DAILY MORNING NOTE | 18 April 2023
Singapore stocks posted gains on Monday (Apr 17), taking their cue from counterpart markets in the Asia-Pacific region, as well as a smaller-than-expected decline in exports. Asia-Pacific indexes closed higher, after China’s central bank decided not to change the one-year medium-term lending facility rate. The decision fuelled optimism among market watchers that the first-quarter economic output of the world’s second-largest economy “won’t be too bad”. In the city-state, Singapore’s non-oil domestic exports (NODX) contracted for the sixth consecutive month in March, down 8.3 per cent year on year, but the drop was less than what the market had expected. On a seasonally adjusted monthly basis, NODX jumped 18.4 per cent.
Wall Street stocks finished a choppy session modestly higher on Monday, at the start of a heavy week of corporate earnings from Bank of America, Netflix and others. After last week’s surprisingly good results from JPMorgan Chase and other large banks, investors will digest updates from more major and midsized lenders as well as from electric automaker Tesla, consumer products company Procter & Gamble and others. The Dow Jones Industrial Average added 0.3 per cent to end at 33,987.18. The broad-based S&P 500 also advanced 0.3 per cent to 4,151.33, as did the tech-rich Nasdaq Composite Index, which finished at 12,157.72.
United Overseas Bank (UOB) and Lazada Group have signed a memorandum of understanding (MOU) to collaborate on retail products and banking solutions for their combined customer base in Singapore, Malaysia, Indonesia, Thailand and Vietnam. UOB will offer its new customers Lazada cashback vouchers worth up to $200 as a welcome gift, says the bank on April 17. The regional strategic partnership will also help e-commerce merchants on the Lazada platform access financing. This is Lazada’s first partnership with a bank across a variety of payments and financial services in Southeast Asia, as well as UOB’s first regional collaboration with an e-commerce platform.
The robust demand for air travel continued in March, with the Singapore Airlines (SIA) group seeing strong passenger traffic and load factors across all route regions. SIA and Scoot carried a combined 2.7 million passengers in March, up 14.1% m-o-m, and three times the number of passengers carried in March 2022. Scoot carried some 947,600 passengers during the month, a 638.6% increase from March 2022. SIA, meanwhile, carried some 1,773,900 passengers in March, up 132% y-o-y. Group passenger capacity was 10.9% higher compared to February 2023, and at 79% of pre-Covid-19 levels (January 2020) during the month.
CytoMed, a Singapore-based pre-revenue biomedical firm backed by Peter Choo, has listed on the Nasdaq. Choo, a renowned figure in the local corporate scene, was once dubbed “IPO King” for shepherding dozens of listings on the local bourse when he was running Westcomb Securities. Besides chairing Cytomed, Choo is also the long-time vice chairman of SGX-listed CNMC Goldmine Holdings. CytoMed, founded in 2018, was spun off from the Agency for Science, Technology and Research (A*STAR), the government’s research and development agency. For this Nasdaq IPO, some 2.4 million shares were sold at US$4, raising the pre-clinical firm gross proceeds of some US$9.65 million.
Southern Alliance Mining (SAM) signed a memorandum of understanding (MOU) to acquire two rare earth mines in Perak and Johor Bahru in Malaysia, just two weeks after it said it was in advanced talks to buy the mines. The signing of the MOU gives SAM a 40% stake in MCRE Resources Sdn Bhd (MCRE), which operates an iron absorption clay rare earth mine in Perak, and a 100% stake in Paramount Synergy Sdn Bhd (Paramount), which owns an iron absorption clay rare earth mine in Johor but is still in the exploration mining phase.
OUE Lippo Healthcare, through its joint venture company (JVCo), China Merchants Lippo Hospital Management (Shenzhen) Limited, has entered into a service agreement with the Chinese University of Hong Kong (CUHK). Under the service agreement, CUHK will provide management consultancy services for the development, commissioning, clinical governance, and management of Prince Bay IMC, an international medical centre, in Shenzhen China Merchants-Lippo Prince Bay Hospital.
USP Group shareholder Melvin Tan has linked up with some of the company’s minority shareholders to wrest control of the company’s board and inject new projects, including a lab-grown diamond business, into the watch-listed entity. The other shareholders of USP will have the chance to vote on his proposed board composition at an extraordinary general meeting (EGM) to be held online at 10 am this Friday (Apr 21). The resolutions include the removal of USP’s chief executive Tanoto Sau Ian and the company’s non-executive chairman Djohan Sutanto, as well as the appointment of four new directors – one of them an executive director.
Alphabet shares fell over 4 per cent in premarket trading on Monday (Apr 17) after a report that South Korea’s Samsung Electronics was considering replacing Google with Microsoft-owned Bing as the default search engine on its devices. The report, published by the New York Times over the weekend, underscores the growing challenges Google’s US$162-billion-a-year search engine business face from Bing – a minor player that has risen in prominence recently after the integration of the artificial intelligence (AI) tech behind ChatGPT.
Tesla’s first-quarter margins are anticipated to have hit a more than three-year low as the electric-vehicle (EV) maker slashed prices to lure more buyers in the face of rising competition and a weak economy. The world’s most valuable automaker, which commands over half of the US EV market, cut sticker prices on its cars five times between January and April – a move that boosted quarterly sales in the quarter ended Mar 31 but squeezed its industry-leading profit margin. Tesla is expected to report auto gross margin of 23.2 per cent for the quarter, according to 17 analysts polled by Visible Alpha, down from a record 32.9 per cent a year earlier and the lowest since the fourth quarter of 2019.
HSBC’s biggest shareholder Ping An is likely to vote in favour of splitting the bank up at its annual investor meeting on May 5, a source familiar with the Chinese insurer’s thinking said on Monday (Apr 17). The source said Ping An would vote in favour of two resolutions tabled by individual investor Ken Lui, which call for HSBC to restore dividends to 51 cents per share and to provide regular updates on the possibility of spinning off its Asia business. HSBC recommended that shareholders vote against the resolutions, and has, since Ping An began urging the spinoff last November, maintained that its global presence is worth more than any such fragmentation would yield.
SpaceX on Monday (Apr 17) postponed the first test flight of Starship, the most powerful rocket ever built, designed to send astronauts to the Moon and Mars and beyond. Liftoff of the giant rocket was called off just minutes ahead of the scheduled launch time because of a pressurisation issue in the booster stage, SpaceX officials said. Elon Musk’s SpaceX said the launch will be delayed for at least 48 hours. Starship had been scheduled to blast off at 1320 GMT from Starbase, the SpaceX spaceport in Boca Chica, Texas.
LVMH is selling debt for the first time in three years, seizing on quarterly results that blew past market expectations as well as calmer conditions in Europe’s credit market. The Paris-based owner of Christian Dior and Louis Vuitton is marketing at least 500 million euros (S$731 million) of new bonds due in 2025, according to a person familiar with the matter, who asked not to be identified as they aren’t authorised to speak publicly. It’s set to be LVMH’s first venture into global debt markets since April 2020, when the company sold debt in the wake of the pandemic. That sale came soon after a huge deal in February to support the acquisition of Tiffany.
Teck Resources’ controlling shareholder has given his clearest indication yet that the company will be up for sale, but only if investors throw their support behind a plan to split the Canadian miner in half. Norman Keevil, the 85-year-old magnate who controls Teck through “supervoting” Class A shares, offered investors the prospect of a future deal as the company scrambles to win over investors in the face of a competing proposal from Glencore. Glencore’s US$23 billion offer – to merge the businesses and then create two new companies that mine metal and coal respectively – gained traction toward the end of last week, putting Teck on the back foot.
Ernest & Young’s US arm said on Monday it was shedding 5 per cent of its workforce, less than a week after the unit’s objection torpedoed the global accounting giant’s plan to break up its audit and consulting units. The layoffs will affect around 3,000 of the company’s US employees. The decision was taken after assessing the impact of current economic conditions, strong employee retention rates and “overcapacity” in parts of the company, EY US said.
Source: SGX Masnet, Bloomberg, Channel NewsAsia, Reuters, CNBC, WSJ, The Business Times, PSR
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