Daily Morning Note – 16 November 2021
Asian stocks looked set for a steady open Tuesday after a choppy U.S. session that saw Treasury yields and the dollar climb amid concern that inflation will force a quicker withdrawal of central bank stimulus.
Australian shares slipped, while futures for Japan, Hong Kong and the U.S. were little changed. The S&P 500 and Nasdaq 100 ended broadly flat. Tesla Inc. shares approached a bear market after Chief Executive Officer Elon Musk raised the idea of selling more of his stock. The carmaker later pared losses.
Treasuries slid and the yield curve steepened on speculation the Federal Reserve may have to speed up policy tightening to fight price pressures that are broadening out from pandemic-linked snarls. Stronger-than-expected New York manufacturing data added to the case for an earlier interest-rate liftoff.
Ascendas Reit has formed a joint venture with CapitaLand Development (CLD), the development arm of CapitaLand Group, to invest S$883 million to redevelop 1 Science Park Drive into a life science and innovation campus. This follows the sale of the site, which houses the TÜV SÜD PSB Building, by the real estate investment trust (Reit) to the joint venture for S$103.2 million. CLD owns a 66 per cent interest in the joint venture, while Ascendas Reit, a member of CapitaLand Investment Limited (CLI), owns the remaining 34 per cent.
Singapore Airlines’ (SIA) passenger capacity recovered to slightly over a third of its pre-pandemic level in October, when the Republic expanded its vaccinated travel lane (VTL) scheme to 7 more countries. The group, which includes its full-service carrier and low-cost carrier Scoot, carried 189,700 passengers in October, compared to just 49,000 a year ago. Of these, SIA serviced 165,500 passengers, while Scoot carried 24,200 passengers. The group’s passenger capacity, measured in available seat-kilometres, grew 6 per cent month on month in October, the nation\al carrier said in an exchange filing on Monday after market close.
The consortium comprising Hotel Properties (HPL), businessman Ong Beng Seng, and two Temasek-linked entities, CLA and Mapletree, has raised its offer for Singapore Press Holdings (SPH), days after rival offeror Keppel raised its bid too. Cuscaden Peak is now offering each SPH shareholder the option of an all-cash offer of S$2.36, or S$2.40 per share comprising S$1.602 cash and 0.782 of an SPH Reit unit through a distribution-in-specie by SPH. Cuscaden had initially offered S$2.10 per share in cash, to rival Keppel’s initial bid of S$2.099 in cash and units of both Keppel Reit and SPH Reit. On Nov 9, Keppel beefed up the cash component of its initial offer by S$0.20 per share. This took its offer up to S$2.351 per share, consisting of S$0.868 per share in cash, 0.596 of a Keppel Reit unit and 0.782 of an SPH Reit unit. A counter to Cuscaden’s revised bid is not expected as Keppel had said its Nov 9 offer price was final. Cuscaden’s latest offer implies a total equity value for SPH of S$3.9 billion.
Singapore Technologies Engineering (ST Engineering) on Monday (Nov 15) said it has secured a smart city project in Kaohsiung City, Taiwan for S$445 million. Its smart mobility business, as part of a consortium with Hyundai Rotem, will be awarded a contract by the Kaohsiung City Mass Rapid Transit Bureau, to provide smart metro solutions, trains and a power supply system for the Kaohsiung MRT Red Line Extension, over a 7-year period. The extension line is 13 km long and consists of 6 elevated stations with an option for 2 additional stations.
First Resources on Monday (Nov 15) reported an underlying net profit of US$52.8 million (S$71.4 million) for the third quarter ended Sep 30, up 44.9 per cent from US$36.5 million the year before. The marked improvement in topline performance was driven by the higher average selling prices and stronger sales volume, the palm oil producer said in a business update. The group added that the better performance also came from a net inventory drawdown of 48,000 tonnes in Q3 2021 as compared to a net build-up of 5,000 tonnes in Q3 2020. Sales also rose by 89.2 per cent to US$314.2 million, from US$166.1 million the year prior.
Tesla Inc’s shares slipped in early trading on Monday, adding to a week of heavy losses after chief executive officer Elon Musk offloaded a combined US$6.9 billion worth of shares in the world’s most valuable car maker. Shares in the company, which lost some US$187 billion in market value over the past week, were down 2.49 per cent at US$1,007.66. If its shares drop below US$995.75, then Tesla’s market value would slip below US$1 trillion, a milestone it breached late last month after securing its biggest-ever order from car rental firm Hertz.
WeWork shares were up more than 1% in premarket trading on Monday after the company reported third-quarter earnings, the company’s first report since going public in October. Total revenue for the quarter was $661 million, up 11% from the previous quarter, WeWork said. The company also saw a loss of $4.54 per share. That’s an improvement from the loss of $5.51 per share in the year-ago quarter. No analysts covered WeWork for the third quarter, so there are no estimates to compare the results against. WeWork went public through a SPAC merger in October, almost two years after its botched IPO.
Projections for oil prices to hit $100 per barrel overlook key questions over the future of demand, according to Mohamed El-Erian, chief economic advisor at Allianz and chair of Gramercy Fund Management. Both international benchmark Brent crude and U.S. crude prices have spiked above $80 in recent weeks as post-pandemic demand outstrips supply. Surging natural gas prices have also caused crises around the world, most notably in Europe. Speaking to CNBC’s Dan Murphy at the ADIPEC energy conference in Abu Dhabi, El-Erian said he agreed with earlier remarks by Sultan Ahmed Al Jaber, CEO of the Abu Dhabi National Oil Company, that global markets had “sleepwalked” into the energy crisis.
American Tower Corp has agreed to buy CoreSite Realty Corp, valuing the data-centre real estate investment trust at an enterprise value of about US$10.1 billion, including debt. The offer of US$170 a share is a 2 per cent premium to CoreSite’s close on Friday, when it rose 2.3 per cent to US$166.59, giving the company a market value of about US$8.4 billion. American Tower has a market capitalisation of about US$124 billion. “We are in the early stages of a cloud-based, connected and globally distributed digital transformation that will evolve over the next decade and beyond,” said Tom Bartlett, American Tower’s chief executive officer, in a statement announcing the deal on Monday.
Source: SGX Masnet, The Business Times, Bloomberg, Channel NewsAsia, Reuters, CNBC, PSR
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