SG Market (19 Aug 14)

US Market: US shares rebounded, recovering some of last week losses, helped by easing Ukraine-Russia tensions, improving housing sentiment and deal news. The DJIA rallied 176 pts to 16,839 (+1.1%), while the S&P 500 added 17 pts to 1,972 (+0.9%) and the Nasdaq Composite gained 43 pts to a 14-year high of 4,508 (+1.0%). The CBOE Volatility Index, a barometer of investor anxiety, fell 6.3% to 12.32. Markets opened higher and stayed near their highs for most of the session, with no major economic data release to set the direction for the day. Geopolitical tensions that had whipped markets around subsided, after Ukraine foreign minister met his Russian counterpart in Berlin and was reported to have made some progress in the talks. Elsewhere, Iraqi and Kurdish forces, backed by US air power, re-took control of the Monsul Dam from Islamist militants, while in the Gaza, Israeli and Palestinian negotiators agreed to extend the truce to buy more time to thrash out a long term accord. Homebuilders climbed 2.1% following a report which showed housing confidence rose in Aug to its highest level in seven months, with Lennar Corp (+1.7%) and DR Horton (+1.4%) leading the gains. Meanwhile, airlines soared as Brent crude slid 1.8% to a 14-month low, sending Delta Airlines (+2.5%) and Southwest Airlines (+3.6%) higher. Among other key stocks in focus, Dollar General surged 12% after the discount retailer counter-offered US$9.7b to buy over Family Dollar, topping rival Dollar Tree’s bid. Monster Beverage lost 5.4%, giving up part of its 30.5% gain last Fri after Coca-Cola made a US$2.2b purchase of a 17% stake in the energy drink company. About 5.1b shares were traded on US exchanges, 12% below the three-month average. All eyes and ears will be on the annual Fed summit which begins on 21 Aug in Jackson Hole, where central bankers will discuss on the outlook for the economy and monetary policy. Previous conferences there have preceded some of the biggest policy shifts since the global financial crisis. S’pore shares are expected to regain some composure from the strong rebound on Wall Street. Technical indicators have also corrected from their overbought levels and are turning positive with the STI likely to test the upper limits of its 3,320-3,280 trading range. Stocks to watch: *Olam: Sells 25% stake in its packaged food business to Sanyo Foods (Japan’s 3rd largest noodle maker) for US$187.5m (rising to US$212.5m upon meeting specific performance targets), pricing the deal at 2x P/B. The strategic partnership would enable both companies to capitalise on growth opportunities in sub-Saharan Africa. Group will book US$80.8m gain to reserves. *Nam Cheong: Secured four contracts worth US$90m for a platform supply vessel, accomodation work vessel and two anchor handling towing supply vessels. The vessels are expected for delivery in 2014 and raises cumulative order book to RM2b ($790.1m). *Nam Cheong/ Marco Polo Marine: Both parties entered into a 50/50 JV, which secured a five-year charter contract for an accomodation work vessel worth US$27m from a regional growing O&M service provider. The JV will combine Nam Cheong's shipbuilding capabilities and Marco Polo's chartering expertise to seize opportunities in the region. *SBI Offshore: Secured US$24m contract for the design and engineering of a jack-up drilling rig, from a consortium of six Mid-East/Chinese parties that have interests in O&G activities. *GLP: Signed lease agreement for 6,500 sqm at newly completed GLP Atsugi in Greater Tokyo with SENKO, one of its largest largest customers in Japan and a major third party logistics provider in Greater Tokyo. *Lian Beng/Heeton/KSH: Teamed up to co-develop a A$150m mixed-use site in Brisbane's Fortitude Valley. The residential portion, comprising two towers with 324 apartment units, will be undertaken by a development JV with Heeton (18.2%), Lian Beng (9.9%) and KSH (5%) minority stakes and Australian counterpart Marvel Investment holding the balance 67%. The second component is 70/30 JV between Heeton and Lian Beng to develop a 198-room hotel to be ready in 2-3 years. *OKH Global: Acquiring 15% stake in Pan Asia Logistics Holdings, an established logistics and supply chain solutions provider, for $21.5m. The proposed acquisition will enable the group to gain immediate access to a fast growing and established logistics and supply chain solutions provider with extended reach to new geographical markets. *CapitaLand/Ascott Residence Trust: CapitaLand completed the sale of three serviced residences - one in Malaysia (Somerset Ampang KL), two in China (Citadines Zhuankou Wuhan, Citadines Caoxin Xi’an) - to ART. This marks ART’s expansion into Malaysia, bringing its portfolio to 86 properties across 34 countries. *Geo Energy: Completed its 66%-stake acquisition of Borneo International Resources for US$55m, raising the group's coal reserves from 11m tonnes to 40m tonnes.