SG Market (05 Sept 14)

US Market: US stocks closed lower, retreating from intraday records as decline in energy producers sapped an earlier rally following ECB’s new stimulus measures. The blue-chip DJIA dipped 9 pts to 17,0070 (-0.05%), while the broad-based S&P 500 slipped 3 pts to 1,998 (-0.15%) and the tech-heavy Nasdaq Composite lost 10 pts to 4,562 (-0.22%). Markets initially reacted positively to the surprise interest rate cuts by the ECB, which pared its key refinancing rate to 0.05% from 0.15%. The central bank also lowered its deposit rate to -0.2% from -0.1% and looked to launch an asset purchase plan to ward off deflation. Economic data showed the US services sector expanded in Aug at its fastest pace in nine years, a sign of growing momentum in the US economy. Meanwhile, jobless claims rose slightly to 302,000 last week, but remained near an eight-year low, while the private sector hiring came in at 204,000 last month, a bit less than expected. But equities saw a late pullback as investors await Fri’s closely-watched Aug employment data with expectations of a 225,000 jobs growth. Markets are also overextended after a big run-up over the past four weeks. The energy sector was the worst performing, sinking 1.3% as crude oil prices slid 1.1% to US$94.55 on a stronger USD, sending both Chevron and ExxonMobil 0.8% lower. US-traded shares of BP plunged 5.9% after a US judge ruled the oil firm grossly negligent in the 2010 Gulf of Mexico oil disaster and liable for a massive fine of up to US$18b. Amazon added 2$ after announcing a venture to enable authors to publish children books on its Kindle reader. Big box retailer Costco jumped 3.1% after reporting a sales increase in Aug. PVH Corp surged 9.6% after its 2Q ernings beat expectations, bolstered by sales of Tommy Hilfinger and Calvin Klein clothes. Yum Brands, which owns KFC, Pizza Hut and ither fast food chains, fell 0.9% on continued poor sales in China foolowing a food scandal involving expired meat supplies. About 5.6b shares were traded on US exchanges, 2% above the three-month average. S’pore shares may remain muted following the softer close on Wall Street with the STI continuing to be range-bound between 3,380 and 3,280. Stocks to watch: *Ascendas REIT: Parent, Ascendas, will be merged with Jurong Int’l Holdings, SingBridge and Surbana as part of a Temasek and JTC plan to create a giant infrastructure and development group to build cities in China. *Keppel Corp: Finalizing contracts on its second FLNG vessel conversion for Golar, marking the exercise of the first of two options that Golar has. Recall, the first FLNG contract inked in Jul was worth ~US$735m. The current deal is expected to be firmed up by Oct, with full construction activities expected to commence between Jan ’15 and Nov ’15. Separately, KEP will acquire a 10% stake in the first FLNG vessel conversion project from Golar for consideration via grant of a US$21.7m shareholders’ loan. *Linc Energy: Commenced operations as part of its three well drilling program to prove up the deeper parts of the Arckaringa Shale Oil & Gas Basin in South Australia. The first rig is expected to roll onto site in late Sep ’14 with spudding of the first well to occur shortly after. *Charisma: Secured a seven-year contract worth US$72m to provide a fleet of five offshore support vessels to support the marine and oil & gas activities of a Middle Eastern national oil company in the Arabia Sea. The project will be funded through internal resources as well as bank borrowings and is expected to commence in 3Q14. The group expects a positive impact to FY14 financials. Separately, there were changes in key management, with replacements for the CEO and CFO roles. *Sim Lian: Emerged as the top bidder with a $207.4m ($361 psf ppr) bid for a land parcel at Choa Chu Kang Drive, near to the Choa Chu Kang MRT Station. Consensus was expecting a bid range of $320-$350 psf ppr. The 1.9ha site is expected to yield ~535 executive condo units, with breakeven estimated at $700-$720 psf. *TIH: Wholly-owned subsidiary TIHT will acquire a portfolio of assets, including minority stakes in Mitsui Life Insurance Co and CEO Contract Manufacturing, for total consideration of $129m, payable partly in cash, and by issue of shares amounting to a 45% stake in TIHT. The sellers, Republic Technologies and Baytree Investments are owned by Temasek. TIH expects further partnerships with Republic, Mitsui Life and CEI in the future. *Sunmoon Food: Acquiring a 51% stake in global fresh fruits and vegetables procurer, Ban Fresh, for $5.6m. The customer base of Ban Fresh in Singapore consists of domestic wholesalers and supermarket chains whilst its supplier base includes growers and packers from countries such as Australia, Argentina, China, France, New Zealand, Spain, Malaysia, Thailand and South Africa. *Asia-Pacific Strategic: FY14 net loss widened to RM5.0m from a RM4.3m loss a year ago, weighed by a 29% y/y rise in general and admin expenses to RM4.9m. Revenue remained in consequential at RM0.2m, as the group remains in process of disposing its existing bereavement care business to pursue the reverse takeover of Coeur Gold Armenia. *OKP: Obtained consent judgement against two individuals for total payments amounting to ~$4.7m.