Daily Morning Watch - 5 October 2012

SINGAPORE

SembCorp Marine (SMM) said its Jurong shipyard unit has signed a letter of intent to build a semi-submersible accommodation rig for operator Prosafe SE. Financial terms were not disclosed.

Mapletree Logistics Trust (MLT) was downgraded to "underperform" from "outperform", Ascendas REIT (AREIT) and Cambridge Industrial Trust (CREIT) to "underperform" from "hold" at Daiwa Securities.

US indices traded higher on Thursday. On the US economic data front, initial jobless claims increased 4,000 to 367,000 (370K expected) in the week ended September 29th while factory orders dropped 5.2% MoM (-5.9% expected) in August. FOMC participants saw "significant downside risks" and "persistent headwinds" to recovery according to the FOMC minutes. Stocks in the diversified financials and automobiles sectors were firm while shares in the real estate and technology hardware & equipment sectors were under pressure. Looking at some US company news, Applied Materials (AMAT -0.54% to $11.1) announced a restructuring plan to cut 900-1,300 jobs, equivalent to 6-9% of the Co's global workforce. Separately, Sprint Nextel (S -2.12% to $5.09) may consider a bid for MetroPCS Communications (PCS +3.68% to $12.69) reported Bloomberg. In other news, HMS Holdings (HMSY -13.81% to $27.79) cut its FY12 revenue guidance to $480-490M from $500-$515M and its adjusted EPS forecast to $0.85-0.90 from $0.91-0.96.

In Europe, the European Central Bank left its benchmark interest rate at 0.75%, where it has been since July. Mario Draghi said the bank is ready to start buying government bonds as soon as the necessary conditions are fulfilled by any countries needing assistance. The Bank of England left its main interest rate at a record low 0.50 percent and to stick by its current Quantitative Easing (QE) stimulus amount. Regarding stocks, ThyssenKrupp jumped after a report that Korean steelmaker Posco submitted a letter of intent for its American unit. Halfords surged the most ever after saying earnings will be in the upper half of its previous forecast. This morning, the Nikkei225 index opened higher.

CHINA - HK

China market closed during October 1-5 for Mid-Autumn Festival and National Day.

Hong Kong 's retail sales increased 4.5% YoY to HK$35.8B in August (+5.8% expected) vs +3.9% (to HK$36.5B) in July according to the government.

S&P pointed out that the world's banking industry is still clouded with uncertainty : "The global economic recovery remains precarious, and the eurozone has fallen back into recession. New banking rules and regulations are in the works and investors remain wary of taking on bank-related risks. Banks are still in restructuring mode, with some on government and central bank life support, especially those in Western Europe . (...) The main risks to global banking in our view are located in three areas of the world, but their effects are intertwined: resolution of the eurozone crisis, the direction of the US economy and fiscal adjustment, as well as the limited possibility of a hard landing in China ."

HSBC Holdings (5) announced a restructuring of its Islamic finance business, saying: "It will focus its Islamic finance offering on customers in Malaysia and Saudi Arabia , and maintain a limited presence in Indonesia . (...) The Group will cease to offer sharia-compliant products and services in the UK , the UAE, Bahrain , Bangladesh , Singapore and Mauritius , with the exception of wholesale Islamic financing/sukuk (bond) products that will continue to be offered in these jurisdictions and globally through HSBC Saudi Arabia Ltd."

Standard Chartered (2888) said Singapore 's state investment company Temasek Holdings misinterpreted UK corporate governance rules when it abstained from voting to re-elect some bank board members in May, according to an emailed statement cited by Dow Jones.

Li & Fung Ltd (494) is said to be negotiating the acquisition of Synergies Worldwide, a New York-based sourcing firm engaging in the fast fashion sector, reported Reuters.

Cathay Pacific Airways (293) said it has reached a new multi-year distribution agreement with Sabre Travel Network, which it said will broaden its customer reach by "offering Sabre-connected travel agents a comprehensive range of content, fares, schedules and inventory".

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