Daily Morning Note – 12 January 2022

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PHILLIP SUMMARY

Asian stocks looked set to follow a bounce in the U.S. after Federal Reserve Chair Jerome Powell reassured investors the central bank will tackle inflation to extend the economic expansion.

Shares in Australia advanced. Futures rose in Japan and Hong Kong. U.S. contracts fluctuated after the S&P 500 halted a five-day slide and the Nasdaq 100 outperformed. Treasuries found support after a solid three-year note sale. The yield on the 10-year note dipped, while the curve flattened. The dollar declined and commodity-linked currencies like the Australian and Canadian dollars climbed alongside a jump in oil prices.

Powell told the Senate Banking Committee that officials won’t hesitate to act if needed to contain price pressures. He also said the Fed will probably start shrinking its balance sheet this year. He noted the runoff would be quicker than the last time the central bank shrank its balance sheet because the economy was in a much stronger position.


BREAKING NEWS

SG

Singapore Press Holdings (SPH) on Tuesday (Jan 11) said that its overall business improved in the first quarter to November following the gradual recovery of the economy. Still, it said in a business update that it would continue to monitor the impact of the evolving Omicron Covid-19 variant on travel, government-imposed restrictions and consumer sentiment. On the group’s purpose-built student accommodation (PBSA) front, SPH said it has achieved 98.7 per cent of its target revenue for the current academic year (AY) 21/22, and could exceed its target, given that there are still unoccupied rooms being marketed.

Catalist-listed HC Surgical Specialists’ net profit slipped 7.2 per cent to S$4.6 million from S$5 million the previous year, in part due to a decline in revenue as fewer patients pursued elective medical treatments amid the heightened Covid-19 situation across the half year ended Nov 30. Revenue was down 5.2 per cent to S$10.4 million from S$11 million the year before, its unaudited results indicated on Tuesday (Jan 11). The gastrointestinal medical services specialist clinic group posted a 60.8 per cent gain under other income to S$1.1 million, mainly due to S$86,000 in grants from the Jobs Support Scheme and Rental Support Scheme, higher dividend income from investment on financial assets at fair value through profit or loss of S$283,000; and higher interest income of S$46,000.

AEM Holdings on Tuesday (Jan 11) announced a revenue guidance of between S$670 million and S$720 million for FY2022. However, the company is anticipating some margin compression in the coming financial year, in view of higher supply chain costs and an increase in research and development spending as it engages customers on new projects. Meanwhile, capital expenditure is projected to be around S$10 million, said AEM in a regulatory update. In AEM’s latest business update for the 9 months ended Sep 30, 2021, the company reported a 33.4 per cent fall in net profit year on year to S$53 million. Revenue declined 22.3 per cent to S$338.5 million in the same period. AEM attributed the drop to its key customer preparing to make a transition to its next-generation test platform in the first half of this year.

iFast Corporation on Tuesday (Jan 11) priced its private placement at S$7.50 per share, which is at the top end of its price range. In a bourse filing, the wealth management platform said it had raised gross proceeds of S$105 million via the placement on Monday, bringing the total number of shares to be issued to 14 million. The placement will be used to fund the proposed acquisition of a majority stake in BFC Bank, which the company said would help accelerate the growth of its overall wealth management business. iFast’s chief executive Lim Chung Chun told The Business Times the response to the private placement exercise has been “strong” and well received, despite the market being “quite jittery” recently.

US

International travel is likely to recover soon despite progress being slowed by the omicron variant, according to AirAsia chief executive Tony Fernandes. “I do believe that we’re at the beginning of the end,” he told CNBC’s “Squawk Box Asia” on Monday, noting that the recovery has already begun in earnest. “The good thing is, this time last year, we had no planes flying. Now, we’ve got a large chunk of our fleet flying domestic Malaysia, Thailand and Indonesia,” he said, adding that demand has been “very, very robust.” International travel will get back to pre-Covid levels around six months after borders begin to reopen, he predicted, and said he hopes borders will start to open again in March.

Oil prices climbed on Tuesday, with investors regaining some risk appetite as they await clues from the U.S. Federal Reserve chairman on potential interest rate rises and as some oil producers continued to struggle to beef up output. Brent crude futures gained 40 cents, or 0.5%, to $81.27 a barrel at 0529 GMT, after dropping 1% in the previous session. U.S. West Texas Intermediate (WTI) crude futures rose 52 cents, or 0.7%, to $78.75 a barrel, after falling 0.8% on Monday.

Pfizer CEO Albert Bourla on Monday said two doses of the company’s vaccine may not provide strong protection against infection from the Covid omicron variant, and the original shots have also lost some of their efficacy at preventing hospitalization. Bourla, in an interview at J.P. Morgan’s health-care conference, emphasized the importance of a third shot to boost people’s protection against omicron. “The two doses, they’re not enough for omicron,” Bourla said. “The third dose of the current vaccine is providing quite good protection against deaths, and decent protection against hospitalizations.”

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

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