SG Market (26 Sept 14)

US Market: US shares suffered its steepest loss in two months, led by Apple’s 3.8% drop, amid weak economic data, geopolitical concerns and quarter end profit-taking. The blue-chip DJIA plunged 264 pts to 16,946 (-1.5%), while the broad-based S&P 500 lost 32 pts to 1,966 (-1.6%), sending the benchmark index below its 50-dma for the first time since Aug and the tech-heavy Nasdaq Composite tumbled 88 pts to 4,467 (-1.9%). The CBOE Volatility Index or gauge of market risk jumped 18% to 15.64, after sliding 11% the day before. Markets opened lower after US data showed that jobless claims crept 12,000 higher to 293,000 last week, although the trend of layoffs continued to improve below the 300,000 pace. But durable goods orders dived 18.2% in Aug, dragged by volatile aircraft orders, after an outsized increase the previous month. If transportation is stripped out, new orders for durable products rose 0.7% in Aug. Sentiment was further rattled by reports that Russian lawmakers have drafted new legislation that would allow the government to seize foreign assets, while in the Mid-East, US-led airstrikes in Syria intensified, targeting oil installations held by the extremist Islamic State group. All except 14 of S&P 500 components retreated in the broadest slump since early Feb as 8 out os 10 industry groups declined at least 1%. Investors sold some of the market’s best performers with tech shares the biggest losers, sliding 2.3%. All 30 Dow blue-chips gave way with JPMorgan and UnitedHealth both down 2.3%. Apple sank 3.8% to a six-week low, sparked by glitches over its new mobile-software update and criticism that its new iPhone 6 can be easily bent. Other high profile tech names also got hit including Twitter (-3%), Yahoo (-2.3%) and Microsoft (-2.2%). Allegheny Technologies crumbled 4.8%, leading losses among materials producers as commodities prices rose across the board after the USD touched a four-year high. After the bell, Micron Technology fell 3.4%, while Nike rose 4.1% after both reported results. Volume was heavy with 6.4b shares exchanging hands, 13% above the three-month average with 80% of stocks traded on both NYSE and Nasdaq ending weaker. S’pore shares are likely to face downside pressure following Wall Street’s broad sell-off with the STI poised to penetrate beneath its 3,280 support to test the recent low of 3,266 set on 16 Aug. Below that, former support can be found at the 3,230 level. Stocks to watch: *Ezion: Entered into an MOU with a large multi-national fuel trading and distribution company for the potential storage and distribution of fuel on Port Melville in Northern Australia. Ezion is currently in the process of developing a 30m-litre tank farm on Port Melville. *Halcyon Agri: Buying New Continent Enterprises (NCE), which is a global natural rubber dealer and distributor. Consideration will be fixed at 118% of NCE’s net book value as at 31 Jul ’14, and is payable in four quarterly instalments. *SIIC Environment: Injected additional capital of Rmb74.5m in its wholly owned subsidiary, Wuhan Huang-Pi Kaidi Water Services, which will be used mainly to fund the construction expenditure and working capital needs in relation to two water projects. *Teho: Signed a non-binding letter of intent to acquire ECG Property Services, which is engaged in the business of real estate, and related services. Consideration of $17m will be satisfied via $5m cash, and the issue of 42m shares at $0.28 each. *Manhattan Resources: JV with Kaiyi Investment to form Manhattan Property Development, which will facilitate the potential restructuring of certain company investments. *TTJ: FYJul14 net profit jumped 47% to $21.8m, driven by a decline in cost of sales (-2%) even as revenue grew 6% to $134.7m. Accordingly, gross margin expanded 5.5ppt to 27.5%. Construction order book stood at $97m. Dividend raised to 1.4¢ (FY13: 0.9¢). BVPS at $0.34. *Hai Leck: Obtained TOP for its second dormitory situated at 9 Tuas Avenue 1. Hai Leck now has bed capacity to house 800 workers. *Lee Kim Tah (LKT): The founding family has made a $1.08 per share offer, with a view to privatise the company and exercise its rights of compulsory acquisition. This values LKT at $546m. The offer is conditional upon the offeror and its concert parties receiving at least 90% control (current stake: 86.4%). *Olam: Changes to the Board. Non-executive director Mark Haynes Daniell and independent director Wong Heng Tew will step down after more than 10 years of service each. In their place, Kwa Chong Seng will assume the role of non-executive director and deputy Chairman, and Nihal Vijaya will be appointed as independent director. Both men have career backgrounds in Termasek-linked companies. *ECS: Will be suspended until further notice, following the fall of free float below the minimum 10% requirement. The controlling shareholder, VST Holdings, does not intend to restore the float. *Sapphire: In response to SGX’s query on trading activity, the group summarized details of its on-going major restructuring exercise. Sapphire will book a $6m disposal gain from the sale of its loss-making steel manufacturing business, with the sale proceeds to be invested in the business of a profitable EPC (engineering, procurement and construction) company specializing in land transport infrastructure design and engineering works. *AusNet Services: Allan Gray Australia has ceased to be a substantial holder *Sitra: Its 7-for-5 rights issue at $0.01 each, received valid acceptances representing ~91%, and excess applications amounting to 36% of the total rights shares available for subscription.