SG Market (15 Oct 14)

US Market: US stocks ended mostly mixed, snapping their worst three-day retreat since 2011 as a rebound spurred by some upbeat corporate earnings faded in late session dragged by energy shares following a steep plunge in oil prices. Yield on the 10Y bond fell 10bps to 2.21%. The blue-chip DJIA dipped 6 pts to 16,315 (-0.04%), wiping out an earlier 143-pt gain, and the broad-based S&P 500 edged up 3 pts to 1,878 (+0.16%) after climbing as much as 1.3%, while the tech-heavy Nasdaq Composite rose 14 pts to 4,227 (+0.32%). The small cap Russell 2000 rallied 12 pts to 1,062 (+1.2%), paring a mid-day gain of 2.5%. The CBOE Volatility Index, often viewed as a measure of market anxiety, declined 7.5% to 22.79 after surging 16% yesterday to its highest level since Jun 2012. Economic data from Europe showed consumer prices fell in Spain and Sweden, while UK inflation slowed to a five-year low and German investor confidence sagged for a 10th consecutive month. Markets were initially buoyed by solid 3Q earnings from Citigroup (+3.2%) and Wells Fargo (-2.7%) that topped and matched estimates but JPMorgan (-0.3%) slipped as its profit missed expectations. The news lifted financial stocks up 0.5% as a group. Energy shares sank 1.2%, extending their loss from a Jun record to 20%, as US crude slid 4.6% to US$81.84/barrel, its lowest price in more than two years, following a IEA report that forecast 2014 demand to rise at its slowest pace since 2009. Chevron (-2%), ConocPhillips (-2.8%) and Schlumbeger (-2.2%) led the declines. Airlines were amongst the biggest gainers, jumping 6.3% after plummeting 16% over the past six sessions on concerns about the spread of the deadly Ebola virus. American Airlines (+10.3%), UAL (+6.5%) and Delta Air Lines (+6.1%) all soared. Among other stocks in focus, Johnson & Johnson (-2.1%) fell despite posting 3Q earnings that roundly beat estimates. After the close, Intel (+1.4%) advanced following its results which gave a rosy 4Q outlook. Volume picked up to 9.2b shares traded on US exchanges, 51% higher than the three-month average. Advancing issues outnumbered declining ones by 1.6 to 1 on both the NYSE and Nasdaq. S’pore shares are unlikely to take much solace from Wall Street action, which saw US markets close flat and well off sessions highs of over 1%. However, the technical set-up for the STI is grossly oversold and we might see the index attempt a rebound towards the 3,220 resistance before resuming its downtrend to next support at 3,168 level (50% Fibonacci retracement). Stocks to watch: *SingPost: Spending $182m to develop a fully integrated regional eCommerce Logistics Hub in Tampines LogisPark. The advanced warehousing facility and adjacent office building will be built on a 3.25ha plot of land leased from JTC for 30 years, and have a built-up area of 0.55m sqft. Construction is expected to be completed by end Jan ’16, and operations to commence in 2H16. The development will be funded by the group’s internal cash resources. *Triyards: Acquiring shipbuilder and fabricator, Strategic Marine, for an aggregate A$23.3m (1.2x P/B). The acquisition is in line with the group's growth strategy to develop its core business, and will provide increased fabrication capacity to achieve scale, as well as be used for new product offerings. Post-acquisition proforma FYAug13 NTA/share will marginally decline to US47.29¢, while EPS will improve 10% to US11.72¢. *CDW: Partnering Suzhou Industrial Estate Jia An Investment Co to establish a JV in Suzhou to invest in PRC entities which have growth potential. CDW will contribute US$7.5m for a 25% equity share of the JV. *Noble: Has completed the 51%-stake disposal of its agri business for US$1.5b (1.15x target P/B). Proceeds will be used to repay a portion of existing debt, and for general working capital. *GKE: 1QFYMay15 losses narrowed 38% y/y to $0.43m, on a 30% rise in gross profit ($2.4m) and lower expenses across functions, except finance costs. Revenue jumped 32% to $9.7m, due to an increase in volume and local transportation services and freight services. Share of profits from associates tumbled 82% to $0.04m. *KS Energy: Its “KS Discoverer 1” rig has resumed drilling operation in Kurdistan until 1Q15, under a new US$4.5m contract with a subsidiary of ORYX Petroleum of Canada. The rig was idle since early Oct, after a previous client declared a force majeure event due to continuing unrest in Kurdistan. *St James: To go ex-distribution and ex-consolidation (50-into-1) on 21 Oct. As part of the RTO process, St James will dispose interests in its existing business to CityBar, and then distribute in specie all the CityBar shares on a pro-rata basis. Subsequently, a cash exit offer of $0.006 per CityBar share will be made to shareholders. *Vard: Profit warning. Expects negative EBITDA for 3Q14, due to cost overruns and slower-than-expected improvements in throughput and productivity at the new shipyard, Vard Promar in Brazil. , Results due 11 Nov. *China Environmental Resources: Served notice on 30 Sep, to terminate its proposed acquisition of Clear Wisdom, and has requested the vendor to return the deposit within 14 days. *Great Group: Terminated the proposed Scheme of Arrangement to dispose its interest in the various entities engaged in the garment contract manufacturing business, including 3W Life, Basic World Resources, and G&W Investment Management Co.