Daily Morning Note – 1 September 2021

Dear valued client,

US stocks bobbed and weaved before ending Tuesday’s session with modest losses as investors await key data on how the labour market is weathering the Delta variant surge.

In the final trading day of August, the benchmark Dow Jones Industrial Average lost 0.1 per cent to close at 35,359.08.

The broad-based S&P 500 dipped 0.1 per cent to finish at 4,522.58, while the tech-rich Nasdaq Composite Index was essentially flat at 15,259.24, ending a two-session streak of records by both indices.

Following a reassuring signal last week from Federal Reserve Chair Jerome Powell that the central bank will be cautious in removing its massive stimulus from the economy, attention now turns to the government employment report due out Friday, which is expected to show hiring slowed as the virus resurged.


BREAKING NEWS


SG News

CDL Hospitality Trusts (CDLHT) announced on Tuesday that it has entered into a land-purchase agreement and a development-funding agreement to invest in a build-to-rent (BTR) residential property in Manchester, United Kingdom, for a purchase consideration of £73.3 million (S$136 million). This is in line with CDLHT’s strategy to strengthen its rental income base and boost its portfolio diversification. CDLHT is therefore expecting a growth in rental housing demand and is looking forward to achieving steady rental growth from this investment over time. This transaction is a forward-funding arrangement, which enables CDLHT to invest in a residential BTR property at a fixed-cost, with cash flows managed over the duration of development.

Agri-Business firm Olam International has secured US$5.2 billion worth of loans in part to support its business reorganisation plans, the mainboard-listed firm said in a Singapore Exchange filing on Tuesday evening. The three facilities comprise a US$1.2 billion three-year term loan and two 18-month bridge loan facilities of US$2 billion each. The term loan facility will be used for general corporate purposes of the Olam Group while the bridge loan facilities will be used to facilitate Olam’s reorganisation plans.

Singapore fintech FOMO Pay has obtained new licences from the Monetary Authority of Singapore (MAS) to operate three new regulated activities. Starting from Wednesday, merchants will be able to leverage FOMO Pay’s services to accept and process payment transactions. FOMO Pay will also be able to carry out local money transfer services in Singapore for its clients, as well as facilitate transactions with digital payment tokens – including cryptocurrency and the central bank digital currency (CBDC). With the new licences, FOMO Pay is now able to conduct four out of seven key regulated activities under the Payment Services Act (PSA) licensing framework. Previously, the company bagged a cross-border transfer services licence from MAS.


US News

Oil settled down 1 per cent on Tuesday, posting its first monthly loss since March, as demand is expected to drop after Hurricane Ida shuttered U.S. Gulf refineries. Brent crude futures for October, due to expire on Tuesday, settled down 42 cents, or 0.6 per cent, at US$72.99 a barrel. US West Texas Intermediate (WTI) crude futures settled down 71 cents, or 1 per cent, at US$68.50. Both benchmarks posted their first monthly losses since March, even though they are not far from July highs. Brent lost 4 per cent in July while US crude fell 7 per cent.

Gold prices were underpinned by a subdued dollar on Tuesday, with investors looking ahead to US non-farm payrolls data, which could be key to the Federal Reserve’s tapering decision. Spot gold rose 0.1 per cent to US$1,812.27 per ounce by 1.16am GMT. US gold futures were up 0.2 per cent at US$1,816.00. The dollar hovered near two-week lows against a basket of currencies, steadying from falls after Fed chief Jerome Powell gave no signal regarding the central bank’s tapering timeline except that it could be “this year”. Gold is considered a hedge against inflation and currency debasement in the wake of massive stimulus measures.

Online search giant Google said on Tuesday it would invest 1 billion euros in Germany through 2030 to expand its data centre operations and secure renewable power supplies to run them. The Alphabet unit will spend the money to expand its data centre in Frankfurt and set up a new regional cloud computing operation centred on the capital Berlin, as well as source power from wind and solar operator Engie. “This will bring us a step closer to using CO2-free sources of energy exclusively in our datacenters,” Philipp Justus, who heads Google in central and eastern Europe, told Reuters in an interview. Europe’s strict privacy laws have increased demand from companies to host data locally. At the same time the Berlin startup scene is booming and electric carmaker Tesla will soon launch production at a new factory nearby. Google’s investment follows a similar-sized bet on Germany by Silicon Valley rival Apple, which is setting up a semiconductor design bureau in Munich.

Allbirds, a footwear maker backed by asset manager Franklin Templeton, said on Tuesday it has filed for a US initial public offering, as the company looks to cash in on growing demand for sustainable products globally. The company, which mentions the word “sustainability” 107 times in its regulatory filing, said it hopes to “help pioneer” a framework for companies to conduct what it called a sustainable public equity offering, or SPO. In order for a public equity offering to be designated as an SPO, a company must meet certain criteria, such as a minimum environmental, social and governance (ESG) rating and best practices on climate response, among others. “We believe the SPO designation will help to identify leading ESG companies as they enter the public equity markets,” the company said. Allbirds’ bid to go public comes against the backdrop of surging investor interest in sustainable companies, which also care about ESG issues.


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

TECHNICAL REPORTS

Alibaba Health Information Technology Ltd

Recommended Action: Technical BUY

Analyst: Chua Wei Ren

– Ali health (HKEX: 241) suffered heavy losses since March 2021 and the recent price action indicate bullish potential for the stock.

– Buy stop: 13.22 Stop loss: 9.35 Take profit 1: 17.59 Take profit 2: 22.00

Tencent Holdings Ltd

Recommended Action: Technical BUY

Analyst: Chua Wei Ren

– Tencent (HKEX: 700) suffered heavy losses since July 2021 and recent price action indicate that Tencent may enjoy some bullish action.

– Buy stop: 491.00 Stop loss: 402.65 Take profit 1: 599.76 Take profit 2: 680.00

>> Read more Technical reports

HK Reports – Read up on our Hong Kong reports here

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IMPORTANT INFORMATION

This material is provided by Phillip Capital Management (S) Ltd (“PCM”) for general information only and does not constitute a recommendation, an offer to sell, or a solicitation of any offer to invest in any of the exchange-traded fund (“ETF”) or the unit trust (“Products”) mentioned herein. It does not have any regard to your specific investment objectives, financial situation and any of your particular needs. You should read the Prospectus and the accompanying Product Highlights Sheet (“PHS”) for key features, key risks and other important information of the Products and obtain advice from a financial adviser (“FA“) pursuant to a separate engagement before making a commitment to invest in the Products. In the event that you choose not to obtain advice from a FA, you should assess whether the Products are suitable for you before proceeding to invest. A copy of the Prospectus and PHS are available from PCM, any of its Participating Dealers (“PDs“) for the ETF, or any of its authorised distributors for the unit trust managed by PCM.  

An ETF is not like a typical unit trust as the units of the ETF (the “Units“) are to be listed and traded like any share on the Singapore Exchange Securities Trading Limited (“SGX-ST”). Listing on the SGX-ST does not guarantee a liquid market for the Units which may be traded at prices above or below its NAV or may be suspended or delisted. Investors may buy or sell the Units on SGX-ST when it is listed. Investors cannot create or redeem Units directly with PCM and have no rights to request PCM to redeem or purchase their Units. Creation and redemption of Units are through PDs if investors are clients of the PDs, who have no obligation to agree to create or redeem Units on behalf of any investor and may impose terms and conditions in connection with such creation or redemption orders. Please refer to the Prospectus of the ETF for more details.  

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