DAILY MORNING NOTE | 10 October 2023
Local shares began the week in the red, as investors took in news of the Israeli conflict, the resultant impact on equities globally, as well as rising uncertainty amid the start of the corporate earnings season. OCBC was one of Monday’s top gainers by value. The stock added 0.2 per cent or S$0.03 to close at S$12.88. The other two lenders ended the day mixed. UOB booked a gain of 0.04 per cent or S$0.01 to S$28.27, while DBS fell 0.6 per cent or S$0.21 to S$33.58. SGX was another top advancer, rising 0.3 per cent or S$0.03 to close at S$9.80. Jardine Cycle and Carriage was the biggest loser, slipping 1.4 per cent or S$0.43 to close at S$30.35.
Wall Street stocks closed higher on Monday, bouncing back from an earlier slump as traders assessed uncertainties surrounding the deadly conflict between Hamas and Israel. US stocks initially slipped after the weekend’s surprise attack by Palestinian militant group Hamas on Israel, which announced it would impose a total siege on the Gaza Strip on Monday. Despite fears that the conflict could escalate, markets shook off pressure and closed higher, while oil prices surged on worries of growing unrest in the crude-rich Middle East. The Dow Jones Industrial Average was up 0.6 per cent at 33,604.65. The broad-based S&P 500 Index also rose 0.6 per cent to 4,335.66, while the Nasdaq Composite Index advanced 0.4 per cent to 13,484.24.
Israel and Singapore-based startup incubator Trendlines Group does not anticipate “significant impact” on its operations arising from the armed conflict between Israel and Hamas; “limited impact” is expected on some of its portfolio companies’ operations, the Catalist-listed company said in a bourse filing on Monday (Oct 9). The company, which has its office in Misgav Business Park in northern Israel, said its operations are “well distant” from the military activities in the south. Still, the impact of such an event has ramifications for the whole company, Trendlines said, including staff being called up for army duty. The company, which invests in and incubates innovation-based medtech and agrifood technologies, also said it will continue to monitor the well-being of its staff, as well as the situation.
Property developer Oxley Holdings is selling an office tower at Oxley Towers KLCC in Kuala Lumpur for approximately RM406 million (S$118 million) to Alliance Bank Malaysia. The transaction includes its Grade A office tower and four adjoining parcels of retail units, Oxley said in a bourse filing on Monday (Oct 9). Oxley Towers KLCC, a freehold property, comprises two hotel towers with residences, an office tower and a retail podium linking all the three towers. It is next to the iconic Petronas Twin Towers in the centre of the Malaysian capital. The property is expected to receive its temporary occupation permit by next year. Alliance Bank Malaysia’s plan to relocate its corporate office to the commercial centre of Kuala Lumpur will improve its visibility and branding, the company said.
Cromwell European Real Estate Investment Trust’s (Cromwell E-Reit off-market divestment of Viale Europa 95 in Bari, Italy, was completed at 94 million euros (S$135.4 million). The Reit manager on Monday (Oct 9) estimated the sale consideration to represent a 13.1 per cent premium to Viale Europa’s 2017 purchase price of 83.1 million euros. The sale price stands at 28.2 per cent above the asset’s valuation of 73.3 million euros as at end-2022. Including the divestment of Viale Europa, the manager estimated it has completed 188 million euros in divestments at an average of 10.2 per cent premium to valuation in the year to date. This represents almost half of the Reit’s targeted 400-million-euro divestment programme to 2026, said the manager’s chief executive, Simon Garing. Assuming the transaction was completed on Dec 31, 2022, net tangible assets (NTA) per unit of the Reit would have stood at 2.453 euros after the divestment as opposed to the Reit’s FY2022 NTA of 2.416.
Capitaland Ascott Trust (Clas) on Monday (Oct 9) said it will seek approval from stapled securityholders for several interested person transactions at its upcoming Oct 24 extraordinary general meeting. These include the S$530.8 million acquisition of three lodging assets in London, Dublin and Jakarta, announced in August, as well as the renewal of three master leases for serviced residence properties in France, expiring on Dec 31, 2023. The managers said in a bourse filing that master lease agreements were entered into with Citadines SA – which is indirectly owned by The Ascott – for La Clef Louvre Paris, Citadines Presqu’ile Lyon and Citadines Place d’Italie Paris. Each of the renewed master leases, to be inked with Citadines SA, will span 12 years from Jan 1, 2024. The renewals will have the same terms and conditions except for higher rent, lease duration and the co-sharing of renovation expenses between Clas and the lessee. The new rent for FY2024 will be 5.6 million euros (S$8.1 million), 33.3 per cent higher than the existing FY2022 rent of 4.2 million euros.
The US Federal Reserve’s top regulatory official defended a sweeping proposal to overhaul bank capital rules before the country’s largest bank lobby on Monday (Oct 9), arguing the benefits of a bigger cushion outweigh any additional costs banks might face. Fed Vice Chair for Supervision Michael Barr said that the complex “Basel Endgame” proposal overhauling how banks gauge the amount of capital they must hold against potential losses should have a “limited” impact on banks’ lending costs, with much of the focus on other activities, like trading. Barr’s Monday speech, which is his first on bank regulation since the proposal came out, served as a broad-based defence of the effort. He said the Fed and other bank regulators welcome comments from the industry to help refine the plan, but maintained the benefits of higher capital for lenders. Barr also pushed back against the industry’s refrain that higher capital costs for banks will mean curtailed lending and potential economic harm. He noted that banks sounded similar warnings when regulators imposed tougher rules in the wake of the financial crisis, but the US banking system has remained vibrant and the economy has grown.
Exchange-traded funds (ETFs) that track US Treasury bonds rose on Monday (Oct 9), as worries over possible escalation of the conflict between Israel and the Palestinian group Hamas boosted demand for safe haven assets. The iShares 20+ Year Treasury Bond ETF rose 0.9 per cent, after falling over 4 per cent last week, while the iShares 7-10 Year Treasury Bond ETF climbed 0.8 per cent. The US bond market is closed with the Columbus Day holiday, but bond-related ETFs are trading. The 10-year Treasury futures rose a sizable 13 ticks. The conflict in the Middle East comes at a time when bond yields around the world are at multi-year highs on fears that central banks will keep interest rates elevated for longer. Performance-wise, the popular iShares 20+ fund has nearly halved from its 2020 peak amid the bond rout but posted its ninth straight quarter of inflows last month. The iShares 1-3 Year Treasury Bond ETF gained 0.2 per cent, while ultra-short bond ETFs like iShares 0-3 Month Treasury Bond ETF and SPDR Bloomberg 1-3 Month T-bill ETF, edged higher.
Oil prices surged 4 per cent on Monday, recouping some of last week’s steep losses, as military clashes between Israel and the Palestinian Islamist group Hamas ignited fears that a wider conflict could hit oil supply from the Middle East. Brent crude settled US$3.57, or 4.2 per cent, higher at US$88.15 a barrel. US West Texas Intermediate crude closed at US$86.38 a barrel, up US$3.59 or 4.3 per cent. At their session highs, both benchmarks spiked by more than US$4, or over 5 per cent. Last week, Brent fell about 11 per cent and WTI retreated more than 8 per cent, the biggest weekly decline since March, as a darkening macroeconomic outlook intensified concerns about global demand.
Source: SGX Masnet, Bloomberg, Channel NewsAsia, Reuters, CNBC, WSJ, The Business Times, PSR
PSR Stocks Coverage
For more information, please visit:
Guest Presentation by Oceanus Group Limited
Date & Time: 10 Oct 2023 | 12pm – 1pm
Strategy & Stock Picks (US Market)
Date & Time: 12 Oct 2023 | 7.30pm – 9pm
Guest Presentation by Keppel Pacific Oak US REIT (KORE)
Date & Time: 19 Oct 2023 | 12pm – 1pm
Corporate Insights by Sasseur REIT [NEW]
Date & Time: 15 Nov 2023 | 12pm – 1pm
PHILLIP RESEARCH IN 3 MINS
Phillip Research in 3 minutes: #29 Keppel Corporation; Initiation
Click here for more on Phillip in 3 mins.
The information contained in this email and/or its attachment(s) is provided to you for information only and is not intended to or nor will it create/induce the creation of any binding legal relations. The information or opinions provided in this email do not constitute an investment advice, an offer or solicitation to subscribe for, purchase or sell the e investment product(s) mentioned herein. It does not have any regard to your specific investment objectives, financial situation and any of your particular needs. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of this information. Investments are subject to investment risks including possible loss of the principal amount invested. The value of the product and the income from them may fall as well as rise. You may wish to seek advice from an independent financial adviser before making a commitment to purchase or investing in the investment product(s) mentioned herein. In the event that you choose not to do so, you should consider whether the investment product(s) mentioned herein is suitable for you. PhillipCapital and any of its members will not, in any event, be liable to you for any direct/indirect or any other damages of any kind arising from or in connection with your reliance on any information in and/or materials attached to this email. The information and/or materials provided 揳s is?without warranty of any kind, either express or implied. In particular, no warranty regarding accuracy or fitness for a purpose is given in connection with such information and materials.
This e-mail and its attachment(s) may contain privileged or confidential information, which is intended only for the use of the recipient(s) named above. If you have received this message in error, please notify the sender immediately and delete all copies of it. If you are not the intended recipient, you must not read, use, copy, store, disseminate and/or disclose to any person this email and any of its attachment(s). PhillipCapital and its members will not accept legal responsibility for the contents of this message. Thank you for your cooperation.