SG Market (18 Nov 14)

US Market: US stocks edged fractionally higher as stimulus talk by ECB President Mario Draghi and huge deal flows helped offset concerns over global growth after Japan slipped into recession. The blue-chip DJIA climbed 13 pts to 17,648 (+0.07%), narrowing missing a record, while the broad-based S&P 500 crept up 2 pts to 2,041 (+0.07%) and the tech-heavy Nasdaq Composite shed 18 pts to 4,671 (-0.4%). The small cap Russell 2000 lost 0.8% for its third day of losses. The CBOE Volatility Index jumped 5.1% to 13.99, suggesting that traders are getting a little jittery. Reinforcing the sentiment, JPMorgan advised investors to dump US equities in favour of European stocks on valuation grounds and ECB’s stimulus package. Markets were under pressure in the morning trade on news that Japan’s economy contracted 1.6% last quarter instead of an expected 2.2% growth, and less-than-stellar manufacturing data in the US. Industrial production fell unexpectedly in Oct, the second drop in three months, weighed down by declines at utilities, mines and automakers. Separately, the Empire State manufacturing index rebounded slightly in Nov but still well below Sep levels, indicating a downshift in activity. Comments by Draghi that the ECB would be open to buying government bonds, if needed, helped underpin the market in the afternoon session. In deal news, oil services giant Baker Hughes surged 8.9% after agreeing to a US$34.6b takeover offer by rival Halliburton (-10.6%), while Allergan leapt 5.3% on news that it is close to a US$66b acquisition deal by drug maker Actavis (+1.7%%). This is likely to end Valeant Pharmaceutical’s (+1.9%) hostile bid for the Botox maker. Meanwhile, DreamWorks tripped 14% on reports that merger talks between the Hollywood studio and Transformers toymaker Habro (+4.4%) fell through. Nasdaq stocks were weak, weighed by Google (-1.5%), Gilead Sciences (-1.6%) and Apple (-0.2%). Among other stocks in focus, Tyson Foods jumped 5.8% after its 4Q earnings beat forecasts, while Linkedin lost 4.5% on plans by Facebook (-0.9%) to launch a professional version of its social network in the next few months. Ford gained 2.6% after its new aluminium F-150 pickup was named the best buy for 2015. Volume was light with 5.7b shares traded on US exchanges, 12% below the three-month average. Declining issues outnumbered advancing ones by 1.25 to 1 on the NYSE and 1.93 to 1 on the Nasdaq. S’pore shares are likely to remain lackluster, suffering from a lack of catalysts and trading interest as funds head northwards to Hong Kong and Shanghai, which is beneiftting from the trading link,, giving international investors direct access into the vast Chinese market. Topside resistance for the STI is capped at 3,360 with support at 3,270. Stocks to watch: *Wee Hur: 3Q14 net profit swelled 19-fold y/y to $88.8m, boosted by a surge in gross margin to 43.3% (+30.9 ppts). Revenue jumped nearly five-fold to $455.3m, mainly due to the full recognition of industrial development, Premier@Kaki Bukit, which attained TOP in Aug ‘14. Construction order book stood at $397.2m, which will provide work through FY17. BVPS at $0.33. *CapitaLand: Entered into a 50/50 JV with the Credo Group to develop an integrated development in Central Jakarta, comprising a Grade A office tower, mid-to-high end residential units, serviced residences and retail space spanning a total gfa of more than 40k sqm. Construction is expected to commence in 2015 with estimated completion in 2018. The total development cost is ~$220m. *Centurion: Awarded an open tender to design, build and operate a 12,000-bed purpose-built workers village in Penang (2 phases of 6,000 beds each). The group will pay RM20.8m for the 99-year 12.6acre land plot. *Mermaid Maritime: Its Indonesia business unit has chartered in a 5-year old DP2 dive support vessel, for 5 years at a cost of ~US$15m per year, with options to extend for another 5 years. Vessel delivery is scheduled in Dec ’14. The Indonesia flagged vessel will undertake inspection, repair and maintenance contracts we well as perform saturation diving for construction support, ongoing field maintenance and call out repair. *Boustead: 88.2%-owned Esri Australia has been award a landmark A$16.5m ($18.6m) contract from the Australian Government Department of Defence (AGDD). The three-year contract includes the provision of Esri ArcGIS software, professional services, training and after-sales software services to AGDD, and is expected to positively impact FY16-17 group earnings. *CSE Global: Clinched two contracts worth US$17m ($22m) from a US energy company for a deepwater project in the Gulf of Mexico. Work will be executed over 4Q14 - 4Q15. *Midas: Subsidiary Jilin Midas Aluminium Industries secured Rmb151.7m worth of contracts to supply high-speed train car body components to CNR Changchun Railway Vehicle, bringing the group’s year-to-date orders to Rmb615.7m. The new contracts are expected to positively impact FY14-15 earnings. *TIH: Signed a MOU with non-performing loans servicing specialist, Sheng Yuan Investment Management, and a leading Chinese online finance marketplace, to establish a peer-to-peer online platform to provide financing secured by high quality collateral (including properties) in China. *RH Petrogas: Commenced drilling the first of its 1,008 development wells approved in Fuyu 1 Block in Jilin, China. Up to 15 wells will be drilled and completed before end of 2014 and production is expected to start in 2015 spring. *Trans-Cab IPO: Cancelled on eve of offer closing, after being informed of unexpected additional insurance premium billings.