SG Market (16 Sept 14)

US Market: US shares closed mixed but Internet and small cap stocks were sold down heavily as investors unloaded riskier positions and cleared the deck ahead of key Fed policy meeting and Alibaba’s IPO debut later this week. The clue-chip DJIA rose 44 pts to 17,031 (+0.3%), while the broad-based S&P 500 dipped 1 pt to 1,984 (-0.07%) and the tech-heavy Nasdaq Composite sank 49 pts to 4,519 (-1.1%), its biggest drop since Jul. The mixed trade followed disappointing US industrial production data, which unexpectedly fell 0.1% in Aug, marking its first fall since Jan. Investors also exercised caution ahead of the Fed’s FOMC meeting on Wed, which could provide guidance on the timing of an interest rate hike. Investors were also focused on the upcoming Alibaba’s listing, taking profit on high-flying tech stocks, to raise cash for investing into the Chinese online giant. Prominent tech names, including Facebook (-3.7%), Twitter (-5.2%), Tripadvisor (-4.1%), Netflix (-4%) and Amazon (-2.2%) all fell. Tesla tumbled 9.1% after Morgan Stanley warned that the stock’s upward trajectory may slow as progress of electric cars has been bumpy. Mocrosoft lost 1% after announcing plans to acquire Mojanga, a video game franchise, for US$2.5b. Among other stocks in focus, energy stocks rebounded with Chevron and ExxonMobil up 1.3% and 0.5% respectively, while Molson Coors Brewing rallied 5.9% led by merger activity among brewers. Biotechnology company Gilead Sciences dropped 2.6% after reaching licensinf deals with seven Indian drug firms to produce cheaper versions of its hepatitis C pill in over 90 countries. Volume was modest with about 5.51b shares exchanging hands. Declining issues outnumbered advancing ones by about 2 to 1 on the NYSE and 3 to 1 on Nasdaq. S’pore shares are likely to stay in the doldrums with uncertainty over the FOMC meeting on Wed, referendum on Scotland’s independence on Thu and renewed fighting in Ukraine. The STI has also broken below its 20 and 50-dmas with technical indictors signaling for a correction. Downside support for the index is at 3,280 with topside resistance remaining at 3,380. Stocks to watch: *Property: Latest URA data showed that private residential sales continue to decline, with developers selling 432 units (excluding ECs) in Aug, 15% below the 509 units sold in Jul. The weak sales were partly attributed to existing property cooling measures with no new projects launched during the month. From Jan-Aug '14, 5,350 new private homes were sold vs 11,180 units sold in corresponding year-ago period. Consultants expect totoal number of units sold this year to range from 8,000-9,000. *Ezion: Secured US$76m contract, including extension options, to provide a service rig to be used by a SE Asian national oil company over a 3-year period to support its oil & gas activities, starting end-2016. *Swissco: Acquired first liftboat for US$56m, which is expected to be completed within 2 years and deployed in SE Asia. The liftboat will be able to operate in water depths up to 70m and has accommodation for 120 offshore personnel. *Triyards: Won another liftboat contract worth US$50.5m to take order book to over US$200m over next 3-4 years. The new unit is scheduled for completion in 2016. *QT Vascular: Enrolled its first European patients in the ENDURE Trial in Germany. Multiple patients have already been enrolled in this study in New Zealand. The study is a single-arm core-lab adjudicated multi-center clinical trial conducted to evaluate the efficacy of Chocolate Touch drug-coated balloon at intervals of 30 days, 3 months, 6 months and 12 months. *SIA: Aug operating data. SIA passenger carriage grew 0.3% y/y, while capacity fell 0.5%. Consequently, passenger load factor (PLF) was 0.7ppt higher at 83.1%. Silkair’s passenger traffic rose 3.7%, just behind capacity growth of 4%. As a result, PLF dipped 0.2ppt to 71.5%. Overall cargo load factor improved 1.2ppt to 61.3% as a 3.8% reduction in traffic was matched by a 5.7% reduction in capacity. *GLP: Leases 112,000 sqm of space to a large state-owned consumer goods company in Midwestern China. This is a new customer relationship. *Frasers Commercial: Secured $545m and A$135m syndicated term loans to refinance all outstanding loan facilities. The new loans will extend its weighted average debt maturity to 4.3 years. *Xpress: Proposed placement of 480m new shares at $0.021 each to help repay creditors has fallen through as subscribers Strong Core Global and Ma Jing failed to complete deal. The group is facing winding-up application from its creditors. *PSL: Expiry of non-binding MOU to purchase shares of Longmen has been extended to 13 October 2014.