Singapore stocks gained on Thursday (Jun 15) amid mixed trading in the region. It rose 0.8 per cent or 24.71 points to 3,242.85. Elsewhere in the region, Japan’s Nikkei 225 and South Korea’s Kospi ended in the red. Key indices in Hong Kong, Shanghai, Australia and Taiwan closed higher, following the US Federal Reserve’s decision to pause rate hikes. The Fed, however, signalled that more tightening could come before the year ends. Investors continued to buy Singapore Airlines shares, sending the counter up for a 12th consecutive day. It rose 4.1 per cent to S$7.91, and was the most actively traded by value, with some 27.5 million shares worth S$215 million traded.

Wall Street stocks rallied on Thursday, in a sign that the stock market sees the Federal Reserve’s campaign of raising interest rates as ending soon. All three major indices jumped more than one per cent, a day after the Fed kept rates unchanged but signalled it expects further hikes in 2023. The Dow Jones Industrial Average rose 1.3 per cent to 34,408.06. The broad-based S&P 500 climbed 1.2 per cent to 4,425.84, while the tech-rich Nasdaq Composite Index also advanced 1.2 per cent to 13,782.82. Despite Fed forecasts suggesting two more interest rate hikes this year, Treasury yields pulled back, suggesting skepticism that the central bank will follow through with more increases.

Top gainers & losers





Singapore Airlines (SIA) and its budget carrier Scoot served 2.8 million passengers in May, a year-on-year increase of 65.8 per cent. This comes amid “strong demand for air travel”, SIA said in its monthly operating results on Thursday (Jun 15). Scoot itself flew over one million passengers in the month, more than double from 418,700 passengers in the same month last year. SIA likewise saw a 41.7 per cent increase in the number of passengers to 1.8 million. The company noted that passenger traffic and load factors were “robust” across all route regions. The group passenger capacity for May was up 33.7 per cent, while the group passenger load factor (PLF) came in at 88 per cent, 9.8 percentage points higher than the previous year. SIA posted a monthly PLF of 87.2 per cent while Scoot recorded a monthly PLF of 90.7 per cent. This is Scoot’s sixth consecutive month with a PLF above 90 per cent.

The board of Singapore Kitchen Equipment “sees no impediment” to chief executive Sally Chua and senior manager Charlene Koh remaining in their roles while they are being investigated by the Commercial Affairs Department (CAD). SKE disclosed this in a Thursday (June 15) bourse filing, in which it responded to queries from the Singapore Exchange about the nature of the CAD investigation, and whether Chua and Koh should remain in their posts. On Wednesday, SKE disclosed that the two women had been released on bail after having been interviewed by the CAD, and that the investigation was into a potential offence under the Penal Code. It did not elaborate.

SATS will put three regional chief executives at the helm of its gateway services business lines, including the operations of its recently-acquired air cargo handler Worldwide Flight Services (WFS). In a bourse filing on Thursday (June 15), it said that the Hong Kong and Singapore businesses of WFS will be helmed by Bob Chi, Sats’ chief executive of gateway services. He will also lead the Singapore hub and all Sats gateway services subsidiaries and associates in Asia and the Middle East. WFS’ operations in Europe, Africa, Thailand and India will be led by John Batten, who is WFS’ chief executive for Europe, the Middle East and Africa. The operations in the US, Canada, and Brazil will be overseen by Mike Simpson, WFS’ chief executive of the Americas. Stanley Goh, chief executive of Sats Food Solutions, will lead the company’s food solutions businesses in Singapore, China, India, Thailand, Japan and the UK.

Developers in Singapore sold 1,038 private homes in May, 17 per cent higher than April’s take-up, but fewer than the 1,355 units moved in the corresponding month the year before. This made for the highest monthly number of private homes sold in a year, noted Christine Sun, OrangeTee & Tie senior vice-president of research and analytics. The figures, which exclude executive condominium (EC) units, were released by the Urban Redevelopment Authority (URA) on Thursday (Jun 15), based on its survey of licensed housing developers. This came as 1,595 private homes were launched in May – nearly double that of April’s 798 units, and nearly 30 per cent more than the 1,240 units released in May the year before. May’s surge in private home sales was driven mainly by the launches of freehold development The Continuum and 99-year leasehold condo The Reserve Residences, which collectively accounted for 72.1 per cent of all sales that month, noted Lee Sze Teck, senior research director at Huttons.


US import prices fell in May and the annual decrease in prices was the sharpest in three years, providing another boost for the Federal Reserve in the fight against inflation. Import prices dropped 0.6 per cent last month as the costs of energy products and food declined after increasing 0.3 per cent in April, the Labor Department said on Thursday (Jun 15). Economists polled by Reuters had forecast import prices, which exclude tariffs, dropping 0.5 per cent. In the 12 months through May, import prices plunged 5.9 per cent. That was the biggest year-on-year decline since May 2020 and followed a 4.9 per cent fall in April. Annual import prices have now decreased for four straight months. The government reported this week that consumer prices edged up in May, while producer prices fell.

Citigroup chief financial officer (CFO) Mark Mason said the firm’s recent job cuts will cause expenses to climb by as much as US$400 million this quarter compared with the first three months of the year. The New York-based bank expects to record severance costs tied to the departure of 1,600 employees in the second quarter, which mostly affected its investment-banking and trading divisions, Mason said on Wednesday (Jun 14) at a Morgan Stanley conference in New York. So far this year, the firm has set aside severance for 5,000 employees affected by the cuts, he said. “We remain expense-disciplined around driving costs out,” Mason said. “Sometimes that means reducing headcount.” Separately, Mason warned that trading revenue has dropped 20 per cent so far this quarter after the Congressional debate over the debt ceiling weighed on client activity for much of the period. Revenue from the firm’s investment-banking division has dropped about 25 per cent so far this quarter, in line with industry levels, he said.

US retail sales unexpectedly rose in May as consumers bought motor vehicles and a range of other goods, which could help to support the economy this quarter. Retail sales increased 0.3 per cent last month after rising 0.4 per cent in April, the Commerce Department said on Thursday (Jun 15). Economists polled by Reuters had forecast sales slipping 0.1 per cent. Retail sales are mostly goods and are not adjusted for inflation. Food services and drinking places are the only services category in the retail sales report. Though inflation and higher interest rates are causing consumers to be more selective and price sensitive, spending has remained resilient, thanks to strong wage gains resulting from a tight labour market. Some households still have savings accumulated during the Covid-19 pandemic.

The European Central Bank (ECB) raised interest rates for the eighth successive time as expected on Thursday (Jun 15) and signalled further policy tightening, as it battles high inflation. “Barring a material change to our baseline, it is very likely the case that we will continue to increase rates in July, which probably doesn’t come as a surprise,” said ECB president Christine Lagarde after the bank’s policy meeting. “Conditions in different sectors of the economy are uneven. Manufacturing continues to weaken, partly owing to lower global demand and tighter euro area financing conditions, while services remain resilient,” added Lagarde. The ECB has now increased borrowing costs by a combined four percentage points in a year, its fastest pace on record, but a peak is now clearly in sight and the debate is slowly shifting to how long rates will need to be kept at current levels.

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


Uni-Asia Group Ltd – Waiting for supply to bite

Recommendation: ACCUMULATE (Downgraded); TP S$0.94, Last close: S$0.895; Analyst Paul Chew

– The average charter rate in 1Q23 for Uni-Asia was US$12,423/day, a 33% YoY decline and below our US$14,500/day estimate for FY23e. From April, the Baltic Handysize continued to weaken into June, a decline of around 30%.

– Near-term strategy is to explore taking advantage of the attractive second-hand value of their fleet of bulk carriers. In March, a joint-venture vessel was sold for an undisclosed sum. The funds will be redeployed into new bulk vessels at a later stage or for property investments.

– We are lowering our FY23e PATMI by 22% to S$13.7mn. We downgrade our recommendation from BUY to ACCUMULATE. The target price is lowered to S$0.94 (previously S$1.19), in line with industry peers at 4x PE. New orders for Handysize vessels continue to be weak with industry supply expected to shrink 2.7% in 2023.

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