SG Market (16 Oct 14)

US Market: US stocks finished lower but clawed back from the biggest intraday plunge since 2011 in a wild day, as bond yields bombed, worries over the Ebola epidemic mounted and several US economic datapoints came in below expectations. The blue-chip DJIA sank 173 pts to 16,142 (-0.1.1%), after plummeting 460 pts earlier in the session, and the broad-based S&P 500 dropped 15 pts to 1,862 (-0..8%) trimming an earlier plunge of 3% which wiped out its gains for the year, while the tech-heavy Nasdaq Composite lost 12 pts to 4,215 (-0.3%). Amid signs of a market capitulation, the CBOE Volatility Index jumped 15% to 26.25, the highest level since Jun 2012 as demand for protection against equity losses piled up. Investors took cue from equity markets in Europe, which closed more than 2% lower and flocked to the safety of government bonds as the 10Y Treasury surged and yields dipped to 2.09% (-12bps), after diving at one point below 2% for the first time since Jun 2013. Stocks opened sharply lower on disappointing US retail sales, which fell 0.3% in Sep, its first decline in eight months, and reignited concerns about the economy. Separately, manufacturing activity in New York slowed more than projected in Oct, while a reading on wholsale prices missed expectations. Markets then cut its losses but plunged again during midday when US officials warned of more potential Ebola cases after a second healthcare worker in Texas caught the deadly virus. Stocks however recovered a big portion of losses in the afternoon, led by small-caps (+1%) and energy shares (+0.4%), after Fed Chair Janet Yellen voiced confidence in the US economic expansion despite the global weakness and the Fed’s Biege Book said the economy continued to grow at a modest pace. Financials were amongst the biggest losers, down 2% as a group, weighed by concerns that higher rate assumptions are now in question. Pacing declines were JPMorgan (-4.2%), Citigroup (-3.5%) and Wells Fargo (-2%). BofA tumbled 4.6% after reporting a 3Q loss due to a US$5.3b legal charge arising from its mortgage securities settlement. Among other stocks in focus, Netflix plunged 25% after the bell as its 3Q results and net subscriber growth came in below estimate, while Wal-Mart slid 3.6% after cutting its full year sales forecast. Intel lost 2.7% after Morgan Stanley downgraded the chipmaker to Underweight, citing weaker PCs sales and pressure in gross margins. Volume soared to 11.9b shares traded on US exchanges, almost double the three-month average. Advancing issues outnumbered declining ones by 1.1 to 1 on the NYSE and 1.2 to 1 on the Nasdaq. S’pore shares are expected to open weak following the selloff on Wall Street although grossly oversold indicators suggest that the STI may find a temporary bottom at around 3,168 level (50% Fibonacci retracement). Topside resistance now capped at 3,220 level, marked by the 200-day moving average. Stocks to watch: *SPH: FYAug14 net profit fell 6.2% to $404.3m. Revenue dipped 2% to $1.2b, dragged by a 6% decline in newspaper and magazine revenue to $931.7m on lower ads (-6.8%) and circulation (-4.9%) revenue. Property revenue rose 3.5% to $205m, buoyed by higher rental income from Paragon and The Clementi Mall. Final and special DPS of 8¢ and 6¢, respectively, brings full year payout to 21¢ (FY13: 22¢). *Sabana REIT: 3Q14 DPU fell 24% y/y to 1.81¢, implying an annualized yield of 7.2%, as distributable income dropped 18% to $12.7m. Revenue grew 16% to $25.1m, due to contribution from a new property (acquired Sep '13) and higher gross revenue the conversion of 151 Lorong Chuan to a multi-tenanted lease arrangement (from 4Q13). But NPI declined 10% to $18.0m, dragged by a more than quadrupling of property expenses attributable to higher property tax, maintenance, utilities and land rent expenses, and lease management fees being charged to the 15 properties acquired during IPO, following the expiry of the three-year waiver period in 4Q13. BVPS at $1.08. *Noble: Aloca World Alumina and Chemicals (AWAC) will sell its entire 55% stake in the Jamalco bauxite mining and alumina refining JV to Noble for $140m. AWAC will continue as the managing operator for three years under a compensated service agreement and employees will remain employed by Jamalco. The transaction will provide Noble with an additional 778,800 mt of annual alumina off-take while the Jamaican government will retain its 45% ownership of the JV. Deal closing expected by year end. *SIA: Sep systemwide passenger carriage declined 1% y/y, while capacity was reduced by 1.9%. Consequently, passenger load factor (PLF) improved 0.8ppt to 80.7%. All route regions saw stronger PLF y/y, except Americas. SilkAir’s carriage grew 8.4%, against a 4.2% increase in capacity. As a result, PLF improved 2.6ppt to 67.5%. Cargo load factor was 0.8ppt lower at 62.2% as traffic fell 3.1%, against capacity cut of 1.8%. *First Resources: Operating statistics for Sep. CPO production of 67,149 tons (+12.4% y/y) and palm kernel production of 15,190 tons (+9.3% y/y). CPO extraction rate grew 0.1 ppt to 23.1%, while PK extraction rate slipped slightly to 5.2% from 5.3%. For 9M14, CPO production was 460,855 tons (+10.9%), while that for PK was 107,093 tons (+12%). *HPL: Formed a 70/30 JV to buy the former Royal Mail delivery Offices in central London for £111m. A further planning overage payment of £20m is payable to the vendor on grant of planning permission for development of the freehold property which has a total land area of 0.45ha. The JVC will further assess the property’s potential for residential and retail re-development. *Singapore eDevelopment: Signed a definitive agreement with US-based Fragmented Industry Exchange (FIE) for the latter to buy its instant messaging (IM) software company for US$700m, as a prelude to a launch of the IM applications in North and South America. Under the terms, FIE will issue US$10m worth of new shares and US$690m worth of perpetual preferred shares to acquire HotApps International from Singapore eDevelopment, effectively resulting in a reverse takeover of FIE. *BBR: 80% owned subsidiary secured two new contracts worth RM335m for specialised engineering projects in Terengganu, Malaysia. They involve the design and construction of a new marina base and a 362-metre long precast girders bridge. BBR is currently engaged in a number of civil engineering and building projects in Singapore and Malaysia worth ~$2b. *TIH: Entered into a 32/51/17 JV with Argyle Street Management and Dragonext to operate a litigation funding business in Asia. The JVCo will have a total investment of US$14m. *Armarda: Acquiring Guiyang Tech, which owns a tier four standard data storage facility located in Guizhou province, China, for between Rmb160m and Rmb200m. The facility commenced full operation in Oct ‘14 and comprises 660 cabinets and hosting up to ~ 6,600 data servers. *QT Vascular: Signed distribution agreements for the sales of its Chocolate PTA balloon catheter in Italy Austria, Turkey and Australia. *Triyards: Completed the acquisition of Strategic Marine (S) and Strategic Marine (V), utilizing ~90% of net proceeds from the placement. *XMH / BH Global: Both parties have extended the long stop date for the purchase/ disposal of Z-Power Automation from 18 Oct to 19 Nov ’14. *China Hongxing (suspended): granted extension of time to its unaudited financial results for 3QFY13, FY13, 1QFY14, 2QFY14 and 3QFY14.