SG Market (01 Oct 14)

US Market: US stocks ended lower on the final day of the month and quarter, dragged down by small cap and energy shares on the back of disappointing economic news. The blue-chip DJIA retreated 28 pts to 17,043 (-0.2%), while the broad-based S&P 500 shed 6 pts to 1,9728 (-0.3%), and the tech-heavy Nasdaq Composite lost 12 pts to 4,493 (-0.3%). The CBOE Volatility Index climbed 2.1% to 16.31, 26% above its mean for 3Q14. Markets were weighed by weak China manufacturing PMI, which came in at a barely expanding 50.2 and a drop in Eurozone inflation in Sep to the lowest level since the global financial crisis. Adding to the downward pressure, the Conference Board index of consumer confidence fell to a four-month low of 86 from 93.4 in Aug due to mounting concerns about the jobs market, while home prices rose 6.7% in Jul from a year ago, the smallest annual gain since Sep 2012, underscoring the unsteady growth in the housing market. Other negative factors included a report projecting Opec oil production to hit a two-year peak in Sep on strong output from Saudi Arabia and Libya and a stronger greenback. Oil companies, including ExxonMobil (-0.4%), Chevron (-1%) and ConocoPhillips (-1.7%), dropped 1.2% as a group as US crude oil prices slipped 3.6% to US$91.16 a barrel. Material shares also slumped 1.2% as commodity prices plunged 1.6% for its biggest decline since Jun ’13. EBay jumped 7.5% was the biggest gainer for the day, after announcing a plan to spin off PayPal, its fast growing online payments unit, in 2H15, while Apple advanced 0.6% after China granted approval for the sales of iPhone 6 to begin on Oct 17. Among other stocks in focus, Ford declined 2.1%, extending losses after disclosing that it will miss its 2014 profit forecast on weakening sales in Russia, deflation in South America and recall costs in North America, while Yahoo rallied 5.6% after receiving US$9.4b net proceeds from the Alibaba IPO. Volume was heavy with 7.2b shares traded on US exchanges, 29 above the three-month average. Declining issues outnumbered advancing ones by 1.7 to 1 on the NYSE and 2.3 to 1 on the Nasdaq. S’pore shares may see renewed selling pressure as investors remain wary of the cross currents on Wall Street and watch developments in Hong Kong where the market is closed for a two-day holiday. With earnings season looming round the corner, traders could be taking a pause to wait for the next catalyst to move the market. Expect the STI to test immediate support at 3,266 with topside resistance at 3,320. Stocks to watch: *United Engineers (UE) / OCBC: UE has sold its entire stake in the completed mixed-use development project orchargateway to a wholly-owned subsidiary of OCBC, for total cash consideration of $353.2m, based on adjusted book value. The proceeds will be used to reduce UE’s borrowings. *City Dev: Its JV with a US based investment firm has acquired a prime freehold site in Tokyo for ¥30.5b from Seiko, with a view to develop an iconic high-end condo. The 16,815 sqm parcel of land is located in the prestigious residential enclave of the Shirokane area in Tokyo’s Minato ward where foreign embassies and offices are situated. *KLW Holdings: Acquired a prime freehold property in Australia for A$23.6m. Located within the Melbourne CBD, the property has a land area of 895 sqm and houses a seven storey building currently 100% leased to Victoria University until 30 Oct 2020. The average rental yield is 5.8% pa. Separately, the group has appointed Prince Abdul Qawi of Brunei as non-executive Chairman. *Cheung Woh Technologies: Purchasing land and a building in Penang for RM9.25m to expand its existing Malaysia business. *Vallianz: Acquiring OER Holdings for US$27.7m, via the issue of 250m new shares at $0.14 each. OER is a provider of manpower services to the offshore industry, and the move is expected to enhance the group’s efficiency. Post-acquisition, Vallianz’ proforma FY13 NTA/share and EPS are expected to improve 34% and 35% to US4.82¢ and US0.85¢, respectively. *mDR: Its wholly-owned Malaysian subsidiary Pixio, has entered into an MOU to acquire the business and assets of Colossal Media, is a digital inkjet printer in Malaysia. The acquisition will be synergistic with Pixio’s large format printer business. *Giken Sakata: Its subsidiary PT Cepu Sakti Energy (CSE), has secured 10-year extensions that will allow CSE to operate in its Trembul and Gabus oil fields until 2 Nov ‘20 and 14 Dec ‘21, respectively. Both agreements can be further extended for another five years. *CNMC Goldmine: It’s Sokor gold project produced 5,201.28 oz of gold dore bars in Sep, which is the highest to date for monthly output since the start of gold production in Jul ’10. *Food Empire: Disposed its entire 60% shareholding in PT Empire Prima Indonesia for total consideration of US$0.36m, representing a 39% discount to NAV. *Eu Yan Sang: The Business Times notes that the Bo Ying Compound, which was recently linked to an alleged infant lead-poisoning case in the US, is Eu Yan Sang’s best-selling product, accounting for ~14% of the $366.3m revenue for FYJun14. The group is still trying to engage the US health authorities for more details on the case. *JES: Its affiliate shipyard, Jiangsu Eastern Marine Equipment, has been removed from China's official white list for the shipbuilding industry. *P99 Holdings: Terminated the proposed JV with Verto Group Enterprise to invest in property development projects in UK.