Daily Morning Note – 15 July 2021


Asian stocks look set for a steady start Thursday after Federal Reserve Chair Jerome Powell signalled more U.S. economic progress is needed before stimulus can be pared back and as traders await China growth data. Futures inched lower in Japan and Australia and were steady in Hong Kong. U.S. contracts fluctuated following modest S&P 500 and Nasdaq 100 gains on Powell’s reassurance on accommodative policy and reiteration that high inflation will likely moderate in coming months. Treasuries rallied and the dollar held a retreat. A raft of key Chinese reports are due later, including gross domestic product growth, amid a debate on whether the Asian nation’s economic rebound from the pandemic is peaking. An upcoming maturity of policy loans will offer clues on how far China’s central bank will go in loosening policy.


SG News

Fortress Minerals saw record revenue of US$17.3 million for the first quarter ended May 31, nearly one-and-a-half times the US$7.1 million figure for the year-ago period. Net profit more than tripled to US$7.2 million, up from US$2.2 million in the year-ago period. The Malaysian producer and exporter of iron ore concentrate attributed its results to increased sales volume and strong iron ore prices.

Catalist-listed specialist engineering services provider Acromec has entered into a joint venture (JV) with Tako Ventures to launch co-working laboratory spaces, the group said on Wednesday in a bourse filing. The group said its wholly-owned subsidiary Acromec Engineers has entered into agreements with Tako Ventures to formalise a JV and implement it through a JV company called Life Science Incubator.

Ezion Holdings is divesting two towing tugs along with its entire stake in its wholly-owned subsidiary Teras Sunrise for a total of US$83.7 million to ZhongXie Industrial, a marine logistic services provider based in Hong Kong. According to an exchange filing late on Tuesday night, the offshore and marine player signed a share purchase agreement to sell Teras Sunrise for US$80.2 million. This is expected to result in a US$13.1 million gain on disposal.

Yongnam Holdings gave notice of three consecutive years of losses in a regulatory filing on Wednesday, while its independent auditor also noted material uncertainty over the steel fabricator’s ability to continue as a going concern. As at July 14, Yongnam’s latest six-month average daily market capitalisation was S$43.3 million.

Sembcorp Floating Solar Singapore, a wholly-owned subsidiary of Sembcorp Industries, and Singapore’s national water agency PUB on Wednesday announced the official opening of the Sembcorp Tengeh Floating Solar Farm at the Tengeh Reservoir. With this, Singapore is one of the few countries in the world to have a waterworks system that is fully solar-powered. The farm will also contribute to Singapore’s goal of quadrupling solar energy deployment by 2025.

US News

Even as US inflation has hit the highest rate in over a decade, the central bank is sticking to its guns, and will continue to provide stimulus until the economy has fully recovered, Federal Reserve Chair Jerome Powell said Wednesday. Mr Powell acknowledged that the inflation spike was stronger than the Fed was hoping to see, and will remain “elevated” in coming months, but he again expressed confidence the rate will decline once supply bottlenecks and other temporary issues are resolved.

Apple has asked suppliers to build as many as 90 million next-generation iPhones this year, a sharp increase from its 2020 iPhone shipments, according to people with knowledge of the matter. Its shares jumped to a record. The Cupertino, California-based tech giant has maintained a consistent level in recent years of roughly 75 million units for the initial run from a device’s launch through the end of the year.

Microsoft on Wednesday said it will offer its Windows operating system as a cloud-based service, aiming to make it easier to access business apps that need Windows from a broader range of devices. Windows 365, as the service will be called, will roll out on Aug 2 and will work somewhat like buying a new Windows PC: A business or school will pick how much computing power, memory and storage they would like for an the new machine.

Twitter saw a surge in demands over the course of last year from governments around the world to take down content posted by journalists and news outlets, data to be released by the social media platform for the first time will show. In its transparency report to be published on Wednesday and a copy of which was seen by Reuters, Twitter said verified accounts of 199 journalists and news outlets on its platform globally were subject to 361 legal demands from governments to remove content in the second half of 2020, an increase of 26 per cent from the first half of the year.

American International Group Inc plans to use an IPO to sell part of its life and retirement business, while Blackstone Group Inc agreed to buy a sizeable stake, according to a person familiar with the matter. AIG and Blackstone said on Wednesday the private equity firm would pay US$2.2 billion in cash for 9.9 per cent of the unit, sending the insurer’s shares more than 6 per cent higher in after-market trading.

Citigroup comfortably beat market estimates for second-quarter profit on Wednesday, as the economic recovery allowed the bank to release loan loss reserves and offset a plunge in revenue from lower trading and credit card lending. For the quarter ended June 30, net income jumped to US$6.19 billion, or US$2.85 per share, from US$1.06 billion, or 38 US cents per share, a year earlier. Analysts on average had expected a profit of US$1.96 per share, according to Refinitiv IBES data.

The US Consumer Product Safety Commission (CPSC) said on Wednesday it has sued Amazon.com Inc to force the retailer to recall hundreds of thousands of hazardous products that it had distributed on its platform. By a 3-1 vote, the CPSC voted to file an administrative complaint saying the Seattle-based e-commerce giant was legally responsible to recall the products as they posed a serious risk of injury or death to consumers.

EBay has agreed to sell part of its stake in Norway’s Adevinta to private equity firm Permira for US$2.25 billion in cash, clearing the way for a tie-up between eBay and Adevinta’s classified ads businesses. The deal comes after Austria’s Federal Competition Authority demanded eBay cut its holding in Adevinta to no more than 33 per cent to approve their plan to create a world leader in classified ads.

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


City Developments Ltd

Analyst: Chua Wei Ren

Recommended Action: Technical SELL

City Development Ltd (SGX: C09) has been consolidating as a large range bound move since prices fails to make a new high in April 2021. Furthermore, technical price action indicate that the stock is heading for further downside correction to test the lower boundary of the range

Sell spot: 6.90 Stop loss: 7.10 Take profit: 6.20

>> Read more technical reports

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