Daily Morning Note – 17 October 2018
WEEKLY MARKET OUTLOOK WEBINAR
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YOUR PHILLIP SUMMARY
Stocks closed higher Tuesday, with the Dow Jones Industrial Average rallying nearly 550 points on upbeat earnings and robust economic data, marking the biggest one-day percentage gain for major indexes since late March.
The tech sector, which had led Monday’s decline, bounced back resoundingly to lead the market higher.
U.S. industrial production rose 0.3% in September, according to the Federal Reserve, beating Wall Street expectations of 0.1%, according to a MarketWatch Survey.
The number of job openings in the U.S. reached another all-time high of 7.1 million in August,according a report released Tuesday morning by the Labor Department. The same report showed that American workers were voluntarily quitting their jobs at a rate of 2.4% in August, matching the July reading, which was the highest since 2001.
The National Association of Home Builders Confidence Index ticked up one point to 68 in October, though it remains down from a cycle high of 74, reached in December 2017.
Source: MarketWatch
RESEARCH REPORT
Singapore REITs Monthly – October 2018
Analyst: Tara Wong
– FTSE S-REIT Index declined 5.8% YTD. Weakness across all sub-sectors over the
past month, with Sabana REIT being the top performer (+3.8% MTD) and OUE
Commercial REIT (announced a rights issue on Oct 5) being the worst performer
(-11.7% MTD).
– Sector yield spread of 300bps over the benchmark 10-year SGS (10YSGS) yield
remains close to the -1 standard deviation (SD) level as at end-September.
– The US Fed’s interest rate hike to 2.25% in September and additional
anticipated rate hikes will add pressure on yield spread.
– 3m SOR continued to rise YTD, ending at 1.63% in September.
– Remain NEUTRAL on S-REITs sector. Sub-sector preferences: Office and
Hospitality.
Keppel DC REIT – Portfolio remains stable
Recommendation: Accumulate (Maintained), Last Close Price: $1.34
Target Price: $1.45, Analyst: Richard Leow
– 3Q18 revenue was 5.3% higher than expected, due to higher rental top up
which is recognised periodically
– 3Q18 DPU was 4.1% lower than expected, due to Capex Reserves set aside for
KDC SGP 3 and KDC SGP 5
– 9M18 revenue and DPU met 79% and 73% respectively, of consensus FY18
expectation
– Maintain Accumulate; unchanged target price of $1.45
BREAKING NEWS
Unreported Chinese local government debt may amount to trillions of U.S. dollars, meaning the country’s debt-to-GDP ratio has hit “alarming” levels, S&P Global Ratings said in a report released Tuesday.
EC World REIT has chosen not to acquire Stage 2 properties of Bei Gang Logistics for a purchase consideration of 702.5 million yuan (S$140 million).
Temasek Holdings has launched its first public bond offer to retail investors, with a five-year maturity and a fixed interest rate of 2.7 per cent. Up to S$200 million is offered to retail investors and another S$200 million placement for institutional, accredited and other specified investors.
Temasek Holdings will be acquiring Israeli cybersecurity company Sygnia for US$250mn, subject to customary signing and closing conditions.
SURBANA Jurong is acquiring two major architectural firms, Canadian firm B+H and Singapore firm SAA Architects.
Blumont Group has entered a supplemental sale and purchase agreement regarding its proposed acquisition of all of Singapore-incorporated Samadhi Retreats Pte Ltd, to exclude two entities initially included in an earlier agreement.
Jiutian Chemical Group expects to report a net loss for the third quarter ended Sept 30.
Source: SGX Masnet, The Business Times, Bloomberg, Channel NewsAsia, Reuters, PSR
Clients of Phillip Securities can keep updated with Country Strategy and Singapore Sector Reports by logging into: www.poems.com.sg > STOCKS > Research
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