Daily Morning Note – 11 August 2021

Dear valued client,

Asian stocks looked set to follow their U.S. peers higher as investors assessed the ability of the economy to sustain less stimulus and rising virus outbreaks. Treasuries slipped and the dollar was steady.

Equities ticked higher in Japan and Australia, but slipped in South Korea. U.S. futures fluctuated. Earlier, the S&P 500 closed little changed, while the Nasdaq 100 ticked up. The dollar and Treasury yields held overnight gains. Crude oil pared a decline after it touched the lowest in three weeks on concern the delta strain will hamper demand growth

Futures pointed to modest gains in Japan and Australia and dipped in Hong Kong. U.S. contracts were little changed in Asia. Earlier, the S&P 500 climbed to an all-time high, while the tech-heavy Nasdaq 100 declined. Chip stocks retreated, while energy shares rallied. Crude oil bounced back from a three-week low on bets that the global demand recovery will remain intact despite the fast-spreading delta virus variant.


SG News

Beverage maker Yeo Hiap Seng (YHS) posted a net loss of S$1.21 million for the six months ended June 30, narrowing from the S$6.73 million loss reported in the year-ago period. The heritage brand attributed the improvements to double-digit growth in its core food and beverage revenue, and “positive momentum from key overseas markets”.

CapitaLand shareholders have voted in favour of the real estate group’s proposal to privatise its development arm and to list its fund-management and property-investment business. From September, CapitaLand will operate as two distinct entities: the new, listed unit CapitaLand Investments (CLI) and the privatised CapitaLand Development.

Wee Hur Holdings and ISOTeam separately announced on Tuesday that they would report net losses for, respectively, the six months and full year ended June 30. In a profit guidance released after market close, property group Wee Hur said that its weaker-than-expected financial performance for H1 2021 was partly due to additional costs required to complete projects for its construction arm in Singapore. Meanwhile, building maintenance and estate upgrading firm ISOTeam expects a net loss for its fiscal year ended June 30, given the “continued adverse impact” from the coronavirus pandemic and further provisions for impairment losses.

Grand Venture Technology has declared its first cash dividend, amounting to 0.5 Singapore cent per share, given strong bottom-line growth for the first half of this year. The proposed payment date for the interim dividend is Sept 10, after the books close on Aug 26. The manufacturing solutions and services provider, which went public in January 2019, expects to continue with a dividend payout ratio of up to 20 per cent. This will be subject to its profit performance, balance sheet and cash-flow requirements, as well as the availability of market opportunities for value-creating investments.

Increased footfall at its food outlets and a newly acquired business helped Koufu Group‘s H1 2021 net profit surge to S$9.9 million, almost quadrupling from S$2.5 million in the year-ago period. Revenue grew 18.8 per cent to S$105.7 million for the six months ended June 30, from S$89 million in the first half of last year. Earnings per share stood at 1.79 Singapore cents, up from 0.46 cent in H1 2020, said the operator and manager of food courts and coffee shops in a Tuesday filing.

US News

Robinhood Markets said on Tuesday it would buy fintech startup Say Technologies for US$140 million in an all-cash deal, weeks after the online brokerage’s stock market listing. New York-based Say, founded in 2017, has built a communication platform that crowdsources questions from retail investors and allows them to interact with the companies they invest in during annual meetings, earnings calls and other events.

Softbank has offloaded shares of U.S. tech giants like Facebook, Microsoft, Alphabet and Netflix, according to its latest financial report released on Tuesday. The Tokyo-headquartered conglomerate invests in publicly listed shares through its SB Northstar trading unit and provides a breakdown of the unit’s portfolio companies in its quarterly results. Facebook, Microsoft, Alphabet and Netflix were included in SB Northstar’s portfolio at the end of March but were absent from the list at the end of the April-June quarter, suggesting a reduction or a complete offload in holdings.

The Senate passed a $1 trillion bipartisan infrastructure plan Tuesday, a huge step for Democrats as they try to push President Joe Biden’s sweeping economic agenda through Congress. The legislation, which includes $550 billion in new funding for transportation, broadband and utilities, got through with Democratic and Republican votes. Senate Majority Leader Chuck Schumer, D-N.Y., next plans to turn to a budget resolution that would allow Democrats to approve what they see as a complementary $3.5 trillion spending plan without Republican votes.

Productivity in the US took a step back in the second quarter, indicating an easing in the rapid pace of efficiency gains seen in the prior three months. Nonfarm business employee output per hour increased at a 2.3 per cent annualised rate in the second quarter, according to Labor Department figures Tuesday. That compared to a 4.3 per cent rate in the first quarter and the 3.2 per cent projected in a Bloomberg survey of economists.

Hawaiian Airlines told U.S. staff they will be required to be vaccinated against Covid-19, becoming the third major carrier to issue such a mandate in less than a week. CEO Peter Ingram told employees Monday that they must receive their second shot, if they are getting a two-dose vaccine, by Nov. 1, though there will be exceptions for medical or religious reasons, according to a staff memo reviewed by CNBC. Last week, United Airlines became the country’s first major carrier to mandate vaccines, requiring that its 67,000-person U.S. workforce show proof of inoculation by Oct. 25 at the latest. Frontier Airlines also announced that it will require that its employees be vaccinated against Covid by Oct. 1 or that they are regularly tested.

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

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