Daily Morning Note – 16 March 2022
Singapore shares were pushed into positive territory on Tuesday (Mar 15), bucking the broad-market trend as the lockdown of tech hub Shenzhen, Russia-Ukraine tensions and upcoming United States Federal Reserve policy announcement weigh on sentiments. The Straits Times Index (STI) rose 0.12 per cent or 4.01 points to 3,236.04, led by gains from local banks. Elsewhere in the region, Hong Kong tech companies led another sharp equity sell-off following the lockdown of Shenzhen. The Hang Seng Index ended the day 5.72 per cent lower. South Korea’s Kospi slipped 0.91 per cent; the Kuala Lumpur Composite Index was down 0.64 per cent while the Jakarta Composite Index dipped 0.49 per cent. Japan’s Nikkei 225, on the other hand, was up 0.15 per cent as inflation fears receded following a retreat in oil prices.
Wall Street stocks surged on Tuesday following another steep drop in crude prices as the Federal Reserve kicked off a closely-watched policy meeting. Brent oil futures finished under US$100 a barrel for the first time in nearly three weeks, tumbling mainly on worries about weakened Chinese demand due to fresh Covid-19 restrictions. “The market is breathing a big sigh of relief that commodities prices – mainly food and energy, oil and grains prices – are coming down,” said Adam Sarhan of 50 Park Investments. “At the same time, you have bargain hunters showing up,” Sarhan said. “We are oversold and the market is due for a nice rally.” The Dow Jones Industrial Average finished up 1.8 per cent at 33,544.34 The broad-based S&P 500 gained 2.1 per cent to 4,262.45, while the tech-rich Nasdaq Composite Index leaped 2.9 per cent to 12,948.62.
Food and beverage company ABR Holdings has acquired the remaining 20 per cent stake in catering group Chilli Padi Holding for a consideration of S$4.4 million, the company announced in a bourse filing on Tuesday (Mar 15). Following the completion of the agreement, Chilli Padi Holding will be a wholly-owned subsidiary of ABR Holdings, which owns and operates Swensen’s in Singapore. The acquisition of the remaining 20 per cent stake comes after the exercise of the put option by Chilli Padi Holding’s non-controlling shareholder in accordance with the sale and purchase agreement back in July 2017. Both parties had agreed that the consideration for the acquisition will be S$4.4 million, and the completion date will be no later than Mar 15. Shares of ABR ended Tuesday flat at S$0.445.
CDC South East Queensland (CDC SEQ), a subsidiary of transport operator ComfortDelGro’s wholly-owned subsidiary ComfortDelGro Corporation Australia, will acquire certain assets of Rothery’s Coaches business in Rockhampton, Queensland for a total consideration of A$6.75 million (S$6.74 million). This transaction will add another 16 buses to the existing bus operations of CDC SEQ in Rockhampton, the company said in a filing to the Singapore Exchange on Tuesday (Mar 15). CDC SEQ had entered into an agreement with Keydale, Keydale Holdings, Barry Stephen Rothery and Roslyn Ann Rothery on Mar 10 to acquire these selected assets. The total consideration was arrived at on a “willing buyer willing seller” basis after taking into account the book value and net tangible asset value of the identified assets, among other factors. The transaction has no material impact on ComfortDelGro’s net tangible assets or earnings per share for the fiscal year ending December 31, said the company. Shares of ComfortDelGro ended Tuesday at S$1.36, down 0.7 per cent or S$0.01.
Learning solutions company Alpha DX Group flagged uncertainty over its ability to continue as a going concern, in its response to queries from the Singapore Exchange (SGX) on Tuesday (Mar 15). The company noted that since its previous going-concern assessment on Mar 2, it has received a letter of statutory demand, and negotiations with its creditors have either deteriorated or not yielded desired outcomes. Alpha DX had on Mar 4 said it received a letter of statutory demand from Kydon Holdings over the payment of a sum of S$1.9 million, relating to the remaining consideration and interest charges for the acquisition of Kydon Learning Systems Institute – now known as Zionext. It also made an application to Singapore’s High Court for the grant of a moratorium under Section 64 of the Insolvency Restructuring and Dissolution Act, as a short-term measure in order to allow the company time to resolve its cash flow issues, the company said. Its board of directors expects the company will not be able to continue operating on a going-concern basis unless the group receives a fresh injection of funds. The company noted that its cash and cash equivalents of S$3.4 million, while able to partially satisfy its short-term liabilities, is not sufficient to cover all its short-term liabilities of S$7.3 million.
Oil prices tumbled more than 6 per cent on Tuesday to their lowest in almost three weeks, as Russia suggested it would allow a revival of the Iran nuclear deal to go forward and as traders worried growing pandemic lockdowns in China could dent demand. Both Brent and US crude futures benchmarks settled below US$100 per barrel for the first time since late February. Since reaching 14-year highs on March 7, Brent has slid nearly US$40 and WTI more than US$30. Trading has been extremely volatile since Russia invaded Ukraine more than two weeks ago. During the session, Brent futures plummeted US$6.99, or 6.5 per cent, to settle at US$99.91 a barrel. US West Texas Intermediate (WTI) crude fell US$6.57, or 6.4 per cent, to settle at US$96.44 a barrel. Brent fell as low as US$97.44 and WTI hit US$93.53, their lowest since Feb 25.
Gold prices fell on Tuesday (Mar 15) to their lowest in more than a week, as US Treasury yields surged ahead of an expected rate hike from the Federal Reserve, and as hopes for progress in Russia-Ukraine talks further dampened the metal’s safe-haven appeal. Spot gold was down 0.4 per cent at US$1,942.96 per ounce by 1.21 am GMT, after touching its lowest since Mar 4 at US$1,940 earlier in the session. US gold futures fell 0.5 per cent to US$1,951.20. US Treasury yields jumped to two-and-a-half-year highs on Monday, ahead of what is expected to be the Fed’s first rate hike in 3 years on Wednesday to try to tame soaring inflation that shows no signs of slowing.
Tesla Inc raised prices by about 5 per cent on Tuesday for some of its China-made Model 3 and Model Y products, the website of the US electric vehicle maker showed, in its second such hike in five days. Tesla declined to comment on the hikes. After the price increases, the Model Y Long Range vehicle costs 375,900 yuan (S$80,540), up 18,000 yuan from March 10, when its price went up 10,000 yuan from 347,900 yuan. The price tag of the Model 3 Performance unit was 367,900 yuan after Tuesday’s increase of 18,000 yuan, which followed an increase of 10,000 yuan five days ago. Last week, industry body the China Passenger Car Association said Tesla sold 56,515 China-made vehicles in February.
Source: SGX Masnet, The Business Times, Bloomberg, Channel NewsAsia, Reuters, CNBC, PSR
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