Wednesday, July 16, 2014

SG Market (16 Jul 14)

US Market: US shares pulled back after the Fed raised concerns about the overvaluation of some technology stocks, overshadowing better-than-forecast bank earnings. The DJIA inched up 5 pts to 17,061 (+0.03%), while the S&P 500 slid 4 pts to 1,973 (-0.2%) and the Nasdaq Composite slumped 24 pts to 4,416 (-0.5%). A positive start in the session on better-than-expected results from JPMorgan and Goldman Sachs and upbeat economic data fizzled out when Fed Chair Janet Yellen told Congress that the central bank could act on interest rates sooner if the labour market continues to improve, while a separate policy report cautioned that smaller stocks in social media and biotechnology appear substantially stretched. This sent the Russell 2000 small cap index 1% lower with Internet (-0.7%) and biotechnology (-2.3%) shares the hardest hit. Leading technology and biotech names dropped, including Amgen (-1.8%), Biogen (-2.4%), Facebook (-1.1%), Twitter (-1.1%) and Apple (-1.2%). In economic news, Empire State manufacturing activity picked up in Jul to its higest reading in four years, while retail sales showed a broad-based gain in Jun. Among key stocks in focus, JPMorgan rose 3.5% after its 2Q profit beat estimates, while Goldman Sachs added 1.3% after reporting a surprise 5% rise in earnings. The good banking results lifted BofA (+1.6%), wehich reports earnings on Wed. Tobacco giant Reynolds lost 6.9% after making a US$27.4b takeover bid for rival Lorillard, which plummeted 10.5%. Johnson & Johnson fell 2% despite reporting higher than expected results after guiding slower sales momentum later this year. Meanwhile, BlackBerry's plunged 4% after the bell, on news that IBM will partner Apple to sell iPhones and iPads to corporate clients, while Yahoo climbed over 3% in after hours trade after reporting 2Q results that were in line and Intel also rose 3.4% after forecasting 3Q sales that topped estimates. The S’pore market is likely to open mixed with slight positive bias as the STI continues its trudge towards the near term objective of 3,310 with downside support at 3,270. Stocks to watch: *SPH: 3QFYAug14 net profit slumped 52% y/y to $89.6m, mainly due to the absence of fair value gain on investment properties ($111.4m) booked last year. Otherwise, the results would have been broadly in line with expectations. Core operating profit grew 7.5%, thanks to cost savings from lower newsprint costs and factory overheads. Revenue however declined 4.9% to $312.9m, attributable to a 7.6% drop in core media sales. *First REIT: 2QFY14 DPU expanded 8.1% y/y to a record 2¢, implying an annualized yield of 6.6%. Distributable income rose 13.6% to $$14.4m. Gross revenue and NPI grew 14.5% and 15.4%, to $23m and $22.7m, respectively, on contributions from Siloam Hospitals in Purwakarta, Bali, and Simatupang, all of which were operating at full occupancy. Aggregate leverage for the REIT stood at 32.9%. NAV per unit at $0.97. *SIA: Jun operating data. SIA pax carriage decreased 1.4% y/y, against a 1.3% capacity reduction, leading pax load factor constant at 81.5%. SilkAir pax carriage rose 2.3% y/y, while capacity rose 3%, and pax load factor dipped 0.5ppt to 72.7%. Overall cargo factor improved marginally by 0.1ppt to 62.7%, as the 3.7% decline in cargo traffic was matched by a 3.8% drop in capacity. *OCBC: Declared it will not raise its HK$125 per share offer price for Wing Hang Bank. The offer closes on 29 Jul. OCBC currently holds a 51.1% stake in the Hong Kong lender. *Grand Banks Yachts: Shareholders approved the A$10m acquisition of Palm Beach Motor Yacht at yesterday’s EGM. *King Wan: Has secured five new mechanical and electrical (M&E) projects in Singapore worth a total of $25.5m, during the period from May to Jul '14. These projects will commence in 2H14 and are scheduled to be completed by 2017. The current order book stands at $178m with contracts lasting till 2017. *Yangzijiang: Disposing its 50% stake in Wujiang Jinke Yanzi Real Estate Development Co for Rmb200m, as well as its entire stake in Jiangsu Leyuan Innovation International Trading Co for Rmb10m. Separately, the group is subscribing for a 100% stake in Jiangsu Marine Equipment Co for Rmb0.5m. *Vard: Secured a contract for the design and construction of a PSV for E.R Offshore, with delivery due in 2Q16. *Midas: Won Rmb52.2m of orders from CNR Changchun Railway Vehicles to supply aluminium alloy extrusion profiles used in the manufacture of metro train cars for the Nanchang Metro Line 1 and Wuhan Metro Line 3. The contracts are slated for delivery between 2014-15. *Etika: Counter will be renamed Envictus International wef 17 Jul. *Armarda: Granted extension to complete the placement of 1.44b new shares at HK$0.05 each.

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