Daily Morning Note – 1 December 2021


U.S. equity futures rose and Asian stocks looked set for a muted start Wednesday as traders weighed Federal Reserve Chair Jerome Powell’s comments that officials should consider a faster removal of stimulus.

Australian shares slipped, while contracts for Japan and Hong Kong pointed to a cautious open. The S&P 500 slumped almost 2% overnight and measures of equity volatility jumped on the prospect of tightening monetary policy. The gap between yields on 5-year and 30-year U.S. Treasuries shrunk to the least since March last year.

Powell said the next Fed meeting should discuss whether to wrap up bond purchases a few months earlier and retired the word “transitory” to describe high inflation. That could open the door to earlier interest-rate hikes. Money markets show close to 60 basis points of increases priced in by end-2022.

Powell’s pivot came on top of worries about growth threats from the omicron virus strain amid a rift over the efficacy of current vaccines. Crude oil pared a tumble and gold held a drop.



Keppel Corporation on Tuesday (Nov 30) addressed fresh queries on the attractiveness of its final offer for Singapore Press Holdings (SPH) as the day for shareholders to vote on the offer draws closer. In response to questions fielded by the Securities Investors Association (Singapore), or Sias, Keppel said its decision to waive its right to walk away from the offer is a deliberate decision to improve the attractiveness of the deal amid the bidding war with Cuscaden Peak. In dropping the material adverse effects (MAE) clause, it eliminates the risk of Keppel walking away should SPH’s financial condition worsen. The clause remains in place for Cuscaden’s bid for SPH for now, and its waiver will take effect only from the date its scheme document is despatched.

The Straits Times Index (STI) saw its largest single-day decline in a year on Tuesday (Nov 30), falling 2.5 per cent or 79.29 points lower at 3,041.29. Decliners outnumbered advancers 338 to 172, with 3.22 billion shares worth S$3.89 billion changing hands. Most Asian markets were in the red as well, as uncertainty remained over the impact that Covid-19 variant Omicron could have on economies worldwide. Japan’s Nikkei 225 index fell 1.6 per cent, South Korea’s Kospi tumbled 2.4 per cent and Hong Kong’s Hang Seng Index fell 1.6 per cent. Meanwhile, Malaysia’s Kuala Lumpur Composite Index was up 0.2 per cent and Indonesia’s Jakarta Composite Index fell 1.1 per cent.

ComfortDelGro Engineering, a wholly-owned subsidiary of mainboard-listed ComfortDelGro, has entered into a second joint venture (JV) with Engie South East Asia to develop and manage solar energy solutions. Through JV company ComfortDelGro Engie Solar, both sides intend to electrify ComfortDelGro’s fleet of vehicles with renewable power and offer fast charging solutions to drivers and public electric vehicle (EV) users through renewable energy assets, the transport operator said on Tuesday (Nov 30). The solar JV comes 2 months after the 2 companies’ first venture, ComfortDelGro Engie, won a tender to deploy 479 EV chargers across Singapore by the third quarter of 2022. With a target to operate by the second half of 2022, ComfortDelGro Engie Solar intends to first install and operate rooftop solar panels atop 3 buildings at Loyang, Pandan and Ubi, operated by ComfortDelGro Engineering.

Manulife US Real Estate Investment Trust (Manulife US Reit) announced on Tuesday (Nov 30) that it is acquiring 3 properties in the United States for US$201.6 million, as it increases its exposure to high-growth markets and tenants to drive returns. Jill Smith, chief executive officer of Manulife US Reit’s manager, said in a briefing on Nov 30: “Having built our trophy and Class-A traditional office portfolio painstakingly over these last few years, from today we are embarking on Manulife US Reit’s next phase of growth by entering into the Sun Belt city of Phoenix, Arizona, and the magnet city of Portland, Oregon. “We’re positioning for growth through these accretive acquisitions. The 3 acquisitions will propel exposure to high-growth tenants, especially in the tech and healthcare sectors,” she added.


The US Department of Justice on Tuesday ended a criminal case against Societe Generale SA related to violations of US sanctions, after the French bank agreed to pay US$1.34 billion and met the terms of a three-year deferred prosecution agreement. Societe Generale agreed to the payment in November 2018 to resolve federal and New York state claims that from 2003 to 2013 it handled billions of dollars of transactions for parties associated with countries subject to embargoes or sanctions, including Cuba, Iran, Libya and Sudan. US District Judge Kevin Castel in Manhattan on Tuesday signed an order in which the Justice Department said it “will not now proceed with the prosecution” of Societe Generale because the bank complied with its three-year agreement.

US consumer confidence decreased to a nine-month low in November as accelerating inflation and a pickup in Covid-19 cases weighed on Americans’ views on the economy. The Conference Board’s index declined to 109.5 from a downwardly revised 111.6 reading in October, according to the group’s report on Tuesday. Economists in a Bloomberg survey called for a drop to 110.9. “Expectations about short-term growth prospects ticked up, but job and income prospects ticked down,” Lynn Franco, senior director of economic indicators at the Conference Board, said in a statement. “Concerns about rising prices – and, to a lesser degree, the Delta variant – were the primary drivers of the slight decline in confidence.”

The wave of price increases that has complicated the US pandemic recovery could last longer than anticipated, Federal Reserve Chair Jerome Powell acknowledged on Tuesday, opening the door to raising interest rates sooner. It was a distinct shift by the central bank chief who for months tried to assuage fears by saying the inflation spike would be “transitory,” and pledged to be patient before raising interest rates. The uptick in inflation has put pressure on Powell and become a political liability for President Joe Biden, who is pushing a divided Congress to pass a massive bill improving social services and fighting climate change.

Oil prices tumbled on Tuesday after Moderna’s chief cast doubt on the efficacy of Covid-19 vaccines against the Omicron coronavirus variant, spooking financial markets and heightening worries about oil demand. Crude futures ended November with their biggest monthly declines since the outset of the pandemic, as the new variant, along with expectations that coming emergency reserve releases will juice growing supply, has cut the legs out of the market’s year-long rally. The head of drugmaker Moderna Inc told the Financial Times that Covid-19 vaccines are unlikely to be as effective against the Omicron variant of the coronavirus as they have been against the Delta variant. Brent crude futures fell US$2.87, or 3.9 per cent, to settle at US$70.57 a barrel, after hitting an intraday low of US$70.22, lowest since August. US West Texas Intermediate (WTI) crude futures ended US$3.77, or 5.4 per cent, lower at US$66.18 a barrel. The benchmark dropped to a session low of US$64.43, also its lowest since August.

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

LHN Limited – Tapping into evolving real-estate trends

Recommendation: BUY (Maintained); Last Done: S$0.34

TP: S$0.49; Analyst: Vivian Ye

– FY21 results were below expectations. FY21 revenue and PATMI at 89%/84% of our forecasts. Revenue from commercial and residential properties and facilities management were lower than expected.

– Maintain BUY with a lower TP of S$0.49 from S$0.54. We roll over our P/E target to FY22e or 7x PE. Our FY22e PATMI has been lowered by 16% as we reduce our forecast revenue for the same segments mentioned. Industry is trading at 14x FY22e, down from 19x. Growth for FY22e includes the five new Coliwoo co-living properties and a new Work Plus Store outlet at 202 Kallang Bahru.

Technical Pulse: Frencken Group Ltd

Recommended: Technical buy; Analyst: Chua Wei Ren

Frencken Group Ltd (SGX: E28) The sub-ending diagonal wave from July till September has caused the stock to enter into a larger corrective ABC wave, and the technicals indicate that corrective selling has some more room before a rebound restarts the next bullish impulse wave

Buy limit: 1.96 Stop loss: 1.70 Take profit 1: 2.52 Take profit 2: 2.80

Technical Pulse: Raffles Medical Group Ltd

Recommended: Technical SELL; Analyst: Chua Wei Ren

Raffles Medical Group Ltd (SGX: BSL) Technicals indicate that the stock will enter into a new bearish trend

Sell stop: 1.35 Stop loss: 1.46 Take profit 1: 1.24 Take profit 2: 1.10

Technical pulse: UMS holdings Ltd

Recommended: Technical BUY; Analyst: Chua Wei Ren

UMS Holdings Ltd (SGX: E28) Bullish upside is set to continue as suggested by the sub-minor wave analysis, as wave (5) has yet to be completed

Buy limit: 1.40 Stop loss: 1.34 Take profit 1: 1.60 Take profit 2: 1.70

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