DAILY MORNING NOTE | 16 June 2022

The Singapore stock market started higher but failed to sustain the momentum, ending Wednesday (Jun 15) marginally lower, as the rout continued to grip most regional key indices. The key gauge Straits Times Index (STI) edged down 0.1 per cent or 3.04 points to 3,105.85, logging a third straight day of trading loss.

Wall Street stocks rallied on Wednesday, applauding a large interest rate hike by the US Federal Reserve in hopes that inflation can be countered without prompting a recession. The broad-based S&P 500, which entered a “bear market” earlier this week following the latest inflation data, gained 1.5 per cent to 3,789.99. The Dow Jones Industrial Average gained 1.0 per cent to 30,668.53, while the tech-rich Nasdaq Composite Index jumped 2.5 per cent to 11,099.15. The US central bank raised the benchmark borrowing rate by 0.75 percentage points, bigger than the telegraphed 0.5-percentage-point increase after economic data in recent days showed inflation strengthening and consumer confidence weakening. The super-sized move was the first 75-basis-point increase since November 1994.

 

Top gainers & losers

Factsheets

SG

Singapore Airlines is progressing on its recovery runway as the mainboard-listed group in May logged the highest passenger traffic and load factor since the pandemic hit in early 2020. The national carrier with budget arm Scoot together flew a total of 1.7 million passengers, 17.4 per cent more than that in April, when Singapore dropped most of its border requirements for vaccinated travellers. In addition, SIA’s passenger load factor hit 78.2 per cent at the group level, the highest since the pandemic began in early 2020, according to its monthly operating statistics released after market closed on Wednesday (Jun 15). While freight capacity rose 30.2 per cent year-on-year in tandem with more passenger flights, both load factor and load (in terms of the distance the freight transported) dipped, by 22.3 percentage points and 3 per cent respectively. The lower cargo demand was a result of the pandemic controls in China. Also, SIA noted more bellyhold space went to baggage carriage as passenger load factors improved. Since the city-state significantly relaxed its border restrictions, SIA has reported increasing passenger traffic. In fact, its forward bookings, a Citi analyst wrote in a note published this week, as a percentage of available capacity for the next three months are near pre-pandemic levels. At the closing bell on Wednesday, SIA shares were flat at S$5.13 while the MCBs issued in 2020 inched up 0.2 per cent to S$1.013 and the 2021 tranche was 0.31 per cent lower at S$0.962.

Singtel announced in a press release on Wednesday (Jun 15) that its Australian subsidiary Optus will directly oversee its Optus Enterprise division from Jul 1 this year. The division was formerly under Singtel’s group enterprise division. This follows a similar move to decentralise the telco’s organisational structure when its information and communications technology (ICT) arm NCS was spun off from Singtel’s enterprise business and recast as a regional business-to-business digital services provider. Singtel group chief executive officer (CEO) Yuen Kuan Moon said that the move is in line with the group’s efforts to evolve its operating model to stay relevant and maximise shareholder returns since it began its strategic reset a year ago.

Grab on Wednesday (Jun 15) said it has bought and relaunched food reviews and restaurant reservations site HungryGoWhere and its accompanying social media channels. The site, which provides food reviews, deals and allows users to make restaurant reservations, was previously owned by Singtel and had closed in 2021. Grab said the new HungryGoWhere brand will aim to “address the growing interest of diners to reconnect with our local food scene in much deeper ways”, as the dining scene regains vibrancy amid the easing of the Covid-19 pandemic. On top of restaurant reviews, deals and reservations, the site will also spotlight up-and-coming personalities and the origins of popular foods. Grab said the site will leverage on insights derived from its superapp data, including popular food trends and frequently visited places in Singapore. Relevant stories on HungryGoWhere will also be shared on the Grab app and on Grab’s marketing channels.

US

Walt Disney could lose as many as 20 million of its Disney+ subscribers after being outbid for the streaming rights to Indian Premier League (IPL) cricket matches this week. The estimate, from Media Partners Asia, means the company may have trouble reaching its goal of as many of as 260 million global Disney+ subscribers by 2024, according to Vivek Couto, executive director of the research firm. “IPL drives customer acquisition,” he said in an email. “It’s regarded as entertainment not just sports by Indian households – women and men.” Few consumer products have been as successful as Disney+. The service, which offers unlimited Disney movies and TV shows, garnered 10 million subscribers on its first day in November 2019 and boasted nearly 138 million at last count. Chief executive office Bob Chapek made a bold forecast in late 2020, predicting the company would triple its subscriber count in 4 years. About 50 million, more than one-third, of the worldwide subscribers come from Disney+ Hotstar, a product offered in India and other South Asian nations, and cricket has a been a big driver of that. For months investors have been debating whether the company will have to lower its forecast. The drumbeat began after a weak quarter last year and continued after Netflix reported its first subscriber loss in a decade in April. Disney shares are down 39 per cent this year.

Oil prices fell more than US$3 on Wednesday as markets worried about a fall in demand after the Federal Reserve hiked interest rate by three-quarters of a percentage point. Brent crude futures for August settled down US$2.7, or 2.2 per cent, at US$118.51 a barrel, having fallen as low as US$117.75. US West Texas Intermediate crude for July fell US$3.62, or 3.04 per cent, to US$115.31 a barrel, after dropping to a low of US$114.60. The biggest hike by the U.S. central bank since 1994 also sent dollar higher with the dollar index rising to its highest since 2002. A stronger greenback makes US dollar-priced oil more expensive for holders of other currencies, curtailing demand. Meanwhile, US crude production, which has been largely stagnant over the last few months, edged up 100,000 barrels per day last week to 12 million bpd, its highest level since April 2020, data from the Energy Information Administration showed.

Gold prices inched up from a near 1-month low on Wednesday (Jun 15), as investors awaited a potentially aggressive and key interest rate hike announcement from the US Federal Reserve as it seeks to combat inflation amid mounting fears of an impending recession. Spot gold was up 0.1 per cent at US$1,810.59 per ounce as of 12.51 am GMT, after dropping to its lowest since May 16 at US$1,803.90 on Tuesday. US gold futures fell 0.1 per cent to US$1,811.30.

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

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