SG Market (18 Sept 14)

US Market: US stocks edged up in volatile trading after the Fed renewed its pledge to keep interest rates near zeo for a “considerable time” after the asset purchases are completed in Oct and repeated concerns over the slack in the labour market. The blue-chip DJIA rose 25 pts to 17,157 (+0.1%), setting a new record, while the broad-based S&P 500 was added 3 pts to 2,002 (+0.1%) and the tech-heavy Nasdaq Composite advanced 9 pts to 4,562 (+0.2%). Markets gained ground after the Fed stood firm against policy hawks that wanted the central bank to move the timeline of interest rate hikes earlier even as it took another US$10b off its monthly bond purchases to US$15b, staying on course to end the program by Oct. This comes as consumer prices fell for the first time in nearly 1 ½ years in Aug and underlying inflationary pressure remain muted. However, Fed officials did raise their forecast for the fed funds rate to rise to 1.375% by end 2015 from previous estimate of 1.125% and to 3.75% at end 2017. Stocks trended higher during a a post meeting press conference where Fed Chair Janet Yellen reiterated significant underutilization in the labour market with inflation still running below its 2% target. But the gains eased off towards the close as the S&P 500 reached a technical resistance near its record intraday high. Seven of the 10 S&P sectors posted gains, with materials in the lead led by US Steel, which surged 9.7%, after the group shelved its costly plant expansions and guided for better-than-expected 3Q earnings. Homebuilders were also amongst the outperformers, after Lennar (+5.8%) posted earnings that topped estimates. Among other stocks in focus, package delivery giant FedEx gained 3.3% as its 1Q earnings beat expectations, while Dupont rallied 5.2% on calls to break up its chemeical and agricultural units. Cloud computing firm Rackspace Hosting tumbled 18% after rejecting bid offers and rebuffed investor calls to buy back shares. Volume was active with 6.1b shares traded, 9% above its three-month moving avarege. Advancing issues matched declining ones by 1 to 1 on the NYSE and 1.3 to 1 on Nasdaq. S’pore shares may see some rebound following the slightly dovish FOMC statement but trading is still expected to be range-bound between 3,280 and 3,380 given the lack of any strong market catalyst. Stocks to watch: *STATS ChipPAC: Updated that it now expects 3Q14 net revenue of $398-405m, 1-3% lower q/q against earlier guidance of 2-8% increase due to delay in wafer supply at several key customers and faster demand shift from the high-end smartphone space to the low end segment. Accodingly, adjusted EBITDA is revised to the 20-23% range (previous estimate: 20-25%) and capex cut to $165-185m (previous: $175-205m), including ~$80-90m for progressive construction of the new factory in Korea. *Mermaid: Awarded two saturation diving services contracts of 6-8 months duration, worth US$40-45m. The contracts will be serviced using a chartered-in DP3 multi-purpose support vessel ‘Bourbon Evolution’. Thie group has secured this vessel for a period of 8 months with a further option for an additional 8 month-extension to service additional work prospects. *Raffles Education: Acquires a 62-room hotel and facilities, seven commercial units (911 sqm) and a plot of land with teaching building and dormitories, in Nendaz, Switzerland for CHF29.1m ($39.8m). This is to establish a hospitality management, design and a Swiss International Baccalaureate school, marking its maiden entry into Europe. Following this deal, the group will have three related business lines to drive its future growth – premier private education, management of education assets and facilities, and education-related real estate investment and development. *Xpress: Partnering logistics giants UPS Singapore and Shun Feng Express, China’s largest courier by network, to offer new value added documentation services to business clients, as well as expand its international business and retail customer base. In addition, the group has also sealed reseller agreements with some branded suppliers for a wide range of corporate gifts and premiums. *Swissco: Received approval-in-principle for the listing of 62.7m new shares to be issued upon the exchange of up to 22m redeemable exchangeable preference shares in each of S&E Offshore Investments and S&E Offshore Investments 2. *SGX: Consulting the public on details of the minimum trading price requirement for mainboard listed stocks and proposed changes to the existing watch-list with minimum price as a criterion. The minimum trading price requirement and adjustments to existing watch-list requirements is expected to take effect from Mar’16