DAILY MORNING NOTE | 16 August 2022
Local shares took a hit on the first trading day of the week, as investors kept a close eye on key global economic issues such as inflation rates, the tensions in Taiwan, as well as potential further interest rate hikes by the Federal Reserve. On the Singapore bourse, the benchmark Straits Times Index shed 0.4 per cent or 12.45 points on Monday (Aug 15) to end at 3,256.82. Across the broader market, decliners narrowly inched past advancers 238 to 229. Daily turnover came in at just over 1.6 billion securities worth a collective S$1.1 billion.
Wall Street stocks shrugged off early weakness Monday and pushed higher, extending a positive run for the market that began last month. Equities initially fell after weak Chinese economic data and a gloomy reading from the New York Federal Reserve Bank on regional manufacturing activity, but turned around by midday. The Dow Jones Industrial Average finished 0.5 per cent higher at 33,912.44. The broad-based S&P 500 climbed 0.4 per cent to close at 4,297.14, while the tech-rich Nasdaq Composite Index gained 0.6 per cent to 13,128.05. This week will offer a window into the state of the US consumer, with a government data on retail sales for July coming on Wednesday, and earnings reports from Walmart, Home Depot and other giant chains.
Fibre network infrastructure owner NetLink NBN Trust reported a 11.3 per cent increase in net profit to S$27.6 million for the first quarter of its 2023 financial year ended June 30, 2022, from S$24.8 million a year ago, according to a bourse filing on Monday (Aug 15). Revenue for the quarter grew by S$4.5 million or 4.8 per cent from the year-ago period to S$97.9 million, from S$93.4 million previously. The revenue increase was mainly due to higher ancillary project revenue, revenue from residential, non-residential, NBAP (non-building address point) and segment connections and co-location revenue, though this was partially offset by lower central office revenue, said its manager. It added that ancillary project revenue contributed most significantly to the increase, as more diversion projects were completed as compared to last year. At 62 per cent, residential connection revenue remains the group’s largest revenue contributor. NetLink units closed S$0.005 or 0.5 per cent lower at S$0.94 on Monday, before the results were announced.
Flag carrier Singapore Airlines (SIA) carried 2.1 million passengers on a group level in July, marking the first time its passenger carriage has crossed the 2 million mark since the start of the Covid-19 pandemic, it said in its operating results filed to the bourse on Monday (Aug 15). In July, the group’s passenger load factor also reached a new pandemic-high load factor of 87.4 per cent, making it the second-highest monthly figure in its group’s history. The peak summer season kept demand for air travel robust across all regions except East Asia, where travel restrictions remained in place in some key markets, SIA said. In July, the group reached 67 per cent of its pre-Covid-19 capacity, while group passenger capacity was 4.9 per cent higher on month. Passenger load factor for its full-service carrier SIA was 87.7 per cent, while passenger load factor for its budget carrier Scoot was at 86 per cent. Cargo operations registered a load factor of 60.5 per cent, down 26.7 percentage points on year, with loads declining 4 per cent on year. SIA noted that it resumed services to Shenzhen, China in the month, bringing the group’s passenger network to cover 99 destinations as at end July. Shares of SIA closed at S$5.39 on Monday, down S$0.02 or 0.4 per cent, before the announcement.
Keppel Offshore & Marine (Keppel O&M), through its wholly owned subsidiary Keppel Shipyard, has secured a contract worth about US$2.9 billion, according to a Monday (Aug 15) press statement. The contract was awarded by Brazil’s national oil company, Petroleo Brasileiro SA (Petrobras) on the basis of an international tender for the engineering, procurement and construction of P-80, a floating production storage and offloading vessel (FPSO). Slated for completion in H1 2026, the P-80 is the second FPSO that Keppel O&M will be building for Petrobras for the Buzios field in Brazil, with the first FPSO, P-78, currently under construction. The vessel is structured on progressive milestone payments and will be cashflow neutral during its execution lifecycle. It is expected to add over S$4 billion to Keppel O&M’s orderbook. The contract is not expected to have a material impact on the net tangible assets of earnings per share of Keppel Corporation for the current financial year, the company said. Shares of Keppel Corporation closed down 0.4 per cent or S$0.03 at S$6.96 on Monday, before the announcement.
Nexstar Media Group, the largest local TV station owner in the US, is acquiring a 75 per cent stake in the CW Network. The Irving, Texas-based media company already owns many CW affiliates, including WPIX in New York and KTLA in Los Angeles. The CW’s current owners, Warner Bros Discovery and Paramount Global, will each retain 12.5 per cent of the business and will continue to produce original, scripted content for the network, according to a statement Monday. Financial terms of the deal weren’t disclosed. The purchase underscores Nexstar’s commitment to traditional broadcasting at a time when TV is losing viewers to online services and other entertainment options. Major media giants like Warner Bros Discovery and Paramount, for example, are both racing to build subscription-based online TV businesses. Nexstar says the deal will help diversify its content outside of news, increasing its exposure to the national advertising market. Nexstar has 200 owned or partner stations in 116 US markets, reaching 212 million people. In addition to CW-affiliated stations, it also operates outlets aligned with NBC, CBS, ABC and Fox. Warner Bros Discovery has been a key feeder of shows to CW. Paramount, formerly ViacomCBS, has pushed to unload non-core assets as it works to boost its Paramount+ streaming service. It agreed last year to sell a Los Angeles movie lot for US$1.85 billion to Hackman Capital Partners and Square Mile Capital Management.
Faraday Future Intelligent Electric Inc said on Monday (Aug 15) that the electric-vehicle startup will raise up to US$600 million in funding as it looks to deliver its FF 91 luxury car later this year. The company will get an initial US$52 million of committed funds as part of a new financing facility. EV startups that promised to disrupt the automotive industry by using a technology-heavy approach to their vehicle designs are now scrambling to secure fresh lines of cash and to cut costs due to rising commodity prices. Faraday Future’s manufacturing facility in California is nearing completion and is testing the FF 91 electric vehicle, the company’s chief executive officer Carsten Breitfeld said. The electric-vehicle maker said it was in active discussions with investors in the United States and globally for “significant additional near-term funding” as it looks to start deliveries in the third or fourth quarter. Faraday Future said on Monday its head of global supply chain, Mathias Hofmann, will temporarily oversee manufacturing operations at its Hanford, California factory, replacing vice-president of manufacturing Matt Tall, who will be leaving the company.
The safe-haven US dollar rose on Monday (Aug 15) after a new batch of disappointing Chinese data bolstered global recession worries, while the yuan weakened following a surprise key rate cut by the People’s Bank of China (PBOC). Chinese industrial output, retail sales and fixed-asset investment all fell short of analyst estimates in data published on Monday, as a nascent recovery from draconian Covid-19 lockdowns faltered. The US dollar index against 6 peers rose 0.6 per cent to 106.3, consolidating near the middle of its range this month. The euro eased 0.6 per cent against the US dollar to US$1.0191, after touching a 1-week low. The US dollar was also supported by Federal Reserve (Fed) policymakers’ hawkish comments in response to early signs that US inflation may have peaked.
Source: SGX Masnet, The Business Times, Bloomberg, Channel NewsAsia, Reuters, CNBC, PSR
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