Daily Morning Note – 15 June 2021

PHILLIP SUMMARY

Resurgent technology shares led US stock indices to fresh records Monday, outperforming industrial names ahead of key economic releases and a Federal Reserve announcement later in the week. The tech-rich Nasdaq Composite Index jumped 0.7 per cent to finish at 14,174.14, while the S&P 500 gained 0.2 per cent to 4,255.15, both scoring new records. But the Dow Jones Industrial Average slipped 0.3 per cent to 34,393.75. The first session of the week reflected the latest pivot after a stretch earlier in the year when tech shares lagged other sectors such as financial companies and manufacturers.

Gold prices slipped as much as 1.7 per cent on Monday, as some investors feared the US Federal Reserve may outline a path for scaling back its expansive monetary policy at a two-day meeting this week. Spot gold fell 0.7 per cent to US$1,863.98 per ounce by 1.43 pm EDT (1743 GMT) after hitting its lowest level since May 17 at US$1,848.49. US gold futures settled 0.7 per cent down at US$1,865.9. The dollar was little changed against a basket of major currencies on Monday as traders awaited a much-anticipated US Federal Reserve meeting later this week that might signal a change in the outlook for US monetary policy.

BREAKING NEWS

SG News

Private-sector economists raise Singapore’s 2021 growth forecast again to 6.5%: MAS survey. The 24 economists polled are expecting the economy to grow 6.5 per cent this year, up from the earlier forecast of 5.8 per cent and the second upgrade they have made in six months. This is also higher than the 4 per cent to 6 per cent forecast range that the Ministry of Trade and Industry left unchanged last month, citing “heightened uncertainties” arising from the global COVID-19 pandemic.

Citi is closing its Citibusiness unit, which serves small businesses under its consumer banking franchise in Singapore, from mid-August, the bank told The Business Times on Monday. BT understands that about 20 to 30 staff will be impacted from the closure. The bank will focus on redeploying and assisting staff to get re-established as soon as possible by collaborating with various support agencies to conduct career coaching, change management workshops and more. “Following ongoing strategic reviews of our plans for our small business banking in Singapore, we will be re-allocating these resources and our people to support other growth areas and sharpen our client focus,” a Citi spokesperson told BT.

Temasek-backed software startup Sprinklr targets US$5b valuation in US IPO. Software startup Sprinklr said on Monday it was looking to raise as much as US$380 million through a US initial public offering (IPO), targeting a valuation of about US$5 billion. The company, whose customers include Microsoft and McDonald’s, said in a regulatory filing it planned to sell 19 million shares priced between US$18 and US$20 per share. The company’s revenue rose 19 per cent to US$111 million in the three months ended April 30, 2021. Its net loss, however, widened to US$14.7 million from US$11.2 million in the period.

Lian Beng’s Ong family makes S$0.50 per share mandatory conditional cash offer following married deal. ON Monday, the Ong family which controls civil engineering and construction group Lian Beng announced a mandatory conditional cash offer at 50 Singapore cents per share, following a married deal. The family had, through its investment holding company Ong Sek Chong & Sons, acquired nearly 5.9 million shares or about 1.2 per cent of the total number of issued and paid-up ordinary shares issued by Lian Beng Group. Prior to the market acquisition, Ong Sek Chong & Sons and its concert parties held about 43.6 per cent of voting rights in Lian Beng. With its recent acquisition of more than 1 per cent of shares in Lian Beng, it was required to extend a mandatory offer. The offer price represents a premium on the last traded price of 47 Singapore cents on June 11, the last trading day, the announcement said.

SGX launches world’s first ESG Reit derivatives. The Singapore Exchange (SGX) on Monday launched what it has called the world’s first environment, social and governance (ESG) real-estate investment trust (Reit) derivatives. The new SGX Nikkei ESG-Reit Index Futures contract aims to meet rising demand for integrating ESG considerations into investment portfolios, the Singapore bourse operator said in a statement. It added that the derivatives will fast-track access to the growing Japanese Reit sector for global asset managers and investors. This index consists of 60 Tokyo-listed stocks, which make up nearly all of the US$160 billion market capitalisation of Japan’s listed Reit securities market.

GIC signs JV deals with US data firm Equinix. US-based data centre firm Equinix on Monday said it had signed agreements for additional joint ventures with Singapore’s sovereign wealth fund GIC to add US$3.9 billion to expand a data centre programme. The agreements for additional joint ventures in the form of limited liability partnerships with GIC, when closed, will bring the xScale data centre portfolio to more than US$6.9 billion across 32 facilities globally, Equinix said in a statement. The joint venture projects are expected to close during the course of 2021. GIC will own an 80 per cent equity interest in the future joint ventures and Equinix will own the remaining 20 per cent equity interest, the statement added. Last year in April, Equinix signed a joint venture worth more than US$1 billion with GIC to build three data centres in Japan for the cloud computing market.

US News

US fight against Chinese 5G efforts shifts from threats to iIncentives. Washington is organizing workshops and offering a handbook to help governments avoid using Huawei, ZTE gear. The U.S. government is ratcheting up pressure on Beijing’s 5G ambitions overseas, offering financial incentives and other enticements to countries willing to shun Chinese-made telecom gear. U.S. foreign-affairs agencies are developing workshops and a handbook that would help policy makers in places like Central and Eastern Europe, and in developing countries elsewhere, to build next-generation 5G cellular networks that don’t use equipment from Huawei Technologies Co. and China’s ZTE Corp.

US Companies push employees to prove they are vaccinated for Covid-19. Goldman Sachs, Morgan Stanley are among employers requesting staffers to disclose vaccination status as more offices reopen. Companies are stepping up the pressure on workers to get vaccinated—not necessarily with mandates but with strong nudges. For months, many employers have attempted to coax workers into receiving a Covid-19 vaccine. Companies dangled cash, time off and other prizes to encourage vaccinations. Executives made personal appeals in town-hall meetings and internal memos. Now, some of those efforts are taking a more assertive and urgent tone. While most employers haven’t flat-out ordered staff to get vaccinated, many are asking workers to report their vaccination status or are implementing policies that restrict the activities of unvaccinated workers.

The average age of vehicles on U.S. roadways rose to a record 12.1 years last year, as lofty prices and improved quality prompt owners to hold on to their cars longer. It was the first time the average vehicle age rose above 12 years, according to data released Monday by research firm IHS Markit. While the average vehicle age has risen steadily over the last 15 years, the trend accelerated during the coronavirus pandemic partly because of a drop in new-car sales, IHS said. The finding reflects the stronger value of vehicles throughout their life cycles, from higher new-vehicle prices Americans have been paying for years to steeper prices on the used-car lot, said Todd Campau, associate director of aftermarket solutions at IHS. Improved vehicle quality also is a factor, he said. Whereas 20 years ago a car might have changed hands once or twice and lasted 100,000 miles, it is more common today for a car to have multiple owners and last for 200,000 miles or more, he said.

Fears of inflation in the year ahead hit its highest level on record, according to a report by the Federal Reserve Bank of New York. As the economy quickly picks up steam in the wake of the Covid pandemic, Americans expect inflation to jump in the months ahead. Overall, the expectation is that the inflation rate will be up to 4% one year from now — a new high for one-year-ahead inflation expectations — and at 3.6% three years from now, the highest level since August 2013, according to the Federal Reserve Bank of New York’s Survey of Consumer Expectations for May. Expectations for how much more consumers will spend on homes, food, rent, gas and the cost of a college education all rose in the most recent report. At the same time, consumers surveyed by the New York Fed also expected household income and spending to increase, particularly among households with annual income of more than $100,000, the central bank said.

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

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