SG Market (26 Nov 14)

US Market: US stocks ended little changed, snapping a three-day run on mixed economic reports, as the economy expanded more than previously forecast last quarter but soft readings in consumer confidence and house prices kept the moves within a tight range. The blue-chip DJIA retreated 3 pts to 17,815 (-0.02%), while the broad-based S&P 500 dipped 2 pts to 2,067 (-0.12%), but the tech-heavy Nasdaq Composite added 3 pts to 4,758 (+0.07%). The CBOE Volatility Index fell 2.9% to 12.25. The Commerce Dept revised 3Q GDP growth to 3.9%, much stronger than the 3.5% initial estimate and higher than 3.3% median forecast. This came after the 4.6% increase in 2Q, marking its biggest back-to-back advance since late 2003. However, an unexpected drop in consumer confidence to a five-month low in Nov and further moderation in home prices to its slowest pace in two years, unsettled the markets. Energy producers led the declines with a 1.6% slide as US crude fell 2.2% to US$74.09 a barrel, its lowest level since mid 2010, ahead of the keenly anticipated APEC meeting on Thu. Meanwhile, a meeting between Saudi Arabia and Venezuela with non-OPEC Russia and Mexico failed to garner any commitment to curb oil output. ExxonMobil and Chevron slid more than 1%, while both Halliburton and Schlumberger sank 3.3%. Tech giant Apple also made headlines, hitting a high of US$119.75 to reach the US$700b market cap mark, before closing down 0.9% to US$117.60. Among other stocks in focus, Tiffany rose 2.5% after posting same-store sales growth which was ahead of estimates. United Technologies gained 2.7%, recovering from Mon’s 1.4% drop following the abrupt departure of its CEO. Cable providers Comcast and Time Warner Cable jumped 2.9%, while Netflix lost 2.1%. Volume was thin ahead of Thanksgiving holiday with 6.1b shares traded on US exchanges, 8% below the three-month average. Advancing issues outnumbered declining ones by 1.2 to 1 on the NYSE and was about even on Nasdaq. S’pore shares are likely to trade sideways, tracking the grossly overbought US market, as investors stay on sidelines to await OPEC’s decision on oil production this Thu. Topside resistance for the STI is still capped at 3,360 with immediate support at 3,310. Stocks to watch: *IHH Healthcare: 3Q net profit rose 26% y/y to RM146.9m as revenue climbed 7% to RM 1.78b on growth in patient volume, revenue intensity of existing operations, as well as new contributions from Acibadem Atakent Hospital and Pantai Hospital Manjung. Notably, revenue from Mount Elizabeth Novena Hospital jumped 72% and EBITDA more than doubled. Bottom line was further buoyed by reduced dependence on purchased and contracted services and lower finance costs. *Sapphire: Acquiring Ranken, China’s second largest privately owned integrated rail infrastructure company, for Rmb360m via issue of new shares worth $16.5m at $0.10 each to all 34 beneficial owners of Ranken, and a subsequent capital injection of Rmb282m. Ranken achieved 1H14 revenue of Rmb347m and net profit of Rmb19.4m, and has an outstanding order book of Rmb2.1b. The deal is subject to shareholder approval at an EGM, with expected completion in 1Q15. *Blue Sky Power: Its 60% owned subsidiary, Waypost has inked a series of deals with ASX-listed Triple Energy, an oil and gas exploration company, whereby 1) Waypost will subscribe for 158m Tranche 1 placement shares (19.9% of enlarged stake), for A$0.79m, or A0.5¢ per Triple share, 2) Waypost will make a A$0.5m loan to Triple, which is convertible into 83.3m new Triple shares @ A0.6¢; 3) Triple will conduct a further placement of 333.3m Tranche 2 placement shares @ A0.6¢, of which 208.3m shares will be underwritten by Waypost and 125m shares reserved for existing shareholders of Triple, 4) Waypost will procure a drilling company to drill for Triple at a consideration of not more than US$2.75m, payable by the issue of up to 525.4m new Triple shares @ A0.6¢. *Addvalue Tech: Developing a radiation-resistant satellite-based communication modem to be experimented on the new VELOX-II satellite built by NTU, targeted for launch in 4Q15. Management says if the project is successful, it would allow the group to tap on the market potential of the growing space industry, and put the company in good stead to enable many Internet-of-Things applications via satellites.