Daily Morning Note – 13 March 2019
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YOUR PHILLIP SUMMARY
The stock market is enjoying a solid week so far, but investors might not know it by gauging the performance of the Dow Jones Industrial Average, which by a few measures is registering its widest divergence with its U.S. peers over a two-day stretch in years. As of Tuesday’s close, the Dow was up 0.4% over the past two sessions, an otherwise respectable early start to a week, if not for the outsize performance of the S&P 500 index, up 1.8% week to date, and the Nasdaq Composite Index, which is enjoying a two-day return of 2.5%, according to FactSet data.
Of course, Boeing Co.’s latest 737 Max 8 tragedy is the apparent cause for the current disparity in indexes, which tend to move in lockstep more than they have this week. Boeing has shed $47.13, or 11.2%, its stock price since Friday’s close.
The stock market shrugged off the U.K. Parliament’s rejection of Prime Minister Theresa May’s Brexit deal, in part, as the outcome had been anticipated. Lawmakers will now have to decide whether they want a Brexit without a deal or possibly extend the March 29 deadline for leaving the European Union.
Separately, reports indicated progress on a Sino-American trade deal, with China and the U.S. reportedly close to a deal on currencies—an element in their broader trade dispute.
Source: CNBC, MarketWatch
China Sunsine Chemical Holdings‘ subsidiary on March 8 entered into an investment agreement with the local government of Shanxian County to acquire an 800 mu (534,000 sq m) plot of land to carry out an investment project in phases. The project is meant to further expand the wholly owned subsidiary Shandong Sunsine’s production capacity in rubber chemical products.
LIPPO Malls Indonesia Retail Trust (LMIRT) is looking to acquire Lippo Mall Puri in West Jakarta for 3.7 trillion rupiah (S$354.7 million), financed with a combination of debt and equity financing, the Reit’s (real estate investment trust) manager said in a regulatory filing.
Standard & Poor’s (S&P) reiterated its “A+” rating and “stable” outlook on the mainboard-listed telco on Tuesday, but added that operational weakness has brought Singtel closer to a ratings downgrade trigger. The note comes a week after Moody’s Investors Service cut its outlook to “negative”, with “weak credit metrics” for Singtel’s “A1” rating.
SIIC Environment, through its 92.15 per cent-owned subsidiary Shanghai Fudan Water Engineering Technology Co, has signed a supplementary agreement with the Shanghai Fengxian Water Authority in China for the Fengxian West Wastewater Treatment Plant project.
The slide in SGX stock has coincided with the Hong Kong Stock Exchange (HKSE) announcing plans on Monday to introduce MSCI China A Index futures to provide a hedging tool as global investor interest in Chinese mainland shares surges. On Tuesday, Citi Research downgraded its call on the bourse operator’s stock to “sell” and lowered its target price from S$7.80 to S$7, saying that HKSE’s China futures contract product may curb SGX’s profits. Citi analyst Robert Kong noted that while the “timing of such a product launch is still uncertain, the expectation is months rather than years”.
Mammoth German carmaker Volkswagen said Thursday it had earned 12.1 billion euros (S$18.44 billion) in net profit in 2018, defying heavy charges linked to its “dieselgate” emissions cheating scandal and headwinds from tough new pollution tests.
Source: SGX Masnet, The Business Times, Bloomberg, Channel NewsAsia, Reuters, PSR
Clients of Phillip Securities can keep updated with Country Strategy and Singapore Sector Reports by logging into: www.poems.com.sg > STOCKS > Research
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