SG Market (02 Sept 14)

Global Markets: US market closed for Labour Day holiday. European stocks advanced in final hour of trading as EU governments weighed further sanctions on Russia and investors awaited an ECB meeting this Thu. The Euro Stoxx index rose 2 pts or 0.1% to 3,175, while UK’s FTSE 100 and Germany’s DAX gained less than 0.1%. But France’s CAC slipped less than 0.1%. Markit’s manufacturing PMI for eurozone slumped in Aug to a 13-month low in a further sign that the recovery is faltering, impacted by the Ukraine crisis. While manufacturing activity in Germany and Spain continued to expand albeit at slower rates, Italy has joined France on contraction mode. The downbeat readings add more pressure on ECB to introduce more aggressive stimulus after ECB President Mario Draghi signaled policy makers are considering bond purchases to combat persistent deflation. Growth in the Eurozone has stagnated in 2Q, while inflation eased to 0.3% in Aug. Meanwhile, pro-Russian separatists attacked two Ukraine coast guard vessels for the first time in the conflict, prompting EU leaders to threaten more sanctions that may target Russian energy and finance industries. In China, the official PMI for manufacturing fell to 51.1 in Aug, down from 51.7 in Jul and the first decline since Feb. Separately, the HSBC PMI reading of 50.2 for Aug fell from an 18-month high in Jul to a three-month low. The weak PMI data suggests that China’s economic recovery is starting to lose momentum, stunted by the property market correction that might warrant further easing measures. S’pore shares are facing flagging interest as investors are not showing any signs of buying conviction amid a host of confusing signals and lack of clear catalysts. With momentum indicators turning towards the downside, the benchmark STI has dipped below its immediate support at 3,320 with next objective at 3,280, while topside resistance remains at 3,380. Stocks to watch: *Olam: Selling its dairy processing plant in Cote d’Ivoire to Royal FrieslandCampina for US$18.7m, excluding working capital. In addition, Olam will assign its trademark “Pearl” for US$6.3m, providing Friesland the right to use the trademark for sweet condensed and evaporated milk products in certain designated countries in Africa. Olam expects to book a one-time pre-tax gain of ~US$10m upon deal completion in 2QFY15. *Croesus Retail Trust: Acquiring One's Mall, a large-scale retail shopping complex located in Greater Tokyo, for ¥11b ($132.5m). The acquisition will be financed by debt (¥6,150m), fixed rate notes (¥500m) and the remaining via a private placement of 78.9m new units at $0.915 each. One's Mall has net lettable area of 52,844 sqm, of which 99.4% are occupied with weighted average lease to expiry of 5.8 years. *STATS ChipPAC: Potential suitor Jiangsu Changjiang Electronics Technology has clarified that discussions to explore an acquisition still at a preliminary stage and cautions there is a low likelihood of reaching any definitive agreement within the next three months. *TA Corp: Investing $114m to build a 9,200 bed worker dormitory at a 37,171 sqm site in Tuas. *Genting HK: Its 28% owned Norwegian Cruise Line (NCL) is in advanced talks to acquire Prestige Cruises International for ~US$3b. Private equity firm Apollo Global Management owns both Prestige Cruises, and a 20% stake in NCL. In 2013, NCL posted revenue of US$2.6b (+13%), while Prestige recorded revenue of US$1.2b (+6%). *METech: Entered into a strategic partnership with R-Logic International to venture into the electronic equipment repair business. *Biosensors: Welcomes new CEO Jose Calle Gordo, who has 25 years of broad business and management experience in the medical devices industry. *Trek 2000: Labelled “trade with caution” by SGX, after company said it is not aware of any reasons that could explain the substantial 21.4% increase in share price between 28 Aug and 1 Sep. *ecoWise: Issues profit warning for 3QFY14 and 9MFY14, mainly due to an impairment loss attributable to Changyi Enersave Biomass to Energy. *SGX: Consulting the public to provide retail investors access to bonds currently offered to institutional and accredited investors via 1) offer wholesale bonds, initially denominated in $200,000 or above, in smaller lot size six months after listing and 2) allow issuers to make subsequent offers of new bonds with the same terms as the seasoned bonds to retail investors directly. The regulatory framework applies to plain vanilla bonds with initial minimum principal amount of $300m and a maximum tenure of 10 years.