SG Market (02 Oct 14)

US Market: US stocks tumbled as growing signs of weakness in Europe and the first confirmed Ebola case in US spooked investors as the Fed remains on pace to end its bond-buying this month. The blue-chip DJIA sank 238 pts to 16,805 (-1.4%), while the broad-based S&P 500 shed 26 pts to 1,946 (-1.3%), slipping below its 100-dma, and the tech-heavy Nasdaq Composite lost 71 pts to 4,422 (-1.6%). The small cap Russell 2000 skidded 1.5% and entered the 10% correction territory. The CBOE Volatility Index climbed 2.5% to 16.71, its highest level since 5 Aug. Markets retreated after euro-area factories reduced prices by the most in a year in Sep, while German manufacturing shrank. US Treasuries rallied on expectations that the ECB will unveil details of a plan to buy asset-backed securities, sending the 10Y bond yield down 11bps to 2.4%. Economic data was mixed in the US with the private sector adding 213,000 jobs in Sep. But manufacturing activity cooled last month and construction spending unexpectedly fell by 0.8% in Aug. Other headwinds included the escalating risk of additional sanctions on Russia if pro-Russian separatists make further military gains in eatern Ukraine, the ongoing pro-democracy protests in Hong Kong, the strengthening greenback, lower oil prices, which hit energy shares and the first confirmed case of Ebola on US soil. 9 out of 10 industry groups declined, except utilites and virtually all Dow components dropped, including Intel (-2.4%), Johnson & Johnson (-2.2%), Boeing (-2.1%) and JPMorgan (-0.8%). Airline stocks were pressures by the Ebola news, dropping 3.2%, sending Delta Air Lines down 3.5% and Southwest Airlines off 3.6%. Drug companies which specialized in Ebola treatment however rallied, with Tekmira Pharmaceuticals surging 18.2%. General Motors advanced 1.7% as its US sales in Sep beat estimates but Ford fell another 1.4% on declining sales, extending its loss to 11% this week after it warned of missing its 2014 profit forecast. Among other stocks in focus, HP slid 2.6% after key shareholder Relational Investors unveiled plans to dissolve current funds by the end 2015, while Yahoo crept up 0.6% on chatter that Softbank would make a bid for the company. Volume was hectic with 8.1b shares traded on US exchanges, 43% above the three-month average. Declining issues outnumbered advancing ones by 3.1 to 1 on the NYSE and 3.6 to 1 on the Nasdaq. S’pore shares are expected to face downside pressure following the steep drop on Wall Street and weaker openings in Tokyo (-1.3%) and Seoul (-0.6%). The STI is likely to break below the the 78.6% Fibonacci level at 3,262 and head towards the next support at 3,220 where the 100-dma sits. Overhead reistance remains at 3,320. Stocks to watch: *TEE Land: 1QFY15 net profit soared 367% y/y to $2.7m, even though revenue fell 52.6% to $6.4m following the completion of 91 Marshall in 4QFY14. Gross margins improved 16ppt to 28%, was mainly due to higher revenue recognized from Aura 83, The Peak @ Cairnhill 1, and rental income from Workotel. Bottom line was further buoyed by a doubling of associates’ contributions to $2.4m. *TEE Int’l: 1QFY15 net profit jumped 39% y/y to $2.3m, even though revenue fell 39% to $42.3m on lower revenue recognized from ongoing projects. Bottom line improvement came from reduced operating expenses and a doubling of associates’ contributions to $2.9m. *SGX: Acquired the remaining 51% of Energy Market Company (EMC) from the Energy Market Authority for $23m. This will allow SGX to fully integrate development with the EMC platform for an electricity futures market and related power and gas products for Singapore. *KrisEnergy: Completed the acquisition of COPCL, which holds a 30% working interest and the operatorship of the Block A petroleum agreement offshore Cambodia. This lifts KrisEnergy’s combined stake in the block to 55%. *Keong Hong: JV Katong Holdings has signed Intercontinental Hotels to manage its first hotel property in Singapore. The upcoming 25,000 sqm mixed-used development will comprise the 131-room Hotel Indigo Singapore Katong, a 451-room Holiday Inn Express Singapore Katong, F&B outlets and retail shops, and will be located in the vicinity of the Katong/ Joo Chiat heritage precinct. *Swissco: Completed the acquisition of four additional mobile offshore drilling rigs, bringing its fleet of rigs to eight. The rigs have up to two-year contracts worth ~US$94.8m and are being deployed in Latin America. *Kian Ho: Completed its internal restructuring to include property investment and property development into its core business. Proposes to change its name to Raffles United. The company will transfer its $40.1m book value of bearings and seals inventory to Kian Ho Pte Ltd. *Goodland: Completed the acquisition of M’sia property development and investment holdco, Citrine Assets. Total consideration of $62.7m was satisfied by the issue of cash ($2.2m), corporate bonds ($2.5m), convertible bonds ($3m), and 144.7m consideration shares (42.7% of enlarged share base). The latter will commence trading wef today. *Sky One: Dispatched the circular for its proposed acquisition of 100% Energy Prima and proposed disposal of its existing business (excluding PT Energy Indo) to its controlling shareholder and CEO. *Sitra: Expects to recognize a fair value gain for its 10% stake in the industrial property at 18 Sungei Kadut Street 2. Redevelopment of the property is expected to commence in Oct ‘14 and is scheduled from completion in Apr ‘16. *EMS: Received acceptances for ~92.45% of the total number of right shares available for subscription, as well as excess applications representing ~45.9% of the total number of Rights Shares for subscriptions. Notification of allotment will be sent on 3 Oct. The new shares will commence trading on 7 Oct. *Nam Cheong: Executive chairman Datuk Tiong Su Kuok purchased 1.5m shares in the open market at an average price of $0.435, raising his stake from 50.42% to 50.5%. *CCFH: Terminated the MOU to acquire an equity stake in Mata Brait (PNG), following the expiry of the exclusive period. *A-Sonic: Completed the divestment of its 80% stake in Sterling Campus. *Lorenzo: Labelled “trade with caution” by SGX