DAILY MORNING NOTE | 17 May 2023

SINGAPORE shares closed slightly lower on Tuesday (May 16), amid choppy trading in the wake of underwhelming April macro data out of China, which refreshed concerns that the reopening optimism from the world’s second-largest economy is fading. Singapore shares fell 0.68 point or 0.02 per cent to 3,214.04, snubbing overnight modest gains on Wall Street. Key gauges across the region were mixed, with gains in Japan, Hong Kong, Taiwan, Malaysia and South Korea; China and Australia finished lower.

WALL Street’s main indexes opened lower on Tuesday (May 16) after a dour forecast from Home Depot and April retail sales data that pointed to consumers feeling the pinch from rising prices and interest rates.The Dow Jones Industrial Average fell 73.23 points, or 0.22 per cent, at the open to 33,275.37.The S&P 500 opened lower by 8.33 points, or 0.20 per cent, at 4,127.95, while the Nasdaq Composite dropped 38.16 points, or 0.31 per cent, to 12,327.05 at the opening bell.

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SG

Singapore Technologies Engineering (ST Engineering) has priced US$500 million in three-year notes with a 4.125 per cent fixed-rate coupon. The notes are expected to be issued on May 23 by STE TransCore, and will mature on May 23, 2026, ST Engineering said in a statement on Tuesday (May 16).These notes will be issued in denominations of US$200,000 and integral multiples of US$1,000 in excess thereof. The notes are expected to be listed on the SGX on May 24. They will be issued under the S$5 billion global medium term note programme, which is unconditionally and irrevocably guaranteed by ST Engineering.

Ever Glory United Holdings on Tuesday (May 16) announced that it had raised about S$3.1 million from the full subscription of 14 million placement shares, after the public offer for its Catalist listing closed at noon. Four parties had applied for and were allotted 5 per cent or more of the placement shares – namely Chen Jizhu with 3.5 million shares, Dong Zhaoyan with 3.1 million shares, Hexacon Construction with 1 million shares and Lin Zhiwei with 0.9 million shares.

Sea posted its second profitable quarter in a row, with US$87.3 million in net profit for Q1 ended March 31, a reversal of the US$580.1 million net loss in the year-ago period. But jittery investors sent Sea shares down 13.1 per cent to US$76.58 as of 9.43 pm (Singapore time) on Tuesday (May 16). This came amid a weaker showing in gaming division Garena, which dragged on the New York-listed company’s topline. Sea’s revenue for the quarter was up 4.9 per cent to US$3 billion. This growth was thanks to its e-commerce arm Shopee and other services, for which revenue surged 50.7 per cent to US$2.3 billion. Sea’s latest performance comes after the company posted a surprise US$422.8 million net profit in Q4 last year – its first-ever quarterly profit following aggressive cost cuts and layoffs.

MORGAN Stanley is now a substantial shareholder of Vertex Technology Acquisition Corporation, Singapore’s first special purpose acquisition company (Spac).In a bourse filing on Tuesday (May 16), VTAC announced that Morgan Stanley had acquired another 1.2 million VTAC shares on May 12. This took Morgan Stanley’s deemed interest in VTAC to some 3.3 million shares or a stake of about 7.9 per cent from a stake of 2.1 million shares or 4.989 per cent prior to the acquisition.

CITIGROUP has appointed Sharad Mohan as its head of international personal bank in Singapore, the banking group said on Tuesday (May 16). Mohan, who was most recently head of retail banking for Citi India, will be responsible for the strategic direction and performance of Citi’s offshore wealth management business serving affluent and high-net-worth individuals primarily domiciled across the region, Citi said.


US

US HOMEBUILDER sentiment rose to a 10-month high in May as tight housing supply boosted demand for new construction, according to a survey on Tuesday (May 16) that also showed tightening credit conditions were becoming a challenge. The National Association of Home Builders (NAHB)/Wells Fargo housing market index increased five points to a reading of 50 this month. The fifth straight monthly increase lifted the index to the midpoint mark of 50 for the first time since July 2022.

US business inventories unexpectedly fell in March, pulled down by a decline in stocks at manufacturers. Business inventories dipped 0.1 per cent after being unchanged in February, the Commerce Department said on Tuesday (May 16). Inventories increased 6.5 per cent on a year-on-year basis in March. Stronger consumer spending early in the first quarter also contributed to the inventory rundown. Leaner inventories are potentially good news in the calculation of GDP for the second quarter. There had been fears that a correction of the inventory bloat would result in a sharper economic downturn. But the first-quarter decline led some economists to believe that much of the inventory liquidation was probably over.

PRODUCTION at US factories surged in April, driven by an increase in output at motor vehicle plants, but manufacturing continues to be constrained by higher interest rates. Manufacturing output accelerated 1.0 per cent last month, the Federal Reserve said on Tuesday (May 16). Data for March was revised down to show production at factories declining 0.8 per cent instead of 0.5 per cent as previously reported. Motor vehicle production surged 9.3 per cent last month after declining 1.9 per cent in March. Excluding motor vehicles, manufacturing output rebounded 0.4 per cent after dropping 0.7 per cent in March.

US retail sales increased less than expected in April, but the underlying trend was solid, suggesting that consumer spending got off to a strong start in the second quarter, defying expectations of a recession this year.

OIL futures dipped on Tuesday (May 16) as weaker-than-expected economic data in China and the United States offset a forecast of higher global demand from the International Energy Agency (IEA). Brent crude futures settled 32 US cents lower to US$74.91 a barrel. US West Texas Intermediate crude edged down 25 US cents to US$70.86. Weighing on prices on Tuesday was Chinese data showing industrial output and retail sales growth undershot forecasts in April, suggesting the world’s second-largest economy lost momentum at the start of the second quarter.

OPENAI Chief executive officer Sam Altman plans to tell Congress that artificial intelligence (AI) technology is becoming so powerful that the US and other governments should consider imposing regulation on products “above a crucial threshold of capabilities”. Retail sales rose 0.4 per cent last month. Data for March was revised slightly lower to show sales dropping 0.7 per cent instead of 0.6 per cent as previously reported.

PFIZER sold US$31 billion of debt in the fourth-largest US bond sale ever, according to a person with knowledge of the matter. Pfizer’s mega bond sale comes as the Federal Trade Commission (FTC) sued to block Amgen’s US$27.8 billion deal to buy Horizon Therapeutics on Tuesday, arguing the tie-up would stifle competition for the development of treatments for serious illnesses.

META Platforms is hoping to revive interest in the metaverse by pitching it as a tool to help train workforces, showing the social media giant isn’t backing down on its virtual reality ambitions even as artificial intelligence (AI) takes centre stage. Nick Clegg, president of global affairs, touted the “transformative” role augmented (AR) and virtual reality (VR) can play in job training and education, speaking at the company’s “Future of Work Summit” in Washington on Tuesday (May 16). The event was hosted by companies like Interplay Learning, Talespin and Embodied Labs.


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


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