Daily Morning Note – 18 January 2021
A stronger U.S. dollar is proving to be an early test for emerging-market currencies on the eve of Joe Biden’s inauguration. The greenback gained over the last two weeks, buoyed by the president-elect’s proposal for a $1.9 trillion stimulus package. Most developing-nation currencies have slumped in that span, and history suggests further pain may be in store. Although the MSCI’s gauge of emerging-market currencies ended 2020 with its biggest quarterly advance in a decade, the backdrop of rising cases, renewed lockdowns and vaccine concerns threatens to reverse those flows.
Janet Yellen, President-elect Joe Biden’s pick to take over the US Treasury, is expected to affirm the United States’ commitment to market-determined foreign exchange rates when she testifies on Capitol Hill on Tuesday, the Wall Street Journal reported on Sunday. The Treasury secretary nominee will make clear at a Senate confirmation hearing that the United States does not seek a weaker dollar, the newspaper reported, citing Biden transition officials familiar with her preparation for the session.
France and Russia prepared to beef up their coronavirus inoculation programmes next week, even as authorities sought to allay concerns about supplies of the vaccines while the global pandemic shows no sign of being brought under control. With infections surging past 94 million and more than two million deaths – and Europe among the hardest-hit regions – France and Russia were hoping to shift their vaccination programmes into a higher gear from Monday.
The Trump administration notified Huawei suppliers, including chipmaker Intel, that it is revoking certain licenses to sell to the Chinese company and intends to reject dozens of other applications to supply the telecommunications firm, people familiar with the matter told Reuters. The action – likely the last against Huawei Technologies under Republican President Donald Trump – is the latest in a long-running effort to weaken the world’s largest telecommunications equipment maker, which it says is a threat to US national security and foreign policy interests.
About a third of the residential units offered at Normanton Park were sold at an average price of S$1,750 per square foot on the first day of sales, developer Kingsford Huray Development said on Sunday afternoon. Of the 600 residential units sold, 80 per cent are one- and two-bedroom units, it said in a press statement. Three commercial units were also taken up. The development, which is expected to obtain Temporary Occupation Permit (TOP) in 2023, consists of 1,840 apartment units, 22 two-storey strata terraces and eight commercial units.
Parler, the social network popular among conservatives, could return to Apple’s App Store if it changes how it moderates posts on the platform, the tech giant’s CEO Tim Cook said Sunday. Apple suspended all downloads of the Parler app following the attack on the US Capitol on January 6, citing postings on the platform that could incite further violence. Google and Amazon also cut ties with the company.
Source: SGX Masnet, The Business Times, Bloomberg, Channel NewsAsia, Reuters, PSR
Thai Beverage PCL
Analyst: Chua Wei Ren
Recommended Action: Technical BUY
Thai Beverage PCL (SGX: Y92) has officially embarked on an early bullish rise as it has broken above the key resistance level of $0.735. Further technical indicate that the stock is set to raise further.
UG Healthcare Corp Ltd
Analyst: Chua Wei Ren
Recommended Action: Technical BUY
UG Healthcare (SGX: 8K7) had completed its whole cycle of the Elliott intermediate phase and despite the correction, the stock is looking at a temporary rebound ahead based on the technical.
Singapore REITs Monthly – Recovering with the economy
Recommendation: OVERWEIGHT (Maintained), Analyst: Natalie Ong
– STI outperformed FTSE S-REIT Index in January, as investors rotated to cyclical sectors to tap recovery prospects. Biggest gainers were Industrial REITs, climbing 3.0% MoM. Healthcare was the biggest loser, pulled down by First REIT (FIRT SP, Not Rated) which shed 40.2% MoM due to its impending rights issue.
– Sector yield spread over benchmark 10-year SGS (10YSGS) was 303bps, at -0.7SD. More acquisitions expected in low-interest-rate environment.
– Remain OVERWEIGHT with sector catalysts expected from pick-up in economy activity, interest savings and acquisitions. Prefer Retail and Hospitality. Top picks are and Manulife US REIT (MUST SP, BUY, TP US$0.92) and Ascendas REIT (AREIT SP, BUY, TP S$3.61). These counters look attractive at current valuations and will remain resilient despite the weaker sector outlook, in our view.
Fortress Minerals Ltd – Ore production almost doubled this quarter
Recommendation: BUY (Maintained), Last Done: S$0.310
Target Price: S$0.470, Analyst: Vivian Ye
– 3Q21 results were better than expectations. Revenue was up 150.9% YoY, PATMI up 477.9% YoY. 9M21 PATMI formed 77.5% of our FY21e forecast.
– 3Q21 sales volume increased a stellar 93.8% YoY on the back of increased domestic demand for steel.
– Maintain BUY with a higher TP of S$0.47, up from S$0.28. We raise FY21e PATMI by 69.2% to capture its 3Q outperformance. Our TP remains pegged to 11x FY21e, the industry average. Catalysts are expected from a 50% jump in production in FY21e and iron ore prices (Platts Iron Ore Index, IODEX 65% Fe CFR North China) remaining above US$110/DMT. The company announced a proposed US$30mn acquisition of Malaysia iron ore and copper producer
SG Bonds Weekly – Week 3: Strong Start to 2021
Credit Analyst: Timothy Ang
– Primary debt markets in Asia started the year strongly despite increased market volatility and funding stresses from Chinese SOE and real estate sectors.
– Singapore Airlines raised USD 500mm in its first US dollar bond issue. The transaction attracted strong market interests pushing order books to be 5.7x oversubscribed.
– Agrifood giant Olam International has priced S$250mn of perpetual securities at 5.375%.
HK Reports – Read up on our Hong Kong reports here
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