SG Market (10 Sept 14)

US Market: US stocks suffered its steepest one-day drop in five weeks, consolidating from recent strong gains as a rally in Apple petered after its much-awaited product launch. The blue-chip DJIA slid 98 pts to 17,014 (-0.6%) and the broad-based S&P 500 lost 13 pts to 1,988 (-0.7%), while the tech-heavy Nasdaq Composite slumped 40 pts to 4,552 (-0.9%) and Russell 2000 index of smaller companies tumbled 1.2% for its biggest decline since Jul. The CBOE Volatality index jumped 6.6% to 13.5 as bond yields climbed to their highest in a month on concerns that improving economic conditions may force the the Fed to raise interest rates sooner than anticipated. Benchmark 10Y Treasury yields rose 3bps to 2.5%. All sectors dropped with financials, utilities and telecoms losing more than 1%. Banks bore the brunt of the selling after the Fed guided for more stringent capital reuqirments to ensure that the financial system is not placed at risk. The news sent Morgan Stanley (-2.7%), Goldman Sachs (-1.5%) and JPMorgan (-1.4%) into the red. Apple wiped out an earlier 4.8% gain to end 0.4% lower following the release of two bigger screen iPhones, Apple Watch and ApplePay, with investors being reportedly disappointed that the latest gadgets were not game-changers. Online retail giant Amazon sank 3.7% after it slashed the price of its Fire smartphone from US$199 to US$0.99, while navigation kit maker Garmin tumbled 3.5% after Apple introduced a mapping app on its new smartphone. Apple’s reversal led to a broader technology sell-off, with Yahoo (-2.5%), eBay (-2.8%) and Intel (-1.2%) all closing down. Among other stocks in focus, Home Depot lost 2.1% after confirming that its payment data systems had been breached, while McDonald’s declined 1.5% after reporting Aug global same-store sales fell 3.7% following a food safety scandal in China. About 5.8b shares were traded on US exchanges, 4% above the three-month average. Declining issues outnumbered advancing ones by more than 3 to 1 on the NYSE. Despite the retreat, Wall Street strategists have been raising their targets for the S&P 500, joining increased forecasts from Morgan Stanley, Deutsche and Goldman Sachs. S’pore shares are poised for a shallow correction following the long overdue pause on Wall Street, with the STI is likely to stay within its 3,320-3,380 consolidation range. Stocks to watch: *Olam: Investing US$80m in a new dairy processing facility in central Uruguay. The new plant, expected to commence operations in 2017, will have an initial daily capacity of 0.6m litres of milk, and a maximum daily capacity of 1m litres. It will produce dairy products ranging from whole milk powder to butter, for export to countries such as Russia, Middle East, Eastern Europe and Africa, as well as neighboring countries. *Lian Beng: China’s Nanshan Group said to be in talks to buy the former Midlink Plaza site in Middle Road for ~$270m. The property, which is currently being developed into a hotel, was acquired in Oct ’11 for $126.8m by a consortium which includes Lian Beng (19% interest). *Sim Lian: awarded tender for a land parcel at Choa Chu Kang Drive for EC development. The site has an area of 19,058sqm and potential GFA of 53,362sqm. *GLP: Signed three new lease agreements totaling 83,000 sqm with three leading logistics companies in Eastern and Midwestern China. GLP is also extending strategic partnerships with Sinotrans and Best Logistics. *ST Engineering: Its aerospace unit, VT Mobile Aerospace Engineering (VT) and the City of Pensacola have signed an agreement to set up an aircraft maintenance, repair and overhaul (MRO) facility at the Pensacola Int’l Airport in Pensacola, Florida. Pensacola will construct an aircraft hangar complex on 18.66 acres of greenfield land, and lease it to VT for 30 years. The hangar will be able to accommodate two wide-body aircraft, and is expected to commence operations by mid-2016. *SPH: Acquired Asia’s leading online luxury publication, Luxury-Insider.com from WhiteWave Media Group. *Neo Group: 1HJan15 net profit dipped 9% y/y to $2.5m, mainly due to higher labor cost and rent. Revenue rose 21% to $28m, driven by higher sales for the food catering and food retail businesses. Declared interim dividend of 1.05¢ (1H14: 1.16¢). *Yamada Green: Acquiring a 10-year lease for a moso bamboo plantation for Rmb234.5m. The plantation, situated at Jiangle County, Fujian Province, China, has gross land area of 67,000 mu and will triple Yamada’s moso bamboo plantation size to 100,845 mu. *SunMoon: Letter of Intent with global agribusiness, Giumarra to set up two JVs in the US, to engage in the sourcing for, acquiring, sale and distribution of fresh fruits and vegetables. *SGX: To ink a letter of intent to build a trading bridge with the Taiwan Stock Exchange to facilitate cross-border securities trading. *Interra Resources: Its 60% JV GoldPetrol has commenced drilling development well CHK1192 in Myanmar. Results to be available in approx 6 weeks and drilling costs are expected to be low. *W Corp: Removed from the SGX Watch-List wef today.