SG Market (19 Aug 15)

Singapore shares could remain in the doldrums following the negative close on Wall Street, dominated by headlines from China, as investors worry that the stronger housing data could dent policy response and equity interest.

Regional bourses are trading lower this morning in Tokyo (-0.2%) and Seoul (-0.4%), but higher in Sydney (+1.3%).

From a chart perspective, the STI is in a bearish downtrend with immediate support at 2,950 (Feb ’14 low) and overhead resistance at 3,150.

Stocks to watch:
*Banks: Spore-based wealth managers are under pressure from a global move towards tax info sharing, as Asian countries including Indonesia and India chase undeclared money in S’pore. Indonesia is considering offering tax amnesty to individuals willing to repatriate funds from abroad - targeting US$225b which Jakarta says is parked in Spore alone, with bankers estimating that Indonesia accounts for ~30-50% of private banks business in Spore. Deloitte estimates that S’pore manages US$470b of private client assets.

*Tourism: S’pore Tourism Board is launching a $10m "Experience Step-Up Fund" under its Tourism Product Development Scheme to encourage businesses to develop new tourism experiences that will enhance overall visitor experience and satisfaction in S’pore. The fund will also help businesses improve amenities and infrastructure at existing attractions, precincts and retail malls to provide a better visitor experience.

*Noble: Critics highlight that Noble is avoiding real issues such as the proportion of its profits from fair valuation of MTM contracts, adding that the recent investor’s presentation was “yet another marketing attempt without any substance", with "no material new disclosure". Meanwhile, short-selling levels on the group have more than doubled over the last month, although SunGard's Astec Analytics highlighted that with the supply of the stock available for lending now reaching utilisation levels of more than 80%, this is a name that is becoming increasingly hard to borrow, which could restrict the activities of the short-sellers.

*First Resources: Jul production of CPO was at an all year high of 57,158 toones (+14% y/y) underpinned by a 14.9% jump in FFB harvest. Notably, CPO extraction rates grew a further 0.8ppt to 22.7%, besting its 2Q15 rate of 22.5%.

*Ley Choon: Secured $6m worth of contracts awarded by the PUB. The contracts entail the repair, supply, and laying of watermains, as well as other contract work for network services and are expected to start in 2015 and end in 2017.

*Midas: Secured three contracts worth Rmb94.6m to supply aluminium alloy extrusion profiles for metro trains to CNR Changchun and NPRT, both long-time customers. The orders are slated for delivery in 2015/16.

*Frasers Commercial Trust: Realised $44.1m in net proceeds after entering into an agreement with Frasers Hospitality China Square Trustee to utilise 16,000sqm for the development of a 16-storey hotel and commercial project at China Square Central. The proceeds will be used to prepay a portion of bank borrowings and be distributed to unitholders as capital distribution.

*Thakral: Entered into a 50:50 JV with the Puljich family, Australian developers of retirement resorts, to acquire sites in South Queensland and Northern New South Wales for developing more than 1,000 resort-style retirement homes before expanding across Australia. The JV, GTH Resorts recently acquired a 8.46-ha site at Highfields, Queensland for A$6.3m to build 200 homes with total development cost of A$35.7m, mainly to be funded internally, from sales proceeds and bank loans.

*SBI Offshore: Agreed to divest its entire 35% stake in Jiangyin Neptune Marine Appliance to Mr. Hua Hanshou, a Chinese businessman for US$3.5m as the associate have not contributed to the group’s cash flow despite being profitable in FY14, and the group expects the associate’s performance to deteriorate in the current year.

*Beng Kuang Marine: Proposed to undertake a share consolidation of every four existing shares for 1 new share.