SG Market (13 Oct 14)

US Market: US shares slumped on Fri, capping its worst weekly drop in more than two years, led by a rout in technology stocks after a chipmaker warned of an industry downturn. The blue-chip DJIA tumbled 115 pts to 16,544 (-0.7%), erasing its gains for the year, while the broad-based S&P 500 sank 22 pts to 1,906 (-1.2%), halting right at its 200-dma, a key technical indicator it has not breached since late 2012, and the tech-heavy Nasdaq Composite lost 102 pts to 4,276 (-2.3%). The S&P 500 has fallen for the past three weeks, its longest retreat since Jan and is down 5.2% from its record in Sep, trimming its 2014 gain to 3%. The CBOE Volatility Index spiked 13.2% to 21.24, jumping above 20 for the first time since Feb. The selloff followed weak sentiment in most overseas markets amid anxiety over global growth as S&P lowered France's credit outlook, adding on to woes, in a week which saw Germany, Europe's largest economy, posting a series of dismal economic data. Chipmakers led the declines, with the PHLX Semiconductor Index tripping 6.6% and entering correction territory. Microchip Technology crumbled 12.3% after its preliminary sales trailed its forecast due to poor performance in China and cautioned of an impending correction. Other semiconductor stocks followed suit, including Micron Technology (-9.3%), Texas instruments (-7.1%) and STMicroelectronics (-5.8%). This also brought down other technology players such as Twitter (-8.8%), Microsoft (-4%) and Facebook (-4%). Oil services stocks were also hit as falling oil prices spurred concerns about cutbacks in capital spending. Halliburton dropped 5.2%, while Schlumberger shed 2%. Meanwhile defensive stocks outperformed with utility stocks advancing 0.5%, while consumer staples were also up by the same amount. Among other stocks in focus, Juniper Networks plunged 9.1% after reporting revenue projections that missed its own estimates. Volume was hectic with 9.2b shares traded on US exchanges, with declining issues overwhelming advancing ones by 3.7 to 1 on the NYSE and 2.7 to 1 on the Nasdaq. S’pore shares may resume its downtrend, tracking the selldown on Wall Street and early losses in early Asian trade with the STI likely to breach its key support at 3,220 (200-dma), with the next line of defence at 3,180. Topside resistance remains at 3,260. Stocks to watch: *Sembcorp Marine: Secured a US$696m contract to convert a shuttle tanker into an FPSO vessel, for OOGTK Libra, a JV between Brazil’s Odebrecht Oil & Gas and Teekay Offshore. The FPSO, which is slated for completion in 3Q16, will have the capacity to produce 50,000 bpd and 4m cubic metres of natural gas per day, and is expected to be chartered to Petrobras for work on the Libra field in the ultra-deepwater section of Brazil’s Santos Basin. *AusGroup: Its JV with Meisei Industrial has been awarded a $197m subcontract by JKC Australia to provide painting, surface protection, fireproofing and insulation works for the Ichthys LNG Project in Darwin. Works are expected to take place from Mar ’15 to Dec ’16. *United Envirotech: Framework agreement with Shenzhen-listed Chengdu Xingron Investment to set up a 49/51 JV in Sichuan with initial equity of Rmb50m. The JV co will provide engineering, procurement and construction services using UEL's membrane technologies, as well as to undertake water treatment projects in the western China. The total value of the first block of projects to be undertaken by the JV is estimated to exceed Rmb1.5b. *Boustead Singapore: Awarded three design-and-build contracts in Singapore, by clients in the food, logistics and renewable energy industries. Total value of the contracts could potentially reach $137m, with the final value to be determined based on provisional design and engineering options. *Linc Energy: Spuds the first of its three well drilling program in the Arckaringa Basin near Cooper Pedy in South Australia. *Giken Sakata: Received regulatory approval for the extension of its production agreement in the Tungkul and Trembul fields till 3 Nov 2020. *Yoma: Partnering Yum! Brands to bring the KFC franchise to Myanmar in 2015. *Yamada: Selling an aggregate 51,193 mu of eucalyptus plantations and corresponding forestry land use rights, for total consideration of Rmb66m. Yamada will leaseback 39,735 mu of eucalyptus plantations. *Universal Resource and Services (formerly Sky China Petroleum): Proposed a renounceable 1-for-2 rights issue at $0.064 each. Net proceeds of $12.7m will be used to fund the acquisition of new drilling equipment for further expansion of the group’s equipment rental business. *St James: Shareholders have given EGM approval for the reverse takeover of Perennial Real Estate to proceed. The proposed acquisition and share consolidation is expected to take place on or about 27 Oct. *Swissco: Offering of $100m fixed rate notes due 2018 at 5.7% was oversubscribed by ~10x and well within the initial indicative rate. *SMRT: In response to media articles, SMRT said it will not be making a bid at this stage for London’s biggest minicab operator, Addison Lee. *Eurosports Global: Profit warning. Expects a loss for 1HFY15, mainly due to the end of the Lamborghini Gallardo model life cycle, resulting in a decrease in overall sales. *Federal International: Profit warning for 3QFY14, due to cost overruns and provisions arising from delays relating to an FPSO vessel conversion project. *GMG Global: Profit warning for 3QFY14 attributable to lower average selling price of natural rubber. *Hock Lian Seng: Awarded the JTC tender for an industrial site measuring 25,700 sqm, situated off Tuas South Ave 7, for $31m. The group has plans for an industrial development comprising of strata titled units. *Smartflex: Proposed agreement with UOB Kay Hian for the placement of 30m new shares (23.7% of enlarged share base) at $0.12 each.