Monday, December 5, 2016

SG Market (05 Dec 16)

Recent bullish sentiment may be thwarted as Wall Street retreated on profit-taking and investors mull tail risks in the eurozone after Italian PM Matteo Renzi conceded defeat in the constitutional reform referendum and will resign. For the coming week, investors will chew on the ECB meeting on Thu following the outcome of the Austrian elections and Italian referendum as well as China's trade data on Thu and consumer and producer prices on Fri.Regional bourses are pulling back, with Tokyo (-0.5%), Seoul (-0.4%) and Sydney (-0.9%) opening weaker.Technically, the STI appears overstretched with topside resistance at 2,950 and underlying support at the 2,882 breakaway gap.

Stocks to watch:
*Banks: Rallied 8-18% post-Trump’s victory, sentimentally driven by expectations of higher interest rates, and firmer oil prices. That said, MKE maintains a Negative stance on Singapore banks, as fundamental outlook of sluggish loan growth and worsening asset quality is unchanged. MKE prefers UOB (Hold, TP $18.36) for exposure.

*CapitaLand: Inked agreement to work with Chinese co-working space operator UrWork to provide co-working spaces in CapitaLand’s properties in China and Singapore. MKE has Buy on CapitaLand with TP of $4.06.

*SPH REIT: Remains interested in acquiring The Seletar Mall from sponsor but cited timing and pricing as two determining factors. Trades at 5.9% indicative yield and 1x P/B.*Nam Cheong: Received termination notice from Perdana Petroleum for one accommodation work barge order, which is expected to impact FY16 earnings. Trades at 0.34x P/B.

*Jason Holdings: Seeking High Court approval for a scheme of arrangement between the company and its creditors, as part of efforts to restructure debts and liabilities.

*USP Group: Appointed as exclusive distributor of Mercury Marine’s products in Singapore and Malaysia wef 1 Dec ’16. The agreement is for three years and with option to extend for another three years, subject to performance conditions.

*Hiap Seng/Rowsley/Enviro-Hub/Samko Timber: Will be removed from SGX Watch-list wef 5 Dec.

*Swee Hong/FJ Benjamin: Entering SGX Watch-list wef 5 Dec.

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