SG Market (04 Oct 13)

SG Market: S’pore shares may face more seeling pressure with Wall Street down sharply as the partial government shutdown dragged on for a third day and the markets got hit by a triple whammy of bad news. The CBOE Volatility Index or so-called fear gauge surged to a three-month high of 18.71. As a guide, the VIX rose 160% to 43 in 3Q11 as the S&P 500 dropped 17% in the 2011 debt crisis. The S&P closed below its 50-day moving average, triggering a technical sell. A meeting between President Obama and Congressional leaders ended with no deal fuelling worries that the budget battle could escalate into a debt default. The Treasuury further spooked the market after warning that a default could have catastrophic effect on financial markets, which could lead to a recession more severe than the 2008 financial crisis, while the IMF concurred that a US failure to raise the debt ceiling could wreck havoc on the global economy. Stocks recovered from the lows of the session following a report that House Speaker John Boehner was willing to introduce a bill to raise the debt ceiling to head off a default. But just as markets seemed to be stabilising and paring losses, reports of gunshots fired near Capitol Hill stopped the recovery in its tracks. In economic news, weekly jobless calims came in a better-than-expected 308,000, below the 315,000 estimate but the ISM service index fell to 54.4 in Sep, missed forecasts of 57. Having breached technical support at around 3,160, marked by the 20 and 50-day moving averages, the STI is poised for further downside to the next support at 3,136, followed by 3,060. MACD has also exhibited a bearish crossover. Topside resistance remains at the psychological 3,200 level. Oil stocks appear to be in play led by RH Petrogas, KS Energy and Rex Int’l. Stocks to watch for: *M1: Fined a record $1.5m by regulator IDA for the disruption of its 2G and 3G mobile phone services in Jan 13, which lasted 63-71 hours and affected ~250,000 customers. IDA highlights service disruption was caused by M1's failure to ensure good electrical installation practices during its upgrading works. The fine represents 0.14% of M1's $1.08b FY12 operating revenue. *Blumont: Makes takeover offer for a unnamed foreign-listed coal mining company for $145.9m via issue of 72.2m new shares representing 4.2% of its enlarged share capital at $2.02 each. The target company incurred a loss of $7.9m in FYJun13. In addition, Blumont will invest up to $97.7m in the target company through subscription of new target shares amounting to $28.9m and convertible bonds of $68.8m. *CapitaMalls Asia: Marks key milestone with Sime Darby by commencing construction of their 50/50 JV shopping mall located in Taman Melawati, Malaysia. Melawati Mall will be an eight-storey shopping mall with a net lettable area of about 620,000 sf. The total development cost is expected to be about RM670m. *Hiap Hoe: Entered into MOU with Probuild Constructions to pursue joint development of two recently acquired properties at 6-22 Pearl River Road and 380 Lonsdale Street in Victoria, Australia. Hiap Hoe will undertake the role of the developer, while Probuild will be the main contractor. Meanwhile, the group has completed the A$43.8m acquisition of 380 Lonsdale Street, which will be redeveloped into two 51 and 47-storey towers featuring 658 apartments, 1,344 sqm of retail space, a 399-lot car parking facility and a 350-room hotel. *China Gaoxian: South Korea's Financial Supervisory Services (FSS) imposed fines on the company, its former exec chairman Cao Xiangbin, CFO, and 2 underwriters over irregularities relating to its KDR listing in 2011. The group was fined KRW2b ($2.3m). FSS claimed the group exaggerated its cash and cash equivalents at time of KDR listing by over KRW100b ($116.3m) and did not disclose material facts relating to its Huaxiang Project to expand production. Co entitled to file an administrative law suit within 90 days upon receipt of FSS' notice, if it wishes to challenge its fine. *Technics O&G: Issues a profit warning for 4QFY13 and full year FY13. No reason was offered on the causes of the expected losses.