Daily Morning Watch - 23 July

SINGAPORE

Singapore Exchange (SGX) denied it is in talks on a potential merger with the London Stock Exchange.

Keppel Corp (KEP) price target was raised to S$12.80 ("overweight") from S$11.20 ("equalweight") and Sembcorp Marine (SMM) cut to S$5.20 ("equalweight") from S$5.40 ("overweight") at Morgan Stanley.

Capitacommercial Trust (CCT) price target was raised to S$1.56 from S$1.47 at Daiwa Securities.

2nd Annual International Conference on Innovation and Entrepreneurship (IE 2012)

SIA Engineering (SIE): ex-div S$0.15

US indices dropped on Friday. On the US economic data front, there was no major news. Stocks in the utilities and energy sectors traded higher while shares in the consumer services and transportation sectors were under pressure. Regarding US stocks, Google (GOOG +2.99% to $610.82) reported 2Q adjusted EPS of $10.12 ($10.16 expected) vs $8.74 a year earlier on revenue of $12.2B, up 35%. Separately, Microsoft (MSFT -1.79% to $30.12) posted 4Q LPS of $0.06 and adjusted EPS of $0.73 ($0.62 expected) vs EPS of $0.69 a year earlier and on revenue of $18.1B, up 4%. In other news, General Electric (GE +0.35% to $19.87) reported for its 2Q an operating EPS of $0.38 ($0.37 expected) up 12% YoY and a GAAP EPS of $0.34 on revenues up 2% YoY to $37B. Xerox (XRX -6.82% to $6.7) announced for its 2Q an adjusted EPS of $0.26 (in line with expectations) on revenues down 1% to $5.5B.

In Europe , Spanish government expects 2013 GDP to be down by 0.5% vs a previous forecast of +0.2%. German producer prices fell 0.4% in June (-0.2% expected) vs -0.3% in May. Regarding the stocks, Nokia plunged as Fitch Ratings downgraded the Co's debt rating by two steps to "BB-". Scania gained ground on strong T2 order book. This morning, the Nikkei225 index opened lower with a bearish gap.

CHINA - HK

China Securities Regulatory Commission would lower stock-transaction handling fee again by 20% starting September 1, reported National Business Daily.

China's 117 central state-owned enterprises, which are administered by the State-owned Assets Supervision and Administration Commission (SASAC), posted 1H combined net profits of 387.0B yuan, down 16.4% YoY (-13.6% YoY in 1Q), announced the SASAC.

Citic Securities (6030) announced the acquisition of a 19.9% stake in Credit Agricole's Hong Kong-based brokerage unit CLSA for $310M with an option to buy the remaining 80.1% for $942M. The Co added: "Due to the complexity of the integration of CLSA and CA Cheuvreux, the parties to the  _9.9% Share Sale and Purchase Agreement agreed to exclude CA Cheuvreux from the scope of the Original _9.9% Acquisition."

China Merchants Holdings (International) Co (144) posted a profit warning saying 1H profit may decline significantly compared to a year earlier, citing "an estimated decline of 55% to 75% in the net profit of China International Marine Containers (Group) Co Ltd" and last year's one-time gain of HK$1.4B.

Haitong Securities (6837) said it has approval from China Securities Regulatory Commission for establishing 4 branches each in Changsha city of Hunan province, Shijiazhuang city of Heibei province, Xi'an city of Shaanxi province and Nanning city of Guangxi Zhuang Autonomous Region .

China Telecom (728) reported the aggregate number of 3G service subscribers rose 2.8M MoM in June (+2.6M in May) to 50.96M and that of broadband subscribers increased 1.22M in June to 83.7M.

ZTE Corp (763) said certain directors and senior managers purchased appx. 443K A-shares of the Co in the July 18-19 period.

Angang Steel (347) said members of its senior management bought appx. 252K A-shares of the Co at 3.68-3.84 per shares in the July 9-19 period and agreed to a lock-up period of two years.

Weichai Power (2338) issued a profit warning saying 1H net income may decline less than 50% YoY.

China Railway Construction (1186) said it has completed an issuance of 10B yuan 1-year note at 3.6% coupon rates.

BBMG Corp (2009) posted 1H net income down 12.8% YoY to 1.4B yuan on revenue of 15.0B yuan, up 14.8%.

Shanghai Chengtou Holding (600649): ex-div CNY0.05 COFCO Tunhe (600737): ex-div CNY0.03 Shanghai Dazhong Public Utilities Group (600635): ex-div CNY0.07