SG Market (08 Jun 15)

Singapore shares may face further downward pressure following the mixed close on Wall Street on continuing Greek woes and robust US payrolls that brought forward the odds of a Sep linterest rate lift-off, sending both Treasury yields and the dollar soaring.

Major news for the week ahead will include an announcement by MSCI on Tue on whether China A-shares will be included in its emerging market indices, while the Greek debt crisis and strength of the US economy will continue to dominate headlines.

Regional bourses opened mixed, with Tokyo up 0.3%, while both Seoul and Sydney are trading 0.2% and 0.1% lower this morning.

From a chart perspective, the STI has moved below its 200-dma at 3,360, with next level support now tipped at 3,268. But technical indicators are grossly oversold, but have yet to flag any signs of a rebound.

Major news for the week ahead will include an announcement by MSCI on Tuesday on whether China A-shares will be included in its indices, while the Greek debt crisis and strength of the US economy will continue to dominate headlines.

Stocks to watch:
*Property: S’pore government highlights that it will continue to monitor the property market closely and consider suitable adjustments to its cooling measures when necessary. The government was responding to a Business Times query about strong market sentiments that there will be changes to cooling measures, especially the additional buyer's stamp duty in the near term.

*Strategy: A Business Times study showed that large firms on SGX delivered better average returns over the past three years versus its smaller counterparts. Analysis looked at 319 stocks as at May 18, with market value ranging from $11.4m to $68.5b. Over the three years, largest stocks achieved 40.2% total return versus -2.2% for the smallest stocks. Valuations tend to reflect relative returns. Dividends are a significant driver of large caps' outperformance, while analysts noting that over past five to six years, dividends are ~20-25% of total market returns.

*SMRT: Dropped its bid for Singapore’s fourth telco licence after deciding not to exercise its option to subscribe for shares in OMGTel in favour of allocating capital to its current businesses.

*Spackman: Associate company, Spackman Media Group has agreed to subscribe for 88.9% of Delmedia’s shares for Krw1.6b. The target is one of Korea’s leading producers of variety shows, and is also engaged in the talent management business.

*CNA: Agreed to transfer wastewater treatment plant to United Envirotech for $15m. Assuming the deal was completed at end Dec ’14, both NTA and loss per share would have been unaffected. The transfer is in line with CNA’s corporate restructuring plans.

*IPS Securex: Signed LOI with a dealer for the supply of PepperBall brand of non-lethal countermeasure technology products for US$4m.

*Lereno Bio-Chem: Extending target date for entering into definitive S&P to acquire 51% of HTwo Education Holdings to 4 Jul.