Daily Morning Note – 04 March 2021

PHILLIP SUMMARY

Tech shares had another ugly session on Wall Street Wednesday following disappointing US economic data and amid ongoing worries over rising Treasury yields. New data showed lackluster services sector activity and private-sector job growth that lagged expectations in February. Investors are also keeping an eye on US Treasury yields, which resumed an upward climb, a warning sign of inflation concerns that revived fears the Federal Reserve will move to raise interest rates. The broad-based S&P 500 fell 1.3 per cent to 3,819.72, while the tech-rich Nasdaq Composite Index tumbled 2.7 per cent to 12,997.75. Worries about inflation offset the improving outlook for vaccinations after US regulators approved Johnson & Johnson’s vaccine and President Joe Biden said there would be sufficient supply for all American adults by the end of May.

Asia traders brace for a renewed bout of stock and bond volatility after a surge in Treasury yields once more dragged down U.S. shares. The dollar strengthened. Futures in Japan, Hong Kong and Australia pointed lower after the Nasdaq 100 slumped to a two-month low and the S&P 500 extended its slide into a second day. A selloff in high-flying giants such as Apple and Amazon outweighed gains in banks and energy producers. Australian bonds slumped after benchmark Treasury yields approached 1.5%, and a market gauge of inflation expectations over the next five years hit its highest level since 2008. Oil surged.

BREAKING NEWS

SG

Shares of mainboard-listed Oceanus Group continued to sink on Wednesday after plummeting on Tuesday, prompting a query from the Singapore Exchange (SGX) about the “unusual price movements”. The company’s shares tumbled 2.9 Singapore cents or 45.3 per cent to an intra-day low of 3.5 cents as at 10.22am on Wednesday. The last time the company’s shares traded near this level was in mid-January. Oceanus was the most traded counter by volume on the Singapore bourse at market close, with 1.4 billion shares having changed hands. The counter was down 34.4 per cent or 2.2 Singapore cents to 4.2 cents. On Tuesday, Oceanus’ short-sell volume nearly doubled to 70.3 million shares, from 35.3 million shares the day before.

Israel-based diamond technology firm Sarine Technologies, which is listed on the Singapore Exchange’s (SGX) main board, said on Wednesday that it is planning to seek a dual listing on Israel’s Tel Aviv Stock Exchange (TASE). It expects the dual listing to be completed during the second quarter of this year. This comes as the SGX and TASE have recently authorised the dual listing of companies whose primary listing is on either one of the venues. Sarine said that it has “progressively generated growing interest” in its business and equities in the Israeli investment market, making it “natural” to want to take advantage of the development to seek a dual listing on TASE. Sarine added that the dual listing would expose the company to a broader investing public, not just in Israel, but also in the US. This is because the time difference between Tel Aviv and the US is only seven hours, versus the 12-13 hour time difference to Singapore.

Embattled boxship operator Pacific International Lines (PIL) said on Wednesday that the High Court has sanctioned its debt restructuring plan. The scheme will take effect once the company lodges a copy of the order made by the court with the Accounting and Corporate Regulatory Authority of Singapore. Under the scheme approved by PIL’s creditors last month, Heliconia Capital Management, a wholly-owned unit of PIL investor Temasek Holdings, will become the majority shareholder in PIL while pumping in some US$600 million to rescue the company. The stakes held by the family of executive chairman Teo Siong Seng will be diluted to under 15 per cent. The creditors comprise the holders of the S$60 million tranche of 8.5 per cent notes overdue since last November and other unsecured claimants as well as secured lenders

Hyflux, which was put under judicial management in November last year, currently has at least seven non-binding offers from potential investors, according to two people familiar with the matter. While it fields those offers, the Singaporean water-treatment company’s cash is becoming depleted: it had S$18.4 million of cash as of Jan 31, enough to survive five months from that date, the people said, asking not to be identified because the matter is private. The suitors have shown interest in Hyflux as a whole or for some of its assets, but the bids have varying degrees of complexity and many need additional clarification, the people said. In January this year, Hyflux said 17 potential investors were conducting due diligence for submitting non-binding offers and the judicial manager would invite shortlisted suitors to participate in second stage of bidding process on or about Feb 15

Potential listing of Sea on MSCI Singapore will bring tech exposure and visibility to Republic. Allowing foreign listings in the index in line with other global indices that factor in new economy sector. US-listed Sea will be eligible for inclusion in the MSCI Singapore Indices from the May semi-annual index review (SAIR). The inclusion of a large tech counter could be positive news for Singapore, as it brings the index in line with other global indices that already have exposure to the new economy sector, said analysts The Business Times spoke to. “It’s almost a sure thing that Sea will be included in the MSCI Singapore in May,” said Brian Freitas, an analyst who publishes on Smartkarma, adding that the tech giant would likely be the largest index weight.

Perennial Holdings, together with its partners, has won a tender to develop a plot of land adjacent to the south square of the upcoming Hangzhou West High Speed Railway (HSR) Station, BT understands. The tender, priced at 2,873.28 million yuan (S$591.3 million), covers a total land area of approximately 96,931 square metres (sq m). BT understands that Perennial plans to develop the site into an integrated Transit-Oriented Development (TOD) with retail, apartment, office and hotel components. It is understood that the entire precinct where the TOD project is located is set to be transformed into the Silicon Valley-equivalent of Hangzhou. Science and technology firms are expected to set up offices within the TOD District, given that Alibaba’s headquarters is located nearby

US

Samsung Electronics is considering two sites in Arizona and another one in New York in addition to Austin, Texas, for a new US$17 billion chip plant, according to documents filed with Texas state officials. The tech giant is also seeking combined tax abatements of US$1.48 billion over 20 years from Travis County in Texas and the city of Austin, it added in the documents dated Feb 26, up from the US$805.5 million previously mentioned. Samsung is in talks with the sites at Arizona and New York, with each offering property tax abatement and “significant grants and/or refundable tax credits” to fund infrastructure improvements, the documents said

GameStop shares surge, halted multiple times as Reddit favorites rally again. Investors piled into the brick-and-mortar video game retailer following the reported ousting of GameStop’s top financial executive. GameStop was at the center of a period of market mayhem in late January as retail traders led by multimillion-member Reddit thread WallStreetBets sent its share price skyrocketing, causing a short-squeeze on a number of Wall Street hedge funds with bets on its decline. nother stock caught up in the retail frenzy, AMC Entertainment, was up 10 percent in early trade on Thursday, having climbed 18 percent during the previous session. The cinema chain has been bolstered by New York Gov. Andrew Cuomo’s announcement this week that movie theaters in the city could open with limited capacity next month.

The United States faces a $2.59 trillion shortfall in infrastructure needs that requires a massive jump in government spending to address crumbling roads, bridges and other programs, according to an assessment by an engineers group issued on Wednesday. The report, published once every four years, gave the United States a “C-” overall — up from a D+ in 2017 — and marked the first time in two decades the country received a “C” range grade — but found the country is spending just over half of what is required, labeling overall U.S. infrastructure in “mediocre condition.” The report urges the United States to increase investment from all levels of government and the private sector to 3.5 percent from 2.5 percent of U.S. gross domestic product by 2025

Square, the financial payments firm run by Jack Dorsey, launched an in-house bank that it says will allow it to “operate more nimbly” in an increasingly crowded fintech market. The firm announced Monday that the bank has begun operations after completing the charter approval process with the Federal Deposit Insurance Corporation (FDIC) and the Utah Department of Financial Institutions. It will operate as an independently governed subsidiary of Square Inc (SQ). Dorsey is also the CEO and co-founder of Twitter (TWTR).

The future of Greensill Capital, a UK financial startup backed by SoftBank (SFTBF), has been thrown into doubt after German regulators shuttered a bank it operates, the latest twist in an unfolding corporate collapse that could put 50,000 jobs at risk. Greensill was founded by Australian financier Lex Greensill in 2011 to shake up the world of supply chain finance, which involves making early payments to suppliers to help them finance their daily operations. The firm got a big boost in 2019, when Masa Son’s SoftBank Vision Fund invested $1.5 billion

Instacart, the grocery delivery company, said on Tuesday that it has raised another $265 million in a funding that values it at $39 billion, more than doubling its valuation for the second time in a year. Andreessen Horowitz and Sequoia Capital, which are existing investors in Instacart, participated in the latest financing for the eight-year-old start-up. Over the last year, Instacart has raised two rounds of funding totaling $525 million. It was previously valued at $17.7 billion. The pandemic has supercharged Instacart’s growth. Customers eager to avoid shopping in stores are using the company’s app-based grocery ordering service. Laid-off workers have also turned to gig-economy jobs, like Instacart shopping, to make money. Instacart now has 500,000 shoppers who work on contract

Capitol Hill security increased and House session canceled amid warnings about March 4 conspiracies. US officials on Wednesday alerted lawmakers to a potential threat against the US Capitol on March 4, for which security has been enhanced as a precaution, less than two months after the Capitol complex was stormed and lawmakers’ lives were threatened by rioters. The House changed its voting schedule in light of Capitol Police warning about the security risks, deciding to hold a vote on a police reform bill Wednesday night rather than Thursday as planned. Information provided by the FBI and the Department of Homeland Security warned of increased chatter among extremists, including members of the Three Percenters extremist group.

Source: SGX Masnet, The Business Times, Bloomberg, Channel NewsAsia, Reuters, PSR

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