Singapore market (10 Jun 13)

Singapore market: The Singapore market is likely to start this week on a positive tone, led by advances in the US and Japan. Nevertheless, volatility has risen across all asset classes, as markets try to price for higher interest rates. Stay alert for potential reversals as investors fade the rally, amid continued uncertainty over the direction of the Fed’s monetary policy. US stocks gained Friday, with the S&P 500 up 1.3%, posting its biggest two-day increase since Jan. Notably, US payrolls rose 175,000 last month, pipping expectations of a 163,000 gain. Market watchers note, it was a number strong enough to indicate the US economy is still making progress, “but the improvements aren’t happening too fast to warrant the Fed to aggressively taper their bond purchases”. Meanwhile, Nikkei futures surged more than 4% this morning, after Japan’s public pension fund said Friday that it would sell bonds to buy more Japanese equities. Currencies exhibit higher volatility, with the pound rising 2.3% - its biggest weekly gain against the dollar in more than three years, and the yen featuring wide 250pip swings on Friday alone. The STI may bounce off its support at 3,185 (the 200 day moving average) and make a bid to touch its initial resistance at 3,233. A sustained upmove would trigger a positive reversal for the currently oversold technical indicators, and bode well for near term momentum. Stocks to watch for: * Sembcorp Industries: its solid waste management subsidiary, SembWaste, has been awarded an 8-year contract worth a total of $299m by the NEA, to provide refuse collection and recycling services to the City-Punggol sector of Singapore. * Raffles Medical: has appointed Jones Lang LaSalle Property Consultants to advise and manage the sale of the commercial property at 30 Bideford Road. This comes after the group’s numerous unsuccessful attempts to gain approval for change of use of the commercial podium to a medical centre. The 42,688sf strata-titled freehold property was carried at a fair value of $98m (or $2,296psf), as at end FY12. * AsiaMedic: has entered into a Heads of Agreement with Five Oceans Service (FOSC) to incorporate a 49/51 JV, to set up a PET/CT scanner in City Hospital and a MRI scanner in Nyein Hospital in Mandalay, Myanmar. The expected investment cost is US$3m, with operations to commence by 2H14. Both parties have 6 months to enter into a definitive JV agreement. * Asia Fashion: its wholly-owned subsidiary, Fujian Qianfeng Textile Tech has received claims amounting to Rmb517m from customers for delivered products that allegedly failed to meet customers’ specified requirements. Management is seeking legal advice on the validity of such claims. * St James: has entered into a proposed placement of 60m new shares to 6 individuals at $0.0405 each. The new shares represent 18.6% of the existing share base, and will be issued at a 10% discount to the counter’s last close at $0.045. Net proceeds of $2.2m will be used for general corporate and working capital purposes. * WE Holdings: announced the cessation of the proposed sale of its existing electronics business to Serial System for c.US$2.1m, after failing to reach an agreement on the terms of the sale. *China Environment: responds to SGX’s query on trading activity. Says it has received the notices from substantial shareholders, Prosper Big International and Mr Ma Ong Kee, that they have sold (via married trade) 10m shares each at $0.125 per share on 7 Jun. *MFS Tech: small fire at the lamination press area in its Malacca plant. The rest of the plant processes housed in adjacent buildings were not affected and did not suffer damage. There was no reported loss or injury. Production capacity will be gradually restored. Management believes there will be no adverse impact to the FYSep13 financials.