Tuesday, November 25, 2014
SG Market (25 Nov 14)
US Market: US stocks extended gains to record highs, led by small caps and retailers in a quiet session ahead of s deluge of US economic data tomorrow and Thanksgiving holiday on Thu. The blue-chip DJIA climbed 8 pts to 17,818 (+0.04%), its third straight record close, while the broad-based S&P 500 advanced 6 pts to 2,069 (+0.3%), and the tech-heavy Nasdaq Composite added 42 pts to 4,755 (+0.9%). But it was the small caps that stole the day with the Russell 2000 jumping 1.2% to the highest level since Jul. Sentiment was lifted by hopes that China will take further accommodative monetary policy and an unexpected rise in German business confidence in Nov. I the US, the services sector expanded at a slower pace this month as growth in new business declined. Consumer discretionary stocks rose the most, led by Urban Outfitters (+5.4%), Gap (+4.6%), Coach (+2.6%) and Best Buy (+2.3%) before Black Fri on 28 Nov kicks off the holiday shopping season. Retail sales are expected to rise 4.1% this year, compared to 2.9% average of the past 10 years, as consumers increase spending, spurred by lower gasoline prices. Helping the Nasdaq and tech stocks was the 1.9% jump in Apple shares to US$118.63 to within US$700b market cap as a broker raised its target price to US$135 on strong demand for its iPhone 6. Intel also rallied 1.9%. Energy stocks weighed with declines in ExxonMobil (-1.1%) and Chevron (-0.8%) as crude oil slid 1% ahead of an OPEC meeting this week, where members are facing calls to cut production to arrest the recent slide in oil prices to a four-year low. The biggest drag was in telecos (-1.4%) with Verizon Communications (-1.4%) and AT&T (-1.6%) both down on concerns of higher capacity costs and slower revenue growth from increased competition. Industrial conglomerate United Technologies lost 1.4% following the retirement of its Chairman and CEO, while electric car maker Tesla rose 1.6% on news that it was in collaboration talks with BMW to develop batteries and light-weight parts. Among other stocks in focus, Trina Solar tumbled 5.2% after it posted 3Q flat earnings, while in M&A news, Platinum Underwriters surged 21.1% on a takeover offer by RenaissanceRe (-2.7%). Volume was thin with 5.6b shares traded on US exchanges, 15% below the three-month average. Advancing issues outnumbered declining ones by 1.65 to 1 on the NYSE and 2.45 to 1 on the Nasdaq. Investors will be looking out for a stack of economic releases this week, including updates on housing, inflation, consumer sentiment, durable goods orders and 3Q GDP. S’pore shares are looking a little tired after nearly completing a V-shaped recovery from its Oct bottom with the STI facing stiff resistance at 3,360. Some momentum technical indicators have also crossed into overbought territory, suggesting limited upside in the short term, as there are few market catalysts to attract new funds flow. Immediate support is now seen at 3,310. Stocks to watch: *IHH Healthcare: 60%-owned GHK Hospital awarded a HK$2.5b (RM1.1b) contract for superstructure works in Hong Kong to Hip Hing-Chun Wo JV, for the development of a private hospital in Aberdeen Inland. *Pacific Andes: Proposed renounceable underwritten 4-for-5 rights issue at $0.051 apiece (53% discount to last close). Net proceeds of $192.3m will be earmarked for working capital and/or reduction of debt. *Asiaphos: Disclosed that its total measured and indicated phosphate resources increased to 30.3m tonnes as at 30 Sep (+31.2%), largely due to the granting of an exploration permit on 12 Aug by the Sichuan Land Dept, for a larger exploration area of ~1.54 sqm (old license: 0.55 sqm). The group is also currently awaiting approval from the relevant authorities on the renewal of it exploration rights relating to its Mine 2, which covers an area of 1.28 sqm. *Sapphire Corp: Acquiring Ranken Infrastructure, a China railway infrastructure EPC specialist, for Rmb360m ($75.9m). The consideration will be funded by new placement shares worth $16.5m (165m at $0.10/share) and a subsequent capital injection of Rmb282m ($59.4m). *Soup Restaurant: Won its litigation suit against Y.E.S F&B after the court ruled that the defendant was in wrongful possession of a sub-lease area. As such, Y.E.S will have to pay the group damages, which will be assessed separately. *Singapore Kitchen: Divesting a nine-storey light industrial building, One Commonwealth, to an unrelated third party for $0.73m, a tad below valuation of $0.77m in Jan ‘14. The group will record a post-disposal net gain of ~$0.2m. *euNetworks: Appointed Canaccord Genuity as independent financial adviser for its mandatory unconditional cash offer.