SG Market (28 Sep 16)

Attention is expected to turn to economic releases in US (Thu) and China (Fri) for glimpse on the overall health of the global economy.

Slump in crude prices on fading prospects of an oil deal is likely to weigh on oil-related names such as Keppel Corp, Sembcorp Marine and Ezion.In the consumer space, MKE downgrades Sheng Siong from Buy to Hold given limited 5% upside to TP of $1.13, and calls for a switch to Jumbo, which is upgraded from Hold to Buy, with 40% upside to the revised TP of $0.78. Seasonally stronger 4Q would benefit Jumbo, which should outperform defensive stocks such as Sheng Siong. Valuations currently favour Jumbo and positive catalysts await it as well, while Sheng Siong could face neutral to negative developments.

Regional markets opened mixed in Tokyo (-1.2%), Seoul (-0.1%) and Sydney (+0.5%).From a technical perspective, topside resistance for STI is at 2,880, with underlying support at 2,800.

Stocks to watch:
*Macro: WTO forecasts Asian export volumes to pick up 1.8-3.2% in 2017, up from 0.3% this year. Historically, strong trade growth is a leading indicator of economic growth given that trade accounts for 3x GDP.

*Economy: Pro-birth policies have worked out; Singapore's population grew 1.3% to 5.61m, with 33,725 citizen births in 2015 the highest in over a decade.

*SMRT: On media reports that SMRT's consortium with PT T-Files Indon has been awarded the contract for the construction of rail-based public transport facilities in Bandung, Indonesia, the transport group clarified it has not received official notification of the outcome of its tender. Parent Temasek Holdings is seeking to privatise SMRT and MKE is recommending shareholders to accept the SGD1.68 buyout offer.

*Keppel Corp: Subsidiary Keppel Land will buy an additional 25% stake in Vietnamese property developer Quoc Loc Phat from shareholder Pham Quang Hung for VND412.3b ($25.6m), lifting its stake to 45%.

*Halcyon Agri/GMG Global: Halcyon has obtained 58.3% acceptances in relation to its swap offer of 0.9333 new Halcyon shares for each GMG share. Closing date for the offer is on 21 Oct.*SIIC Environment: Entered agreement to acquire 60% in Ranhill Water Technologies for Rmb273.9m (1.3x P/B). Ranhill provides services for the industrial wastewater treatment market in China and its current concession contracts have a total design capacity of 260,000 tpd.

*Sing Holdings: Jointly submitted a $287.1m tender bid ($517 psf ppr) with Wee Hur for a land parcel at Fernvale Road. Subject to the award, Sing Holdings and Wee Hur will form a 70:30 JV to undertake development for a condominium project.

*Hyflux: IRAS has ruled that distributions from its $500m 6% perpetual capital securities are regarded as interest expense and accordingly, will be tax deductible. As at 1H16, the group had a tax credit of $1.3m (1H15: $1.4m expense).

*ISR Capital: Grants short term bridging loan facility of$6m to Tantalum Holding for its critical rare earth project in Madagascar.