SG Market (03 Oct 14)

Although the European market slumped the most in more than 15 months, US stocks reversed losses toward the end of the day to close flat. Smaller companies shone, buoyed by bargain hunting on beaten-down stocks. The major US indices were all little changed, with the DJIA closing at 16,801, the S&P 500 at 1,946 and the Nasdaq at 4,422. Meanwhile, the Russell 2000 Index of smaller cap companies rebounded following three days of decline, ending the day 1% higher at 1,096. About 7.7b shares changed hands, 35% higher than the three-month average. There were initially some concerns about Europe, after investors were left unimpressed by ECB president Mario Draghi’s plan to buy assets over the next two years in a bid to boost inflation and economic growth. But investors came back to the market after realising that Europe “is not falling off a cliff”, while the US economy remains on track for recovery. Amongst stocks in focus, AutoNation gained 6.1% after Warren Buffet said he could buy a lot more dealerships, following Berkshire Hathaway’s agreement to acquire Van Tuyl Group. Twitter advanced 3.6% after JP Morgan upgraded the stock to Overweight from neutral. Energy and raw materials shares however, were the biggest losers, down 0.2% as a group, after Brent crude fell to its lowest level since 2012. Chevron fell 0.5%, while Exxon Mobil traded 0.4% lower. Tonight’s US labor report will be in focus, with data estimated to show that US employers added 215,000 jobs in Sept, bouncing back from a modest 142,000 gain in Aug. Taking cue from the late US action, S’pore shares may get some respite today. However, expect higher volatility once the Hong Kong market opens, following two days of holiday. Downside in the STI may be limited to the 3,220 psychological support (also the 200 day moving average), with upside capped at ~3,260. Stocks to watch: *Keppel Land: Progressing with the next phase of developing its 42-storey Saigon Centre Phase Two project, which will comprise 37-storeys of premium Grade A office space (40k sqm), five levels of retail space (50k sqm) and ~200 units of luxury serviced apartments. Keppel Land holds a 45.3% stake in the project, has a total investment cost of US$255m. *Rex: Its 66.7%-owned Rexonic AG secured a ~US$10m contract from a national oil company to provide its ultrasonic well stimulation technology on selected wells owned by the client. The contract, slated to start at year end, will be executed over 24 months, and is expected to contribute positively to the current year financials. *Cacola: Proposed three fund-raising initiatives with Advance Opportunities Fund for working capital and proposed acquisitions to be undertaken. The initiatives comprise, i) a $40m conditional unsecured facility, ii) multi-tranche placement of up to $45m worth of new shares and iii) a $0.5m term loan. *NH Ceramics: Revised the consideration for its proposed acquisition of Blackgold Asia Resources and Blackgold Energy to 635.6m consideration shares at $0.295 each. *Sing Post: Extended the completion date for acquisitions of The Store House (100% stake) and The Store House Operating Co (75% stake) from 30 Sep to 31 Oct. *KS Energy: Due to continuing unrest in Kurdistan, a client has declared a force majeure event and terminated the contract for an onshore drilling rig, owned by its 80% subsidiary KS Drilling. The latter has one other rig stationed in the country.