SG Market (06 Jul 15)

Singapore shares are expected to trip at the open amid higher volatility and a flight to safety, after Greece rejected tough bailout terms demanded by its EU-IMF creditors in a historic referendum yesterday, placing its EU membership in jeopardy. Wall Street was closed on Fri for Independence Day holiday.

The ball in now in ECB’s court on whether to continue emergency funding for Greek banks and its response could be key to the extent of contagion for the rest of the eurozone. EU officials and leaders will be meeting over the next two days to dicusss the Greek crisis and next line of action.

Regional bourses were jolted this morning with Tokyo (-1.2%), Seoul (-1.2%) and Sydney (-1.8%).

Apart from Greece, investors are likely to eye the start of the 2Q results season this week, with Alcoa reporting its results on Wed.

Adding to the anxiety, China’s stock market faces an uncertain week after a 30% plunge in the past three weeks, forcing officials to temporarily halt IPOs and introduce market support measures to prevent a full blown market crash.

From a chart perspective, downside support for the STI remains at its recent low of 3,268, with resistance at 3,360.

Stocks to watch:
*Healthcare: The Business Times reported that the SGX Healthcare Index has outperformed the STI by more than 20 ppt during the period from Jan to Jun ’15, generating a total return of 21.4% versus the STI’s 0.14%.

*SGX: Jun securities daily average value grew 8% m/m to $1.2b (+20% y/y), and derivatives daily average trading volume rose 31% m/m to 1m contracts (+144% y/y). Total commodities saw a record volume of 672,383 contracts, comprising SICOM rubber (+53% y/y; -9% m/m), iron ore and steel derivatives (+>100% y/y; +18% m/m) and forward freight derivatives (+1700% y/y).

*Q&M: Signed MOU to purchase a 60% stake in a dental clinic in Panjin, Liaoning Province, China. The MOU provides for a profit guarantee of no less than RMB12.9m and dividends of no less than RMB7.7m over a 12 year period. The acquisition is part of Q&M's plan to continue the expansion of its dental business in China.

*Viking Offshore and Marine (VKOM): To purchase and leaseback a land drill rig and related equipment from a Chinese vendor for US$15.3m. Upon completion, VKOM will lease back the rig on a bareboat charter basis to a major South-Asia energy operator to be deployed in the North African region for 48 months from Sep '15 for US$31m, which includes a put option for the rig at the end of the charter period.

*ISDN: Holds ground breaking ceremony for the development of South Sulawesi “Datara” 9.7 MW
mini-hydropower plant (Datara MHPP). Gowa Perusda, owns 20% of the JV entity while ISDN owns 49% and a local business partner PT Bukit Lau owns the remaining 31%. The Datara MHPP is expected to take 18 to 24 months to complete and will cost ~US$20m to build.

*CSC: Expanding core business to include property business, which includes the acquisition, development and/or sale of properties for capital growth or recurring rental income purposes.

*GMG: Announced the resignation of CFO Zhou Laichun, who has moved on to pursue his own personal interests. In turn, the board has appointed Alan Wong Tuan Keng as the new CFO.