DBS Equity Research: Wired Daily 6 July 2015

kiasutrader

Publish date: Mon, 06 Jul 2015, 02:45 PM

STI to re-test 3000 level, 3270 seen holding up - Financial markets are more prepared for 'Grexit', China A-shares rebound is other market driver today

The Greeks have voted 'NO' to the referendum, increasing the odds of the country exiting from Eurozone. Asian markets are currently down around1% or more; the Euro fell and is testing the 1.10 level against USD while oil price is lower as well amid a flight from risky to safer assets. A downward knee jerk reaction is expected as investors await European markets' reactions later. Markets will be kept on its toes as European leaders scramble to meet over next 48 hours to discuss the next steps for Greece.

We expect a re-test of the 3000 level for the STI. At this stage, we maintain our technical view for the 3270 level to hold up. We think equity markets especially outside of Europe can look passed the possibility of a 'Grexit'. Safety nets have been put up over the past 3-4 years that work to halt contagion risks through the financial system and banks have reduced or cut their exposure to Europe.

Today's market driver is not limited to Greece alone. In Asia, China continues its stock market stabilization efforts over the weekend. China has halted 28 initial public offerings while brokerages pledged to buy shares and state media urged investors not to panic amid the recent stock market tumble. The FTSE China A50 Index futures are currently higher by about 5.5%.

Iran and six world powers have extended the deadline for nuclear talks to July 7, "to allow more time for negotiations to reach a long-term solution". The talks, aimed at blocking Iran's path to nuclear weapons in exchange for lifting of international sanctions, seems to be facing some hurdles in resolving disagreements on the pace of lifting of sanctions and Iran's commitment on nuclear weapon restrictions. The outcome would result in oil price volatility and performance of O&G stocks in the short-term. Market watchers believe that a final deal is near. The lifting of sanctions could flood the oil market, with an increase of up to 1mmbpd of oil (c.1% of global consumption) to the already oversupplied global market next year, and press down oil prices.

Noble Group announced that it will redeem in whole all outstanding 6.625% senior notes due 2020 on Aug 5 this year. The redemption price will be 100% of the outstanding aggregate principal amount of the securities. As at July 3, these were worth US$235m.

Q & M Dental Group has entered into a non-binding memorandum of understanding (MOU) to acquire a 60% stake in a dental clinic located in Panjin City, Liaoning Province, China for RMB 5.976m cash. Panjin Jinsai Dental Clinic currently owns and operates a dental clinic in Shuantaizi District, Panjin City. The proposed acquisition is in line with the Company's plan to continue the expansion of its dental business in China.

Soilbuild Construction Group incorporates a wholly-owned subsidiary in Myanmar, to provide construction services, including, amongst others, construction of buildings and provision of project management services.

Otto Marine has entered into a US$26m term loan agreement with a USA investment company. The term loan facility is to be utilised for the purposes of refinancing of the United States vessel "Surf Challenger" and for general working capital.

CSC Holdings proposes to expand its core business to include property development, property investment and property management. The Group believes that the proposed diversification will reduce its reliance on its existing business, offer new business opportunities, provide the Group with new revenue streams and improve its prospects.

AsiaPhos announced that it will acquire the entire issued and paid-up share capital of LY Resources for $36.8m. This follows the LYR Group achieving a valuation of approximately RMB 266.6m. The completion of the acquisition will allow AsiaPhos to acquire the economic benefits of existing mines and expand its exploration area.

Singapore now has a new gauge of how its economic winds are blowing. The Nikkei Singapore PMI, produced by Markit, the financial information services provider behind PMIs for more than 30 countries and regions, covers more sectors and companies than the familiar PMI compiled by the Singapore Institute of Purchasing & Materials Management (SIPMM). That focuses solely on the manufacturing economy and polls purchasing executives from about 150 companies, compared to Markit's 400-strong survey panel.

Source: DBS

Q&M Dental (QC7)Soilbuild Const (S7P)CSC (C06)AsiaPhos (5WV)

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