SG Market (25 Sept 14)

US Market: US shares rebounded after a three-day slump, led by a strong housing report, as investors continue a long-running trend of buying on dips. The blue-chip DJIA jumped 154 pts to 17,210 (+0.9%), while the broad-based S&P 500 gained 15 pts to 1,998 (+0.8%), bouncing off its 50-dma and the tech-heavy Nasdaq Composite added 47 pts to 4,555 (+1.0%). The CBOE Volatility Index or gauge of market risk fell 11% to 13.27, the steepest drop since early Aug. Sentiment took a lift after the US new home sales surged 18% in Aug to an annual rate of 504,000, its fastest pace in more than six years, , signifying the housing recovery is making progress. Separately, Chicago Fed President Charles Evans called for patience as the central bank withdraws stimulus, fuelling speculation of a sustained period of low interest rates. Healthcare stocks rallied 1.7% amid signs that new rules to curtail tax inversions may fall short as Pfizer (+0.9%) and AbbVie (+2.6%) advanced. Other biotechnology companies, including Biogen (+4.2%) and Celgene (+3.3%0 also rose. Valeant Pharmaceuticals leapt 6.9% after guiding 3Q earnings and revenue to be above forecasts and cooled its unsolicited offer for Botox maker Allergan (+4.2%). Gilead Sciences gained 3.2% after announcing successful clinical trials on a HIV treatment. Consumer staples ran 1.2% on an upbeat Deloitte report that US retail sales may soar 4.5% this holiday season exceeding last year’s increase. Wal-Mart rose 2% after unveiling a deal with pre-paid debit card provider Green Dot (+24.4%) to offer no-fee checking accounts to its customers. Among other stocks in focus, home goods retailer Bed Bath & Beyond shot up 7.4% after its full-year earnings forecast topped estimates, while Apple slipped 0.9% after halting its iOS 8 upgrade due to software bugs, as well as complaints of soft bodies of its new iPhone 6, which result in physical bending. Volume was active with 6.1b shares traded, 7% abover the three-month average with advancing issues slightly edging out declining ones on the NYSE. S’pore shares are expected to open slightly firmer following the technical bounce on Wall Street but any upside may be limited by lack of clear direction and catalysts. The STI is likely to trade within the immediate topside resistance seen at 3,330 with underlying support at 3,280. Stocks to watch: *Office property: Consultant Cushman & Wakefield expects Singapore’s Grade A office rents to rise to its highest levels since 2008, by the year end. Current Grade A office rents are at a three-year high of $10.20 psf pm (+9.9% y/y, +2% q/q), with further strong leasing activity expected in 4Q14, led by the completion of CapitaGreen and South Beach. *Retail property: Colliers International expects monthly gross rents for Orchard Road prime ground floor retail space to either remain flat or dip marginally by 1% for 2014, following a softer 3Q14. This is due to weaker visitor arrivals, which is likely to exert further on malls in the prime shopping district of Singapore. *Lian Beng: Its JV has signed the conditional definitive agreement regarding the proposed disposal of the former Midlink Plaza for $270m. Market watchers had estimated Lian Beng’s share of disposal gains to be between $8.5m and $10m. *GLP: Completed the second tranche of the China consortium agreement (CCA) worth US$875m. The strategic partners include China Life Insurance, China Development Bank Int’l, Bank of China, China Post Insurance, Boyu Capital and HOPU Fund. The US$2.5b agreement CCA is now completed, with the China consortium holding a 33.8% stake in GLP’s China Holdco. *Ascendas Hospitality Trust: Together with JV partner Melic, are in preliminary discussions with a number of parties on the potential divestment of Pullman Cairns International. *AusNet Services: Has been served with court documents which initiate class actions in relation to two separate bushfires. While the group has liability insurance which provides cover for bushfire liability, it does not believe it was negligent and intends to vigorously defend the proceedings. *Singapore eDevelopment: Proposed to issue up to $300m perpetual bonds and a 100-into-1 share consolidation, to accelerate its strategy for corporate recovery. The bonds will have an 8% coupon, and holders will have the right to receive a pro-rated 30% profit on property development projects in the US, Australia, China and Singapore, which are financed by the bonds. *Trading halts: Libra, Sino Construction