DAILY MORNING NOTE | 12 October 2023

Local shares fell on Wednesday (Oct 11) as trader behaviour in the stock markets reflected cautious sentiments. This contrasted with the regional rally, which came after reports of a dovish shift in tone from US Federal Reserve officials on interest rate hikes. Nio was Wednesday’s top gainer. The stock added 3.7 per cent or US$0.31 to close at US$8.80. Jardine Matheson Holdings was the day’s biggest loser, shedding 5.1 per cent or US$2.31 to US$42.92. Among the trio of local banks, DBS lost 0.7 per cent or S$0.25 to S$33.72, and UOB fell 0.2 per cent or S$0.06 to S$28.50. OCBC, meanwhile, closed flat at S$13.00.

Wall Street stocks closed higher on Wednesday as traders await key US consumer inflation data, while shrugging off hotter than expected wholesale price increases. The Dow Jones Industrial Average closed 0.2 per cent up at 33,804.87. The broad-based S&P 500 rose 0.4 per cent to 4,376.95, while the tech-rich Nasdaq Composite Index gained 0.7 per cent to 13,659.68. Minutes from the most recent Fed policy meeting showed on Wednesday that officials agreed to hold rates high “for some time” until confident that inflation is cooling sustainably.

SG

Creative Technology has given notice that it has recorded pre-tax losses for three consecutive years. It however meets the financial entry criteria to avoid being placed on the Singapore Exchange’s (SGX) watch list, as its six-month average daily market capitalisation as at Wednesday (Oct 11) was S$110.3 million. According to SGX listing rules, mainboard-listed companies will be placed on the watch list under the financial entry criteria if they record pre-tax losses for the three most recently completed consecutive financial years, and fail to maintain an average daily market cap of at least S$40 million over the last six months. Companies on the watch list must take active steps to satisfy the financial requirements within 36 months from the date they are placed on the list. That means recording a consolidated pre-tax profit for the most recently completed financial year, based on the latest full-year consolidated audited accounts, and having an average daily market cap of S$40 million or more over the last six months. Otherwise, they will be delisted from the SGX, or have their trading suspended with a view to delisting.

Centurion Corp is likely to be impacted by the Ministry of Manpower in Singapore announcement of a Dormitory Transition Scheme (DTS) for existing dormitories approved or operational before Sept 18 2021 to transition to improved Interim Dormitory Standards (IDS). The aim is to strengthen resilience against future pandemics and enhance liveability. Key interim specifications in the IDS include requirements for a maximum of 12 residents per apartment unit, living space of at least 3.6 sq m per resident, toilets and showers to be ensuite in the apartment units, and more stringent requirements in the isolation facilities of 1% of bed capacity in normal times and additionally 1.5% during a pandemic. Centurion Corp is likely to be impacted by the new regulations. It has already planned for partial redevelopment of two of the PBDs, Westlite Toh Guan and Westlite Mandai, sitting on long leasehold and freehold land respectively. The company received provisional permissions for the redevelopment and plans to substantially complete the added dormitory bed supply ahead of 2027, when the transition period begins.

Thomson Medical Group has appointed Lee Suen Ming as its new chief executive officer, the healthcare group said in a bourse filing on Wednesday (Oct 11). Lee was previously chief executive officer at Mount Alvernia Hospital, Gleneagles Hospital, Parkway East Hospital and most recently, the Dr Soliman Fakeeh Hospital in Saudi Arabia. He will take over from Dr Daniel Lee on Nov 1. Dr Melvin Heng, group chief executive officer of Thomson Medical Group, said Lee Suen Ming’s appointment comes at a “pivotal point in a growth story that we kick-started a year ago”.

US

Exxon Mobil has agreed to buy Pioneer Natural Resources for US$59.5 billion, its largest takeover in more than two decades, as it seeks to become the dominant producer of shale oil. Exxon will pay US$253 per share in an all-stock deal, according to a statement on Wednesday (Oct 11). The agreement paves the way for Exxon’s biggest acquisition since merging with Mobil Corp in 1999 and is the world’s largest corporate takeover announced this year. The transaction amounts to an 18 per cent premium for Pioneer investors, based on the closing price on Oct 5, when reports of the impending deal began to swirl. If finalised, the combination will make Exxon the biggest player in the Permian Basin of Texas and New Mexico and bring the company’s daily production to nearly 4.5 million barrels of oil equivalent a day – 50 per cent more than the next biggest supermajor. The agreement will allow Exxon to boost daily output in the Permian region to the equivalent of 2 million barrels in 2027, or more than half of the oil titan’s current worldwide production. Exxon also pledged to reduce net-carbon dioxide emissions from Pioneer assets to zero by 2035, or 15 years sooner than originally planned, according to the release.

Printer maker Xerox Holdings on Wednesday (Oct 11) said it had sold its operations in Russia to local management for an undisclosed sum, becoming the latest Western business to cut ties with Russia over its February 2022 invasion of Ukraine. Hundreds of foreign companies have left Russia since Moscow began what it calls a “special military operation” in Ukraine, with some selling up for a nominal fee and others having their assets seized by the Russian state. Russia has steadily tightened exit requirements, now demanding a 50 per cent discount on any sale and a contribution to the Russian budget of at least 10 per cent of the sale price, dubbed an “exit tax” by Washington. Executives say navigating the rules is becoming harder. Russia’s Interfax news agency earlier on Wednesday reported that top managers at the Russian division of Xerox had become its new owners.

The US dollar was broadly flat against major currencies, as traders trained their sights on the release of Federal Reserve minutes later on Wednesday (Oct 11) and a key inflation print the next day for hints on the future path for interest rates. US Treasury yields continued to slide, pinning the US dollar close to two-week lows as markets digest recent comments from policymakers that the Fed may not need to tighten monetary policy further. The benchmark 10-year US Treasury yield dropped ten basis points, extending declines from Tuesday after a sharp sell-off in September left bonds cheap. The US dollar index – which tracks the greenback against six major currencies – edged up 0.1 per cent to 105.82, after dipping earlier in the session to a two-week low of 105.6. The index had closed lower over the previous five trading sessions.

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

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