Daily Morning Note – 17 August 2021

Dear valued client,

Wall Street stocks shrugged off early weakness and finished mostly higher on Monday setting fresh records ahead of earnings reports from large US retailers and key economic releases. Major indices opened the session solidly lower, weighed down by disappointing Chinese economic data and rising expectations that the Federal Reserve will soon announce the phaseout of stimulus measures. But equities shrugged off the early losses, with bargain hunters stepping up purchases as the session progressed. The Dow Jones Industrial Average ended at 35,625.40, up 0.3 per cent to close at a fifth straight record, finishing nearly 400 points above its low earlier in the day. A 10-day run of gains for European stocks came to a halt on Monday following a surprise slowdown in China’s economic indicators, with commodity-linked stocks falling the most. The pan-European Stoxx 600 index fell 0.5 per cent to 473.45, easing from a record level scaled last week. Oil and mining stocks fell about 1.5 per cent each as commodity prices took a hit after Chinese data raised concerns about faltering demand in the world’s major consumer of metals and oil. China’s factory output and retail sales growth slowed sharply and missed expectations in July as new Covid-19 outbreaks and floods disrupted business operations.


SG News

Q&M proposes 1-for-5 bonus issue. The exercise will see up to 157.5 million bonus shares issued to shareholders whose names appear in the register of members. The bonus shares will also be issued to those who have shares entered against their names in the depository register on an entitlement date to be determined. On the back of its “strong” second quarter results, Q&M said the proposed bonus issue is to increase the issued share capital base of the company, reflecting the growth and expansion of its business.

Integrated marine logistics company Marco Polo Marine’s revenue for the nine months ended June 30 has since outpaced its FY2020 full-year revenue of S$30.8 million, driven by strength in both shipyard and ship chartering segments. In a voluntary operational update filed on Monday, Marco Polo Marine said its average utilisation and charter rates for vessels has recovered to above pre-Covid levels. The group’s shipyard operations has “remained busy” with strong demand for ship repairs, benefitting from a widening customer base as well as an increased market share, it noted.

Property developer Oxley Holdings on Monday said it has secured S$4.3 billion in sales for its development projects in Singapore. Around 91 per cent of its residential units here have been sold as at Aug 8, 2021, representing 87 per cent of the total gross development value (GDV), said the group in a bourse filing. Its effective stake of secured sales amount to approximately S$2.6 billion, while future progress billings from the sold units amount to approximately S$1.7 billion.

Shares of Nanofilm Technologies International fell 28.8 per cent on Monday to S$4.25 even though the firm is expecting better performance in the second half of the year as it enters its peak season for business activity and as new projects – such as hydrogen fuel cells – progressively come to fruition. This is following a disappointing set of half-year results announced last Friday. Net profit dipped 3.1 per cent for the first half of this year, amid higher costs in manpower and manufacturing overheads. Revenue had improved 24.2 per cent for the six months ended June 30, from S$77.8 million in the corresponding period last year, led by its advanced materials business unit, which saw an 18.5 per cent increase in revenue.

Singapore developers’ private home sales surge 82% in July on suburban demand. Real estate developers in Singapore moved 1,589 private homes in July this year, an 82.2 per cent surge from the 872 units sold in the previous month. These figures – which exclude executive condominium (EC) units – were released by the Urban Redevelopment Authority (URA) on Monday, based on its survey of licensed housing developers. By region, the lion’s share of the sales volume last month came from the suburbs or Outside Central Region (OCR), where 1,012 units or nearly two-thirds of the total volume were sold, according to the URA data.

Mainboard-listed transport operator ComfortDelGro Corporation announced on Monday that it is looking to list its wholly owned subsidiary, ComfortDelGro Corporation Australia (CDC), on the Australian Securities Exchange (ASX). In a statement, the company said the initial public offering (IPO), which is planned for the last quarter of 2021, will unlock the value of the group’s land transport business assets in Australia. Australia is ComfortDelGro’s single largest overseas investment destination, with a total investment of S$1.17 billion to date. The group made its maiden foray in Australia 16 years ago through the acquisition of a bus operator in New South Wales. It now operates a fleet of more than 4,400 vehicles – including buses, coaches and ambulances – in six Australian states and territories.

US News

U.S. cannabis firm PharmaCann plans IPO as New York weed legalization lifts demand. PharmaCann, one of the 10 original cannabis licensees in New York, has confidentially filed for an initial public offering that could value it at well over $1 billion, sources familiar with the matter told Reuters. The planned IPO would help PharmaCann raise funds before New York state begins recreational weed sales, expected sometime next year. The IPO could take place this fall, one of the sources said. PharmaCann, which operates in five other U.S. states, is likely to seek to dual-list its shares on the Canadian Securities Exchange and for over-the-counter trading in the United States, one of the sources said. PharmaCann has tapped Canadian investment bank Canaccord Genuity (CF.TO) for the offering. Canaccord is expected to be the lead underwriter, while more banks are likely to be hired, the sources said. Canaccord did not offer an immediate comment.

Tesla is under investigation because its cars keep hitting emergency vehicles. Federal safety regulators are investigating at least 11 accidents involving Tesla cars using Autopilot or other self-driving features that crashed into emergency vehicles when coming upon the scene of an earlier crash. The National Highway Transportation Safety Administration said seven of these accidents resulted 17 injuries and one death. All of the Teslas in question had the self-driving Autopilot feature or the traffic-aware cruise control engaged as they approached the crashes, the NHTSA said. Tesla (TSLA) stock fell 5% in morning trading following news of the probe. The accidents under investigation occurred between January 22, 2018, and July 10, 2021, across nine different states. They took place mostly at night, and the post-accident scenes all included control measures like first responder vehicle lights, flares, an illuminated arrow board and road cones.

State Street, one of the world’s largest asset managers, is shutting down its two midtown Manhattan offices as the Wall Street firm embraces a hybrid working model. The move by State Street (STT), the company behind the “Fearless Girl” statue outside the New York Stock Exchange, underscores the pressure facing the commercial real estate market as the pandemic changes the way people work. State Street, which manages about $3.5 trillion, is closing both of its offices located near Rockefeller Center.

There’s growing support within the Fed to announce the tapering of bond purchases in September. Shifting policy views amid unexpected economic data have opened the door for the Federal Reserve to announce in September a decision to taper its assets purchases and begin the reduction in buying a month or so after. Interviews with officials along with their public comments show growing support for a faster taper timeline than markets had expected a month ago. Those changing views follow the strong jobs data of the past two months along with higher inflation readings. Fed Governor Christopher Waller and Fed bank Presidents Eric Rosengren, Robert Kaplan and Jim Bullard have publicly called for a September taper. Atlanta’s Raphael Bostic supported beginning the taper sometime between October and December, suggesting he could also favor a September announcement. The group is not known for being hawks, and in fact, some were among those making the earliest calls for historic Fed action to support the economy at the beginning of the pandemic.

Wish stock has plunged 27% in two days and almost 80% since January as users flee. Wish CEO Peter Szulczewski opened his shareholder letter last week in a way that was certain to scare off investors, who were already concerned about a company that had struggled since going public just eight months earlier. “After a strong start to the second quarter of 2021, demand slowed due to a number of headwinds,” Szulczewski wrote in the first sentence of the letter published late Thursday, alongside Wish’s earnings report. Wish shares plunged 20% on Friday and continued sliding on Monday, dropping another 9% to close at $6.87. The company, which operates a discount e-commerce app, debuted at $24 a share in December and traded as high on $31.19 on Feb. 1. The stock has since lost more than three-quarters of its value. Wish reported a 6.4% drop in quarterly revenue from a year earlier to $656 million, while analysts expected a slight increase. Its net loss swelled by tenfold to $111 million, and monthly active users (MAUs) dropped 22% to 90 million. The company attributed the disappointing sales figures to the reopening of the economy and a return to physical shopping. Similar announcements have come from e-commerce companies Amazon and Wayfair, which reported weaker-than-expected revenue, and Etsy, which missed estimates with its forecast.

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

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