DAILY MORNING NOTE | 13 June 2023
Singapore stocks closed higher on Monday (Jun 12) amid mixed trading in the region as investors awaited decisions from global central banks meetings later this week. It rose 0.3 per cent or 9.10 points to close at 3,196.07. Shares of Hongkong Land led the gainers on Monday, with the counter climbing 1.4 per cent to close at US$4.24. Other top performers include Mapletree Pan Asia Commercial Trust and DBS, which rose 1.2 and 1.1 per cent respectively. Shares of Singapore Airlines were the most actively traded by value on Monday. The counter rose 0.7 per cent to close at S$7.30 after 11 million shares worth S$79.8 million were traded.
Wall Street stocks extended a buoyant stretch on Monday, rallying ahead of key economic data and central bank decisions. Markets are focused on Tuesday’s consumer price index report, which will likely influence whether the Federal Reserve follows expectations and skips an interest rate increase after more than a year of hikes. The Dow Jones Industrial Average finished up 0.6 per cent at 34,066.33. The broad-based S&P 500 advanced 0.9 per cent to 4,339.00, while the tech-rich Nasdaq Composite Index jumped 1.5 per cent to 13,461.92. Besides the May CPI report and the Fed meeting, this week’s calendar includes US retail sales data, as well as meetings of the European Central Bank and the Bank of Japan.
DBS Private Bank has launched a multi-family office (MFO) service leveraging on Singapore’s variable capital company (VCC) framework. DBS claims the DBS Multi Family Office Foundry VCC (DBS MFO) is a first globally. While MFOs in Singapore have long used the VCC framework for client portfolios, Lee Woon Shiu, DBS group head of wealth planning, family office & insurance solutions, said the DBS MFO fills a gap in the market. Under the DBS MFO, fund administration and custody are done by DBS, which means clients will not have to deal with third-party providers that other MFOs may need to engage. The VCC framework was rolled out in Singapore in 2020, and since then, many MFOs have tapped the structure for client portfolios.
The Housing Board (HDB) will set aside more temporary housing for families waiting for their new flats, doubling the number of interim rental flats to 4,000 over the next two years. Announcing this on Monday (Jun 12), Senior Minister of State for National Development Sim Ann said that HDB had met its earlier target of increasing the supply of flats under the Parenthood Provisional Housing Scheme (PPHS) from 800 units in 2021 to 1,800 in 2023. The number of such flats will reach close to 2,000 by the end of this year, she noted, adding that application rates for the scheme have fallen significantly due to the higher supply – from over 20 per unit in 2021 to around three now. “But we understand that buyers who booked their flats in the past two years have experienced longer waiting times because of the delays caused by Covid-19. So, HDB is hard at work to increase the PPHS supply further, doubling it again to 4,000 units over the next two years,” said Sim.
Singapore’s international visitor arrivals exceeded a million in May for the third straight month but slipped from April’s post-pandemic high. Tourism arrivals slid to 1.11 million in May, down from 1.13 million recorded in the preceding month, based on the latest figures from the Singapore Tourism Board (STB) on Monday (Jun 12). But the month’s arrival numbers were more than 2.5 times the 418,458 visitors recorded in the corresponding month in 2022, even as arrivals remained below the 1.5 million visitors recorded in May 2019, before the pandemic. Indonesia, for the 14th month, remained the top source of visitors to Singapore, recording 183,758 visitors in May – though this was lower than the 220,067 arrivals in the previous month.
Local business sentiment has hit a two-year low for the third quarter of 2023, amid a worsening outlook for the manufacturing and wholesale sectors. Data from the Singapore Commercial Credit Bureau (SCCB) released on Monday (Jun 12) showed its quarterly Business Optimism Index falling to +3.98 percentage points for Q3 2023, from +4.60 percentage points in the previous quarter and +5.10 percentage points in Q3 2022. “The overall sentiment among the business community has been on a gradual downtrend over the past six quarters since Q2 2022,” said SCCB chief executive officer Audrey Chia. “Given the downside risks in global financial conditions, ongoing geopolitical developments and sluggish demand from China, we expect sentiment to remain dampened moving into the second half of the year,” she added. Similar to the second quarter, five out of six indicators remained expansionary. These indicators were volume of sales, net profit, selling prices, new orders, inventory levels and employment.
Salesforce on Monday (Jun 12) doubled its venture capital fund for generative artificial intelligence (AI) startups to US$500 million and unveiled the AI Cloud service that hopes to attract enterprises by offering the company’s AI-powered products under one umbrella. AI Cloud will include Salesforce’s products from the Einstein service to workplace-messaging app Slack and data analysis software Tableau. Its starter pack will be available for US$360,000 annually, the company said. The move underscores the race among technology companies to incorporate their tools with generative AI, which can create new text, imagery and other content based on inputs from past data. “AI is reshaping our world and transforming business in ways we never imagined, and every company needs to become AI-first,” said Marc Benioff, CEO of Salesforce. Along with the company’s own offerings, AI Cloud will host the large-language models (LLMs) – the core software of artificial intelligence systems – from providers such as Amazon Web Services, Anthropic and Cohere.
The US dollar slipped on Monday (Jun 12) as traders stayed on guard ahead of policy decisions this week from several central banks, including the Federal Reserve (Fed), who are expected to keep interest rates on hold for the first time since January 2022. Monetary policy meetings of the Fed, the European Central Bank (ECB) and the Bank of Japan (BOJ) will set the tone for the week as markets seek clues from policymakers on the future path of interest rates. US May inflation data is also out on Tuesday as the Fed kicks off its two-day meeting. Money markets are leaning towards a pause from the Fed when it announces its interest rate decision on Wednesday, according to the CME FedWatch tool, expectations that sent world stocks surging to a 13-month high on Friday as risk sentiment improved. Conversely, a clear majority of economists polled by Reuters expect the ECB to hike its key interest rate by 25 basis points this week and again in July, before pausing for the rest of the year as inflation remains sticky.
New York City agreed to delay until September enforcement of a new municipal law requiring hosts of short-term rentals to register for an operating licence. Airbnb and three local hosts on Jun 1 sued to block the regulation, which had been set to go into effect next month, saying it amounts to “de facto” ban on short-term rentals in the city. In a Friday (Jun 9) court filing, the city said it won’t issue violations on the law or seek the imposition of fines or penalties until Sep 5 while Airbnb continues litigating its case. Shares of Airbnb rose US$6.73, or 5.7 per cent, to US$124.59 on Monday. Passed in January 2022, the law requires hosts who want to list on Airbnb or other platforms to register with the city and receive an operating licence and bars companies from collecting booking fees on unregistered properties. Units with unresolved fire-code violations or orders to vacate will be unable to register.
Oil prices fell by around US$3 a barrel on Monday after analysts highlighted rising global supplies and concerns about demand growth just ahead of key inflation data and a US Federal Reserve meeting later this week. Brent crude futures fell US$2.95, or 3.9 per cent, to settle at US$71.84 a barrel, their lowest since Dec 2021. West Texas Intermediate crude fell US$3.05, or 4.4 per cent, to settle at US$67.12 a barrel. Goldman Sachs cut its oil price forecasts early on Sunday, citing higher-than-expected supplies later this year and through 2024. The bank’s December crude price forecast now stands at US$86 a barrel for Brent, down from US$95, and at US$81 a barrel for WTI, down from US$89. The Fed’s rate hikes have strengthened the dollar, making commodities denominated in the US currency more expensive for holders of other currencies and weighing on prices.
Source: SGX Masnet, Bloomberg, Channel NewsAsia, Reuters, CNBC, WSJ, The Business Times, PSR
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