Daily Morning Note – 10 March 2022

Wall Street ended Wednesday’s trading well into positive territory, gaining back some ground lost in recent sessions thanks to a rise in oil prices even as Russia’s invasion of Ukraine continued. The benchmark Dow Jones Industrial Average closed 2 per cent higher at 33,286.25, and the broad-based S&P 500 gained 2.6 per cent to 4,277.89. The tech-rich Nasdaq Composite Index rose 3.6 per cent to finish at 13,255.55. Oil prices dropped more than 11 per cent over the course of New York trading, which fuelled the rally.

US lawmaker have reached a US$1.5 trillion deal to fund the federal government for fiscal year 2022, including US$13.6 billion in security and humanitarian aid for Ukraine and US$15.6 billion for Covid, US congressional leaders said on Wednesday. The announced agreement comes as current funding for US agencies is set to expire on Friday.

SG

The units of Singapore’s first 2 special-purpose acquisition companies (SPACs) have begun trading separately as shares and warrants on the Singapore Exchange (SGX). Vertex Technology Acquisition Corp (VTAC) and Pegasus Asia went public on the Singapore Exchange on Jan 20 and 21 respectively. Their units had traded until last Friday (Mar 4), before the detachment date on Mar 7. SPACs are listed as units comprising a share and a fraction of a warrant during their initial public offering (IPO). The share and fractional warrant trade together as a unit for the initial part of a SPAC’s life, ahead of detachment, which typically occurs on the 45th calendar day from the listing date.

Ascott Residence Trust (ART) is acquiring 4 rental housing properties and a student accommodation property in Japan for a total investment of 10.4 billion yen (S$125 million). In an announcement on Wednesday (Mar 9), the stapled group’s managers said they expect the latest acquisitions to be yield accretive, increasing ART’s pro forma FY2021 distribution per stapled security (DPSS) by 1.7 per cent with an average net operating income yield of about 4 per cent. These properties will be acquired on a turnkey basis from 2 different sellers, and the transactions are expected to complete between Q1 of 2022 and Q2 of 2023.

Top Glove Q2 net profit dives 97% to RM87.5m, no dividend proposed. Top Glove Corp reported on Wednesday (March 9) a 96.9 per cent drop in its second-quarter profit from a year ago, hurt by falling average selling prices of medical gloves as the Covid-19 pandemic eases. The world’s largest medical glove maker said in a stock exchange filing that profit in the December-February period fell to RM87.55 million (S$28.6 million), down from a record RM2.87 billion a year earlier. Revenue fell 73 per cent to RM1.45 billion, the filing showed.

Wednesday (Mar 9) marks the last day of trading in shares of Olam International before the group returns to the SGX-ST (Singapore Exchange Securities Trading) a week later on Mar 16 to trade under its new security name, Olam Group. The counter ended the day at S$1.76, down S$0.02 or 1.1 per cent. With effect from 9 am on Mar 10, shares of Olam International will be suspended. These procedures come as part of the agri-business giant’s ongoing restructuring plans which will see it spinning off its Olam Food Ingredients (OFI) unit and subsequently, the Olam Global Agri (OGA) unit.

Hillview residential development site up for sale with S$255.4m reserve price. A total of 23 terrace factories in Hillview, including 14 units whose previous tender was withdrawn 2 months ago, have been put on the market. The 999-year leasehold land parcel at 26-38D Hillview Terrace is available for sale by tender with a reserve price of S$255.4 million, sole marketing agent Colliers said on Wednesday (Mar 9). The plots are all zoned for residential use under the Urban Redevelopment Authority’s (URA) Master Plan 2019. The existing factories span a combined site area of 119,813 square feet (sq ft), which can be amalgamated with the adjoining access road and electrical substation to form a larger site area of about 157,540 sq ft.

US

Amazon.com Inc. is going to split its stock for the first time in more than 20 years, a period in which its shares have gained more than 4,500%, and expects to repurchase $10 billion in shares. Amazon AMZN announced the plans Wednesday afternoon in a filing with the Securities and Exchange Commission, revealing that it expects to split shares 20-to-1, contingent on a shareholder vote at its annual meeting on May 25.

McDonald’s expects that its Russian shutdown will cost the fast-food giant roughly $50 million a month, or 5 cents to 6 cents per share. For comparison, McDonald’s reported fourth-quarter net income of $1.64 billion and earnings per share of $2.18. The fast-food giant announced Tuesday it would temporarily shutter its Russian locations but will keep paying employees and other business costs.

Macy’s CFO says the American consumer is still healthy, but lower-income shoppers could soon cut back. Macy’s says the American consumer is still healthy and spending. But, as escalating oil prices translate into higher prices at the gas pump and bigger grocery bills, the department store chain said it anticipates some consumers will be impacted more than others. “From a consumer demand standpoint, we still have a healthy consumer,” said Macy’s Chief Financial Officer Adrian Mitchell, during a Wednesday presentation at the UBS Global Consumer & Retail Conference.

CrowdStrike stock surges 15% after results, outlook exceed Wall Street expectations. The company reported a fiscal fourth-quarter loss of $42 million, or 18 cents a share, compared with a loss of $19 million, or 9 cents a share, in the year-ago period. Adjusted net income, which excludes stock-based compensation and other items, was 30 cents a share, compared with 13 cents a share in the year-ago period. Company expects to clear more than $2 billion in annual sales for first time in 2022.

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

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