SG Market (07 Oct 13)

SG Market: Sentiment is expected to remain fragile even as Wall Street rebounded on optimism that lawmakers would reach a deal to end the budget impasse and avoid a default on the federal debt. Political wrangling continued as House Speaker John Boehner reiterated the Republicans call for negotiations but there was no progress on the stalemate over the weekend. The government shutdown has made investors nervous as it drags on but the impact has so far been limited. A more serious concern would be the federal debt limit, which a divided Congress must raise by 17 Oct to avoid an unprecedented US default. Economic data has been delayed by the shutdown and the Sep jobs report was not released last Fri. According to estimates, a two-week government halt would shave off 0.25 ppt off 4Q economic growth. Amid the uncertainty, the STI is expected to hover with its trading range of 3,36 and 3,200. Stocks to watch for: *Keppel Corp: Signed MOU with Pemex, Mexico’s national oil company to jointly develop, own and operate a yard facility in Mexico. Total yard development is estimated at US$400m with Phase 1 costing around US$150m. The first phase will support the construction of six KFELS B class jackup drilling rigs and subsequent phases would enable the yard to take in semisubmersibles and drillships for repairs, undertake FPSO and FLNG vessel conversions, as well as fabricate topside modules and other offshore structures. *KS Energy: Signed MOU with Mexican conglomerate Empresas ICA to set up a JV which will provide drilling services and heavy capital equipment for Mexico’s expanding oil and gas industry. By 2014, the group will take delivery of two new jack-up drilling rigs valued at US$240m each, which were ordered from Cosco in May 2011 for US$194m each. *Blumont/LionGold.Asiasons: SGX lifts trading suspension on the three stocks but lists them as designated stocks with restrictions on short-selling and taking on new contra positions (cash upfront). Under its trading rules, SGX may may declare a stock as "designated security" if it views there has been "manipulation of the security or excessive speculation in the security, or it is desirable in the interests of market”. *LionGold: Reiterates that the company is in full compliance with SGX listing rules and suggests that the recent volatility in its share price may be due to a broking house designating the stock. The group also discloses that it is currently in advanced negotiations to acquire a foreign-listed gold mining company and outlines its strategy to raise its gold resources to 10m oz, reserves to 2m oz and production to 200,000 oz by end of 2014 through acquisitions and organic growth. *Blumont: Calles off plans to buy Australia-listed Cokal for $146m for after its shares plunged 58% and "materially and adversely affected the commercial terms discussed with Cokal". Both parties believe in the strategic merit underpinning the proposed transactions and will continue to explore opportunities for such transactions. The group had planned to buy Cokal via issue of 72.2m new sares @ $2.02. *Armarda: Associate, China Mobile Satellite Communications Group (CMSCG) announced that it has signed a supplemental agreement with China Telecom Satellite Communications (CTS) to jointly promote Thuraya SatSleeves in China, targeting sales of 50,000 units by end 2014. The SatSleeve, which debuted in Mar 13, is the world’s first satellite adapter for iPhones. It can transform an iPhone into a dual mode satellite phone by attaching the SatSleeve to the iPhones, allowing users to conduct voice communication and to send text msgs via satellite. *Yellow Pages: Disposing its entire 49% interest in Integrated Databases India (IDIL) to Living Media India, the current 51% shareholder of IDIL for Rs50m (~$1.1m). IDIL is carried at a book value of $1.17m and net tangible asset of $1.7m. *Oceanus: Based on the assessment by its China production team, some of its abalone farms and production facilities were damaged by Typhoon Usagi, which also wiped out some of its abalones. The group estimates the losses in biological assets to be ~Rmb12.3m. *AsiaPhios: At close of offer, IPO of 122m shares @ $0.25 was 3.8x subscribed. Among its investors is commodity guru Jim Rogers, who was allotted 6.1m placement shares. Trading of AsiaPhos shares will commence on the Catalist board on 7 Oct, 0900h.