SG Market (17 Oct 14)

US Market: US shares ended little changed after an early plunge in another volatile session, led by small caps and energy stocks, as better economic data eased fears of sluggish global growth and a Fed official raised the possibility of extending bond purchases. The blue-chip DJIA slipped 25 pts to 16,117 (-0.2%), after losing more than 200 pts at one stage, while the broad-based S&P 500 closed flat at 1,863 and clung to a 0.8% gain for the year, and the tech-heavy Nasdaq Composite added 2 pts to 4,217 (+0.1%). 10Y Treasury yields regained 6bps to 2.15% after falling below 2% yesterday. Equities appeared headed for another hammering early trade on continued selling pressure in Europe, gripped by deflation and recession fears in Greece and Spain. But investors took heart from the 23,000 drop in US weekly jobless claims to a 14-year low of 264,000 and a 1% gain in industrial production in Sep. Providing a shot of adrenaline was comments by St Louis Fed President James Bullard calling on the Fed to delay ending its quantitative easing in order to halt the decline in inflationary expectations. Fed officials are meeting on 28-29 Oct where they are expected to end asset purchases. While the broader market struggled, small caps rallied with the Russell 2000 climbing 1.3% on bargain hunting and extended its three-day rebound to 3.5%, the biggest since Jun. Energy producers were the biggest gainers (+1.7%) with Chevron (+1.6%) and ExxonMobil (+0.4%) both advancing after WTI crude jumped 1.1% to US$82.70 and Brent advanced 0.8% to US$85.82, led by speculation that the recent fall in oil prices could be overdone. Chesapeake Energy soared 17% on plans to sell its shale oil and gas fields to Southwestern Energy (-10.4%) in a US$5.4b deal. Baker Hughes sank 3% after warning that oil prices below US$75 a barrel would lead to cutbacks in E&P spending. Video streanming company Netflix tumbled 19.4%, a day after it reported fewer video-streaming subscribers than forecast for the quarter, blaming it on a recent price increase and offering a guarded outlook. Apple lost 1.3% on worries that its new iPad Air2 may not revive sales. Drug maker Abbie dropped 3.2% after disclosing that its board no longer backs its US$54b takeover of Irish-based rival Shire following new US tax ruling that discourages inversion deals to site its HQ overseas for tax benefits. Among earnings, Goldman Sachs fell 2.6% despite posting 3Q results which beat estimates, as trading revenue showed a bigger decline. Toymaker Mattel fell 3% after reporting a drop in 3Q earnings due to falling sales of its Barbie doll., while UnitedHealth Group Philip Morris rose 2% on 3Q profit that topped estimates. Delta Airlines climbed 2.9% after it released its 3Q results and gave a bullish outlook, saying that it does not expect the Ebola scare to affect airline travel. This also lifted United Airlines (+2.9%) and American Airlines (+4%). After the bell, both Google (- 2.6%) and AMD (-5.3%) fell on 3Q earnings miss. Volume remained heavy with 9.9b shares traded on US exchanges, 62% above the three-month average. Advancing issues outnumbered declining ones by 2.4 to 1 on the NYSE and 2.1 to 1 on the Nasdaq. S’pore shares may see a slight rebound as the selloff on Wall Street begins to wane amid some signs of a bottoming out although upside on the STI is expected to be limited and capped at the 3.220 resistance with downside support at 3,120 Stocks to watch: *M1: 3Q14 net profit grew 12.7% y/y to $44.5m, helped by lower traffic expenses (-29.4% to $12.7m). Revenue climbed 3.5% to $250.2m, driven by a 3.3% increase in mobile, as net postpaid ARPU rose 3.4% to $55.2. Separately, M1 is shelving plans to be a receiver of cross-carriage content through its MiBox Internet TV service, and has withdrawn application for a nationwide TV license. *Keppel Reit: 3Q14 DPU declined 6.1% y/y to 1.85¢, while distributable income dipped 3.8% to $52m, mainly due to lower rental support top-up payments following the sale of its 92.8% stake in Prudential Tower for $512m. Otherwise, property income rose 8.4% to $47.6m, and NPI expanded 12.4% to $38.5m, mainly driven by better performance from OFC and contributions from the 50% interest in 8 Exhibition Street, as well as positive rental reversions (+32.3%). Occupancy rate remained healthy at 99.3%, with WALE at 6.2 years. Aggregate leverage improved by 0.7ppt to 42.8%. BVPS of $1.40. *Tigerair: Disappointing 2QFYMar15 results, with a deep net loss of $182.4m compared to a profit of $23.8m a year ago. Impacted by one-off charges arising from, i) loan impairment of $59.8m following a proposed disposal of its remaining 40%-stake in Tigerair Australia for a token consideration of A$1, and ii) accounting provision of $93m for 12 surplus aircraft which were subleased to InterGlobe Aviation. Revenue slipped 10.5% y/y to $146.7m, weighed by lower yields (-10.4%) for Tigerair Singapore. BVPS collapsed from $0.28 in Mar ’14 to just $0.02. *ST Engineering: Secured $513m worth of contracts in 3Q14, for rail electronics and intelligent transportation, satellite and broadband communications, as well as advanced electronics and ICT solutions. *Sino Grandness: Wellcome, one of Hong Kong’s largest super market chains with over 200 retail points across the country, joins as a new distributor to market Sino Grandness’s garden fresh juices over in Hong Kong. Sino Grandness also aims to roll out its Garden Fresh products to other leading convenience stores (eg. 7-Eleven) in order to increase the brand awareness of Garden Fresh in HK, before targeting other distribution channels. *Ascott REIT: Acquired a prime hotel in Shinjuku, Tokyo for ¥8b - its sixth property acquired this year. Pro forma FY13 DPU to increase by 0.6% to 8.45¢. *GLP: Leased 13,000 sqm to new customer, PepsiCo in Sao Paulo, Brazil. The agreement marks the first collaboration between GLP and PepsiCo. GLP’s stabilized logistics portfolio lease ratio in Brazil stands at 98%. *Cosco Corp: Deferred delivery for its Sevan 650 drilling rig to Oct ‘17 from the initial 2Q14 schedule, under a mutually agreed extension. *RH Petrogas: Secured NDRC approval for the overall development plan for the phased development of the Yongping Oilfield in the Fuyu 1 Block located in Songliao Basin, Jilin Province. Fuyu 1 Block is expected to yield a total of 14.6m bbl of oil during its production cycle, of which RH Petrogas will hold a 49% interest. *Mermaid Maritime: Says its focus on oil & gas production services, strong fundamentals and healthy order book of uS$470m offers protection against declining oil prices. *TT Int’l: Standard Chartered Private Equity shall inject up to US$50m in a JV Co with TT Int’l, to engage in the consumer electronics business.