Daily Morning Note – 12 August 2021

Dear valued client,

Asian stocks look set for modest gains early Thursday after U.S. shares and Treasuries climbed on signs of moderating inflation that reduced concerns about an imminent paring back of Federal Reserve stimulus.

Futures edged up in Japan and Australia and were steady in Hong Kong. U.S. contracts fluctuated after the S&P 500 hit a record and the tech-heavy Nasdaq 100 fell amid a rotation to cyclical shares. Treasuries rose following a strong auction of 10-year notes and a U.S. inflation report lending support to the Fed’s assessment that price pressures are transitory. The dollar held a drop.


SG News

Agribusiness giant Wilmar International’s net profit for the first half of this year increased 23 per cent to US$750.9 million, from US$610.5 million in the year-ago period. Its board proposed an interim ordinary dividend per share of S$0.05 for the half year, up from S$0.04 in H1 2020. This is the group’s highest interim dividend since it listed, Wilmar International (Wilmar) said on Wednesday evening.

Oil exploration and production company Rex International announced on Wednesday that a 90 per cent-owned subsidiary, Lime Petroleum, has acquired a 20 per cent stake in two exploration licences in the North Sea. It said that Lime inked a deal with Norwegian fuel exploration company AkerBP to take a 20 per cent interest in licences PL867 and PL867B in the North Sea, pending regulatory approval. Rex said exploratory drilling is expected to commence in late-2022. The planned well will target a large prospect called Gjegnalunden, with a reservoir in the traditional Jurassic section.

Jiutian Chemical Group clocked a record half-yearly net profit of 160.3 million yuan (S$33.6 million), up 3.5 times from the 35.4 million yuan posted for the year-ago period. Group revenue rose 86.5 per cent year on year to 887.2 million yuan for the six months ended June 30, up from 475.7 million yuan. In a bourse filing on Wednesday, the group’s chairman Han Lianguo attributed the growth to strong demand for its main products, dimethylformamide (DMF) and methylamine, over the reported period amid China’s post-pandemic economic recovery.

China Everbright Water posted a 36 per cent rise in net profit to HK$548.2 million (S$95.8 million) for its first half ended June 30, 2021, from HK$404.5 million a year ago. The dual-listed environmental services group saw a “solid improvement” in market expansion and steady growth in its business scale during the half-year period, it said in a bourse filing on Wednesday. Earnings per share stood at 19.16 Hong Kong cents for the half year, up from 14.14 cents a year ago.

Indonesian coal producer Geo Energy Resources reported a record revenue of US$220.3 million for the first six months of this year, due to an increase in sales volume and a higher average selling price. Its first-half revenue increased 37 per cent from US$160.6 million in H1 2020, the mainboard-listed firm said in a filing on Wednesday night. The average Indonesian Coal Index price for 4,200 GAR (Gross As Received) coal had surged to US$47.78 per tonne in the first half of 2021, from US$30.61 per tonne the year before.

US News

US prices jumped again in July, but at a slower pace than in the prior month, according to government data released on Wednesday, as some impacts of the pandemic shutdowns appeared to dissipate. The consumer price index rose 0.5 per cent last month, seasonally adjusted, after a 0.9 per cent surge in June, the Labor Department said. Energy prices remained a key driver of inflation, jumping 1.6 per cent, while food prices rose 0.7 per cent, the report said.

United States President Joe Biden’s administration is quietly discussing a target date of 2050 for weaning aircraft off fossil fuels as part of the White House’s broader push to fight climate change,sources familiar with the matter said. The White House in recent days has stepped up efforts aimed at transforming the US economy, including promotion of climate-directed infrastructure spending and bringing auto companies on board in its push for more electric vehicle use.

US President Joe Biden will convene a summit with leaders from democratic nations on Dec 9 and 10 as part of a sustained effort to shore up the foundation of such governments, the White House said on Wednesday (Aug 11). The summit “will bring together heads of state, civil society, philanthropy and the private sector,” to discuss “the challenges facing democracy so as to collectively strengthen the foundation for democratic renewal,” with a follow-up, in-person session one year later, it said in a statement.

WeWork has launched its Growth Campus initiative in key cities of South-east Asia, including Singapore, and aims to support the region’s startup ecosystem. The co-working space operator said on Tuesday that the initiative includes close to US$8 million of investment in subsidised spaces, mentorship and education. Members of Growth Campus will have complimentary access to the WeWork Labs service, which offers “virtual acceleration support”. This includes online access to mentoring and coaching opportunities, customised educational programming, a global network and member community, and member benefits and discounts.

US food delivery firm DoorDash Inc held talks over the past two months to buy grocery delivery company Instacart for a likely price of between US$40 billion and US$50 billion, The Information reported on Wednesday, citing people familiar with the situation. The talks have fallen apart in recent weeks, the report added, partly over concerns whether the deal would get antitrust regulators’ approval.

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


Industrial & Commercial Bank of China Ltd

Analyst: Chua Wei Ren

Recommended Action: Technical BUY

ICBC (HKEX: 1398) sell-off since mid-April 2021 has reached its low point and technical has shown signs and indication of a rebound.

Buy spot: 4.42 Stop loss: 4.00 Take profit 1: 4.90 Take profit 2: 5.30

>> Read more technical reports

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