DAILY MORNING NOTE | 15 December 2023

**Do note that the last day of Morning Note Issuance will be on 15 December 2023. Morning Note will resume in January 2024**


Singapore shares finished higher on Thursday (Dec 14), after the Federal Reserve signalled lower borrowing costs are on the horizon ln 2024. The Index rose 0.6 per cent or 18.69 points to 3,122.95. Across the broader market, gainers outnumbered losers 385 to 211, with 1.6 billion securities worth S$1.5 billion changing hands.

Wall Street stocks finished higher on Thursday (Dec 14), lifting the Dow to a fresh record, following solid US retail sales and central bank moves to hold interest rates steady. The Dow Jones Industrial Average ended at 37,248.35, up 0.4 per cent, its second straight record close.The broad-based S&P 500 gained 0.3 per cent to 4,719.55, while the tech-rich Nasdaq Composite Index advanced 0.2 per cent to 14,761.56.


Top gainers & losers

Factsheets


EVENTS OF THE WEEK

Factsheets


***We are ceasing coverage of iX Biopharma with immediate effect due to a reallocation of resources. The previous recommendation can no longer be relied upon.***


SG

Stamford Tyres posted a 24.5 per cent drop in net profit to S$1.6 million for its first half ended Oct 31, 2023, from S$2.1 million in the previous corresponding period. This was mainly due to lower sales and gross profit margin, which was chipped away by the higher tyres and wheel production costs.

St Engineering through its subsidiary ST Engineering Marine, has won a contract from Singapore’s Ministry of Defence to upgrade the navy’s formidable-class frigates. The value of the contract was not disclosed by the mainboard-listed company in its statement on Thursday (Dec 14).

Unitholders of Manulife US Real Estate Investment Trust on Thursday (Dec 14) voted overwhelmingly in favour of the recapitalisation plan proposed by its manager. Over 97 per cent of the votes present at the extraordinary general meeting (EGM) on Thursday were in favour of each of the three inter-conditional resolutions.

Metech International has reached an amicable out-of-court settlement with Deng Yiming over its lawsuit against the latter over missing diamonds and inflated machine prices.Deng is one of the former directors of Asian Eco Technology, a joint venture (JV) to manufacture and distribute lab-grown diamonds between Metech’s subsidiary Asian Green Tech and X Diamond Capital (XDC), which is owned by Deng.


US

Oil prices rose 4 per cent on Thursday (Dec 14), extending the previous session’s gains, boosted by a weaker US dollar and as the International Energy Agency (IEA) lifted its oil demand forecast for next year.Brent futures were up US$3.00, or 4 per cent, to US$77.26 a barrel at 12.57 pm EST (1757 GMT). US West Texas Intermediate crude climbed US$2.89, or 4.2 per cent, to US$72.36.

Facebook owner Meta’s text-based app Threads arrived in the European Union on Thursday (Dec 14), months after its global launch in July, Meta CEO Mark Zuckerberg said.Threads is a spin-off of the Instagram photo app and is intended to be a rival to X, formerly known as Twitter, after that platform alienated many users and advertisers following Elon Musk’s purchase last year.

Intel on Thursday (Dec 14) said that dozens of personal computer makers are using its newest chip, as the company and its customers try to entice consumers to upgrade their machines for a new era of chatbots.At a press event in New York, Intel said the new offering will be available in laptops from Dell Technologies.

Sheffield Green reversed into the black with a net profit of US$3.5 million for its full year ended Jun 30, 2023.The company posted a net loss of US$0.2 million in the previous corresponding period.

Oman Investment Authority is gearing up for an ambitious divestment plan that may include several dozen listings over the next five years as the Gulf sultanate chases an upgrade to emerging-market status. Thuraiya Ahmed Al Balushi, the wealth fund’s manager for economic diversification, said about 30 assets are in the pipeline with the priority on initial public offerings.

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


RESEARCH REPORTS

Phillip Macro Update – Key Points for December FOMC Meeting

Analyst: Shawn Sng

Maintained rates, discussed rate cuts – During the latest FOMC meeting, the U.S. Federal Reserve (Fed) committee acknowledged a notable deceleration in economic activity compared to the robust pace observed in the third quarter of the year. As a result, all committee members unanimously decided to keep the benchmark federal funds rate within the range of 5.25-5.50%. This marks the third consecutive meeting where the rate remains unchanged, concluding the year as anticipated by the market.

Inching towards the targeted range of 2% – In the latest data releases, including indicators such as the Consumer Price Index (CPI) and Personal Consumption Expenditure (PCE), there are consistent indications of progress toward the 2% range.

Federal Reserve Projection/Guidance – In the December Summary of Economic Projections (SEP), the dot plot as depicted in Figure 1, indicates that the central bank policy rate is likely at or near its peak for this tightening cycle.

Market Trend Analysis Topic #10 – US market performance in election years

Analyst: Zane Aw

– This report looks at how the US markets have performed in both absolute and relative terms to the rest of the world, when compared to the MSCI World ex USA Index, in the past 10 election years dating back to 1984.

– Election years have historically provided positive returns for the US markets in contrast to the mixed performance from the rest of the world. In the past 10 election years, the S&P 500 has yielded gains on 8 occasions, with an average return of 3.81%. The MSCI World ex USA Index was positive on 6 occasions, averaging a slight loss of 0.64%. The outperformance of the US markets over the rest of the world was also evident after 2013.

– The market tends to outperform when a candidate from the incumbent party is elected. The average return in election years when the elected candidate came from the incumbent party was 11.29% compared to an average loss of 3.67% when a candidate from the opposing party took office.

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