SG Market (23 Sept 14)

US shares ended lower, with the S&P 500 suffering its biggest one-day drop since early Aug, on weaker-than-expected housing data and renewed anxiety about China’s economic growth. The DJIA dropped 107 pts to 17,173 (-0.6%), after ending last week at an all-time high. The S&P 500 declined 16 pts to 1,994 (-0.8%), and the Nasdaq tumbled 52 pts to 4,528 (-1.1%). About 6.3b shares changed hands on the US exchanges, 11% above the three-month average. The VIX, a volatility gauge and indicator of market risk, surged 13% to 13.69. Concerns about the level of growth in the US economy resurfaced, after the National Association of Realtors reported that existing home sales fell 1.8% in Aug, reversing from four straight months of gains. Accordingly, homebuilder stocks were amongst the biggest losers, with Toll Brothers down 3.1% and KB Home and Lennar both shedding 2.8%. Momentum stocks also sold-off, particularly in the internet, solar, and enterprise sectors. Following its stellar IPO debut, Alibaba succumbed to profit taking and declined 4.3%, leading Yahoo, which owns a 22.4% stake in Alibaba, to plunge 5.6%. Other tech plays were also weak - Amazon.com (-2.1%), Netflix (-3.2%) and Tesla Motors (-3.6%). Among other stocks in focus, Clorox jumped 7.4% after the detergent and household-goods manufacturer raised its 2015 profit outlook and announced plans to shut down its Venezuelan operations. Meanwhile, Sigma Aldrich surged 33.2% after Merck KGaA said it was buying the company for US$17b. With sentiment was crimped by a recent run of soft economic data in China, eyes will be on China’s HSBC PMI due this morning. Another poor read will underscore weakness in the world’s second largest economy and could prompt further market declines. This morning, Korea and Australia are trading lower at -0.5% and -0.3%, respectively. Japan is closed for holiday. Expect a soft open for Singapore, and continued dull activity as investors stay on the sidelines. Immediate topside resistance seen at 3,330 where the 20 and 50-day moving averages are converging. Downside support remains at 3,280 level. Iskandar-related stocks in particular, may be harder hit, after news reports that even CapitaLand has had to delay the launch of its Danga Bay development in Iskandar, pending key approval from the Johor authorities. Stocks to watch: *Vallianz: Acquiring the entire stake in JetLee Shipbuilding & Engineering and a 99% stake in PT United Sindo Perkasa (PTUSP), which owns a fabrication and engineering shipyard located in Batam, Indonesia. The consideration of $19.8m will be satisfied by the issue of ~143.3m new Vallianz shares at an issue price of $0.138. *Pacific Radiance: Acquired the remaining 40% of CrestSA from Soon Aik Marine Engineering for an aggregate sum of $2m, making CrestSA a fully-owned subsidiary. *Wee Hur: Secured a $157.7m contract from HDB for a Punggol West project, raising order book to $404.9m. Works will commence in Oct’14 and expected to end by May ’17. *Tritech: Won two contracts worth $13.8m from the LTA, for the construction and completion of Marina South station and Gardens By The Bay stations on the Thomson Line. Work commenced yesterday and will be completed by 30 Dec ‘20. *CNA: Will record a $6m gain on its 4.7% stake in Urbanise, after the latter successfully listed on the ASX yesterday. Urbanise, which delivers industry-specific cloud-based solutions, had an offer price of A$0.50 and ended the day at A$0.70. *Trek 2000 International: In preliminary discussions with potential partners to collaborate on joint technologies development and commercialisation. *China Energy: In connection with its proposed voluntary delisting, offeror Lianguo Int’l has an on-going exit offer of $0.052 per share that closes on 7 Oct. Accordingly, the last day of trading of China Energy shares will be 29 Sep, and the counter will be suspended thereafter.