DAILY MORNING NOTE | 10 August 2023

US stocks closed lower on Wednesday, the day after a report showed Americans borrowed more than ever on their credit cards in the last quarter, and a day ahead of US Consumer Price Index (CPI) inflation data that could influence Federal Reserve interest rate decisions. The Dow Jones Industrial Average fell 191.13 points, or 0.54 per cent, to 35,123.36, the S&P 500 lost 31.67 points, or 0.70 per cent, to 4,467.71 and the Nasdaq Composite dropped 165.93 points, or 1.2 per cent, to 13,718.40.a

SG

Thai Beverage Public Co (ThaiBev) saw its earnings before interest, taxes, depreciation, and amortisation (Ebitda) fall 3.4 per cent to 37.8 billion Thai baht (S$1.45 billion) for the nine months ended Jun 30, 2023, from 39.1 billion baht in the previous corresponding period. This is despite the food and beverage company having recorded a 3.8 per cent rise in sales revenue to 215.9 billion baht, from 207.9 billion baht in the year-before period. The group’s Ebitda performance takes into account the improvement in revenue, higher brand investment and cost pressures, it said in a business update on Wednesday (Aug 9) night.

Penguin International posted a 28.5 per cent drop in net profit to S$6.1 million for its first half ended Jun 30, 2023, from S$8.5 million in the previous corresponding period. This was due to net foreign exchange losses of S$1.4 million recorded during the period, compared to the net foreign exchange gain of S$1.2 million in the year-earlier period, as well as higher marine insurance costs arising from more vessels being added to the group’s operating fleet, said the shipbuilder in a bourse filing on Wednesday (Aug 9). Earnings per share stood at 1.10 Singapore cents for the half year, down from 3.11 cents in the previous year. Revenue for the first half grew 44.9 per cent to S$89 million, from S$61.4 million a year earlier. The company attributed this mainly to an increase in the number of build-for-stock vessels sold and an increase in chartering activities over the period.

DBS Group Holdings, South-east Asia’s largest bank, will increase investment and hiring in China’s Greater Bay Area as it expects growth in the region to outpace the rest of the country, according to the lender’s head of North Asia. The Singapore-based bank has been keen to expand in Greater China. Earlier this year it signalled its interest to raise its 13 per cent holdings in Shenzhen Rural Commercial Bank in China. The bank will also complete its acquisition of Citigroup’s consumer banking business in Taiwan this month. The diversification comes as the lender seeks more growth in places outside its home market. Hong Kong is DBS’s second-largest revenue generator after Singapore, and contributed to about 16 per cent of its total income in the first half. Despite recent headwinds in China’s economy, Sebastian Paredes, who is also the chief executive officer of DBS Bank in Hong Kong said the expected 5 per cent and 4.5 per cent growth in China’s economy this year and next provides almost US$1 trillion of incremental growth. He pointed to electric vehicles and batteries, and semiconductors as opportunities in the country.

US

General Motors is still struggling to ramp up production of electric vehicles, a top executive said on Wednesday (Aug 9). Speaking at a JP Morgan investor conference, GM chief financial officer Paul Jacobson said the automaker’s electric vehicles, from Cadillac Lyriq SUVs to BrightDrop vans, had been affected by an issue with assembling battery modules – a stumbling block first noted last week by chief executive Mary Barra. Jacobson said GM had built more than 1,000 Lyriqs in July – still well below the company’s initial expectations. GM in early 2022 said it expected to build 25,000 Lyriqs at the company’s Spring Hill, Tennessee, plant last year, but fell far short of that target. In the first six months this year, GM delivered fewer than 2,400 Lyriqs to customers, as it struggled with batteries and other issues. Jacobson pointed to its majority-owned Cruise automated vehicle operation as a bright spot, as the unit enters a “big phase of operational expansion,” with more than 400 vehicles on the road.

The dollar eased on Wednesday (Aug 9) after data showed the Chinese economy slipped into deflation last month, which upped the chances for the government to roll out extra stimulus measures and nudged investors into risk assets. Dollar selling by state-owned Chinese banks helped the yuan rally from a one-month low, dealers said. The Chinese central bank’s stronger-than-expected exchange-rate fixing at 7.1588 per dollar before the open signalled its discomfort with the yuan’s recent declines. The dollar index – which measures the performance of the US currency against six others, – eased 0.1 per cent, paring some of Tuesday’s 0.47 per cent rise.

Oil hits new peaks on Wednesday (Aug 9) with Brent Crude touching the highest price since April, as tighter supply owing to Saudi and Russian output cuts offset concerns over slow demand from China and a report showing rising US crude inventories. Top exporter Saudi Arabia last week extended its voluntary production cut of 1 million barrels per day for another month to include September, and Russia said it would cut oil exports by 300,000 bpd in September. Brent Crude was up US$1.00, or 1.2 per cent, at US$87.17 by 1110 GMT, having touched US$87.24, the highest price since April 13. US West Texas Intermediate (WTI) crude gained 80 cents, or 1.0 per cent, to US$83.72. The US benchmark touched US$84.11, the highest price since November 2022. Crude posted its sixth consecutive weekly gain last week, helped by a reduction in Opec+ supplies and hopes of stimulus boosting oil demand recovery in China.

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

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