1,955 and the Nasdaq Composite added 12 pts to 4,465 (+0.3%). The CBOE Volatility Index rose 5.9% to 13.15, halting a five-day decline. In economic data, industrial production rose 0.4% in Jul but the New York Fed Empire manufacturing gauge fell more than forecast and consumer confidence unexpectedly declined in Aug to the lowest level since last Nov. Markets came under pressure after Ukraine troops shelled a Russian armed convoy that crossed the border, while Russia called for a ceasefire to to facilitiate the delivery of aid supplies. The Ukarine unrest helped pushed oil prices higher with WTI crude rising 1.9% to US$97.35 a barrel and investors switched to safe haven bonds, sending the 10Y Treasury yields to 2.35%. Among the gainers, Anadarko Petroleum (+2.2%), Cimarex Energy (+2.5%) and Kinder Morgan (+3.9%) led a 0.5% advance in the oil and natural gas producers Monster Beverage soared 30% after Coca-Cola (+1.7%) agreed to take a 16.7% stake in the company for US$2.2b. Applied Materials jumped 6.3% as its 3Q earnings beat expectations and the chip equipment maker forecast better-than-expected 4Q sales. Retailer Nordstrom slid 5.2% after its 2Q sales missed estimates, while JC Penny fell 2.5% despite reporting a smaller 3Q loss and growing sales, on questions about the sustainability of its turnaround. About 6.0b shares were traded on US exchanges, 6% above the three-month average. S’pore shares may tick up as technical indicators have corrected from their overbought levels and are turning positive again even though corporate newflow have dried up following the end of the 2Q results season. The STI is likely to advance towards the upper end of its 3,320-3,280 trading range. Stocks to watch: *OCBC: Proposed to issue 440m rights shares on a 1-for-8 basis @ $7.65 or a 25% discount to the last traded price. The rights issue will raise $3.32b to strengthen its balance sheet and part finance the $6.2b acquisition of Wing Hang Bank. *Memstar: Asdew Acquisitions (owned by high profile stock investor Alan Wang), has ceased to be a substantial shareholder after the fund reduced its stake from 5.82% to 4.49%, via the sale of 35.4m shares @ $0.015 in the open market. *JES Int’l: Granted court order against vendor Yang Shushan for breach of a 12-month post-share sale moratorium relating to its proposed purchase of a 51% stake in SCIBOIS, which in turn owns an effective 75% stake in a Congo forestry concession. Apparently, 60m JES sale shares issued to Yang were transferred to a sub-depository agent account. This puts the completion of the SCIBOIS deal at risk. *SIA: Jul operating data. SIA pax carriage was flat y/y, while capacity fell 1.0%. As such, passenger load factor (PLF) was 0.9ppt higher at 81.7%. SilkAir passenger carriage rose 5.9% y/y, while capacity rose 5.4%, and PLF increased 0.4ppt to 70.5%. Overall cargo factor improved 1.0ppt to 62.5% as a 3.2% drop in cargo traffic was matched by a 4.8% drop in capacity. *China Merchants: Received in-principle approval for listing of 119.4m new shares to be issued for the acquisition of Hong Kong Honest Queen International Investment.