DAILY MORNING NOTE | 14 April 2023

Trade of the Day

Ping An Insurance (Group) Company of China, Ltd (HKEX: 2318)

Analyst: Zane Aw

(Current Price: HKD$51.55) – TECHNICAL BUY
Buy price: HKD$51.55 Stop loss: HKD$48.50
Take profit 1: HKD$56.00 Take profit 2: HKD$59.00


Singapore shares climbed 0.3 per cent or 8.42 points to close at 3,294.54 points on Thursday (Apr 13), as Singapore-listed real estate investment trusts (S-Reits) led the charge in a market saddled with fears of a potential recession in the US. Across the wider Singapore market, gainers outnumbered losers 298 to 264, with 1.3 billion securities worth S$851.9 million traded.

Wall Street’s main indexes opened higher on Thursday (Apr 13) as moderating producer prices in March and a jump in weekly jobless claims brought relief to investors worried about how far the Federal Reserve will hike interest rates to tame inflation. The Dow Jones Industrial Average rose 22.47 points, or 0.07 per cent, at the open to 33,668.97. The S&P 500 opened higher by 8.09 points, or 0.20 per cent, at 4,100.04, while the Nasdaq Composite gained 68.09 points, or 0.57 per cent, to 11,997.42 at the opening bell.

Top gainers & losers

Factsheets



EVENTS THIS WEEK

Factsheets


SG

The latest six-month Singapore Treasury bill (T-bill) closed its auction on Thursday (Apr 13) with a lower cut-off yield of 3.75 per cent. While the yield is down from the last auction’s cut-off yield of 3.85 per cent, there was a higher demand for the S$4.8 billion on offer in this round’s auction. The total value of applications in this auction was S$12.3 billion, representing a bid-to-cover ratio of 2.6, and up from the S$9.6 billion in applications in the previous six-month T-bill auction.

AsiaPhos says it is exploring “potential transactions” that may involve investing in or acquiring a renewable energy business. The potential transaction will allow it to diversify into new businesses or growth areas as well as supplement the group’s existing businesses, says the company in its April 13 statement. At present, the transactions have not materialised, with the company currently in discussions and negotiations with a third party. More updates will be made in due course, says AsiaPhos.

The joint venture between GuocoLand and Hong Leong Holdings’ wholly-owned subsidiary, Intrepid Investments, has been awarded the Lentor Gardens land parcel. The interest holdings of GuocoLand and Intrepid are 60% and 40% respectively. The JV partners’ bid price of $486.8 million was accepted by the Urban Redevelopment Authority. The bid price translates to a price of $2,068.23 psf over the site area of 21.866.7 sqm or 235,371 sq ft. The bid price also translates to a price of $984.85 psf over the maximum permissible gross floor area (GFA) of 494,289 sq ft.


US

US producer prices fell in March by the most since the start of the pandemic, driven by a decline in gasoline costs that has helped slow inflationary pressures. The producer price index for final demand decreased 0.5 per cent from a month earlier, according to data out on Thursday (Apr 13) from the Bureau of Labor Statistics. The PPI slowed on an annual basis, rising 2.7 per cent from a year ago, the smallest gain in more than two years. Excluding the volatile food and energy components, the so-called core PPI fell 0.1 per cent from February and increased 3.4 per cent from a year ago.

The number of Americans filing new claims for unemployment benefits increased more than expected last week, a further sign that labour market conditions were loosening up as higher borrowing costs dampen demand in the economy. Initial claims for state unemployment benefits rose 11,000 to a seasonally adjusted 239,000 for the week ended April 8. Economists polled by Reuters had forecast 232,000 claims for the latest week.

Oil prices fell a dollar a barrel on Thursday, as an Opec report stoked summer demand worries and traders took profits after benchmarks scaled multi-month highs in the previous session. Brent crude fell US$1.24, or 1.4 per cent, to settle at US$86.09 a barrel, only the second time this month that the global benchmark has finished lower. The US West Texas Intermediate (WTI) slipped US$1.10, or 1.3 per cent, to close at US$82.16 a barrel.

Walmart has sold menswear brand Bonobos to brand management firm WHP Global and Express in a $75 million deal announced Thursday. It’s the second time this year Walmart has offloaded a direct to consumer brand that it bought under former e-commerce President Marc Lore after it sold Moosejaw to Dick’s Sporting Goods in February.

Luxury electric vehicle maker Lucid Group said late Thursday that it produced 2,314 of its Air sedans in the first quarter. But it delivered just 1,406 Airs to customers during the period, another sign that the company is seeing weaker-than-expected demand. Wall Street analysts polled by FactSet had expected Lucid to deliver about 2,000 Airs in the first quarter. Lucid’s shares were down over 3% in after-hours trading following the news.

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


RESEARCH REPORTS

FAANGM Monthly Mar 23 – Demand still weak

Recommendation: NEUTRAL (Maintained); Analysts: Jonathan Woo, Maximilian Koeswoyo, Zane Aw, Phillip Research Team

– FAANGM was up 13.6% in March, beating the S&P 500’s gain of only 3.5%. Nasdaq also performed well, gaining 9.5%. FAANGM ended 1Q23 up 24.5%, beating both the Nasdaq (20.5%) and S&P 500 (7.0%) as investors piled back into Big Tech.

– META was the top gainer, up 21% due to some follow through positive sentiment on improving efficiency, and news of a potential ban on TikTok in the US – META is up 74% YTD. NFLX was the main laggard, but still gained 7.2% for the month.

– Even with FAANGM forward earnings revised up due to increasing cost-cutting measures (forward P/E -1 std dev below its long-term average), near-term revenue headwinds still linger. 2Q23 demand for PC and other electronic hardware remains weak, with digital advertising headwinds persisting. Layoffs seem to be the only positive, with growth catalysts yet to be seen. We remain NEUTRAL on FAANGM.

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