SG Market (19 Sept 14)

US Market: US shares bolted to fresh records as investors welcomed the Fed’s commitment to low interest rates and on upbeat jobless claims data. The blue-chip DJIA jumped 109 pts to 17,266 (+0.6%), while the broad-based S&P 500 gained 10 pts to 2,011 (+0.5%) and the tech-heavy Nasdaq added 31 pts to 4,593 (+0.7%). The record closes marked continued investor euphoria from Wed’s Fed decision to keep interest rates would be kept near zero for a “considerable time” and enthusiasm over the impending IPO of Chinese e-commerce giant Alibaba. In economic data, investors shrugged off the disappointing Aug housing starts and focused instead on the 36,000 drop in jobless claims to 280,000, well below the median forecast of 305,000. Financial stocks outperformed, rising 1.1% as a group, on back of the central bank’s higher-than-expected interest rate forecasts for 2015 and 2016, sending Citigroup (+2.4%), JPMorgan (+1.7%), Goldman Sachs (+1.6%) and BofA (+1.6%) higher. Energy and utilities were amongst the biggest losers, following the 1.3% slide in crude oil price. Chevron slipped 0.5%, while ExxonMobil shed 1.0%. Among other stocks in focus, Alibaba rivals JD.com (+5.5%) and Vipshop (+3.4%) rose following Alibaba’s strong pricing ahead of its IPO, while Oracle fell 3% after its CEO Larry Ellison announced his decision to step down. Volume was active with 5.9b shares traded. Advancing issues outnumbered declining ones by 1.5 to 1 on the NYSE and Nasdaq. S’pore shares are likely to get a sligh lift from the record close on Wall Street with immediate topside resistance seen at 3,330 where the 20 and 50 dmas are converging. Downside support remains at 3,280 level. Stocks to watch: *Keppel Land/Keppel REIT: Keppel Land is divesting its one-third stake in Marina Bay Financial Centre Tower 3 to Keppel REIT for $1.25b, which works out to $2,790 psf ppr. After deducting for liabilities and five-year rental support, the outstanding consideration of $658.9m will be paid by way of $185m worth of new Keppel REIT units issued and $473.9m in cash to be part financed by a proposed placement of 195m units @ $1.17 to institutional investors. Keppel Land will realize a net divestment gain of $95.5m or 6.2¢ from the transaction and proforma NTA would rise to $4.58 from $4.52 gearing lowered to 29.1% from 38.3%. *Communication Design: Proposed placement of up to 245m new shares @ $0.12 to raise $29.4m, of which 95% of the proceeds will be used for potential acquisitions and investments, while the remaining will be set aside for general working capital. *Giken Sakata: Subsidiary PT Cepu Sakti Energy has entered into two cooperation agreements (Trembul Agreement and Gabus Agreement) with PT Sarana Patra Jateng to manage 24 and 46 old oil wells in Central Java in exchange for a substantial portion of the revenues arising from the oil produced. Both agreements are valid until Dec 2016, Separately, production of crude oil at existing Dandagilo-Wonocolo and Tungkul Oil Fields has increased to 880 bpd. *CNMC Goldmine: Installation of 350 tonnes/hour crushing system has been completed, and trial runs are being conducted. When fully commissioned, the new crushing system is expected to enhance the current gold production process. *SGX: Adding new Asian FX futures contracts on Chinese Yuan, Japanese Yen and Thai Baht. These new Asian FX contracts will be available for trading from 20 Oct ’14. Bank of China will be the pioneer market-maker for its Rmb futures and is SGX’s first Chinese settlement bank for its derivatives market. This development underpins the partnership agreement signed between SGX and BOC in Sep last year. *Loyz Energy: Served with writ of summons by Advance Capital Partners claiming a $4m non-payment. *Fragrance Group: Completed the purchase of 555 Collins Street, an existing freehold commercial building with site area of 2,300 sqm in Melbourne, Australia for A$78m. The group intends to redevelop the property into a high-rise mixed development. *Xinren Aluminum: 51% owned subsidiary has completed the acquisition of a 55% shareholding in Xinjiang Tianfu Coal Mining for Rmb88.6m *WE Holdings: Long stop date for fulfilment of conditions in the proposed disposal of WE Components to SingYaSin Technologies and SCT Technologies has been extended by 6 months to 26 Feb 2015 *TEE Land: Established a $250m multicurrency medium term note program, with RHB-OSK-DMG and UOB appointed to act as joint lead managers and dealers.