Daily Morning Note – 18 July 2019

WEEKLY MARKET OUTLOOK WEBINAR

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PHILLIP SUMMARY

U.S. stocks ended lower for a second straight session Wednesday as investors digested mixed earnings results and economic data, while a lack of progress on the Beijing-Washington tariff dispute remained a headache.

Bank of America reported better-than-expected results after gains in its consumer banking division but railroad CSX disappointed and its weak sales forecast aroused fears of a slump in freight rates, reflecting a slowing manufacturing sector.

The Dow Jones Industrial Average ended down 115.78 points at 27,219.85, a decline of 0.4%, the S&P 500 index lost 19.62 points, or 0.7%, to 2,984.42, while The Nasdaq Composite Index slipped 37.59 points to 8,185.21, a drop of 0.5%. The Dow Transportation Average fell 3.6%, its biggest one day fall since May, to 10,403.


TECHNICAL PULSE

Singtel Ltd

Recommended Action: Technical LONG

Based on the Elliott wave count on the 2nd July 2019 report, there are some notable changes base on the recent price action.

Read more technical pulse

RESEARCH REPORT

Keppel DC REIT – Stopped out by rich valuations

Recommendation: HOLD (Downgraded), Last Done: S$1.73

Target Price: S$1.71, Analyst: Natalie Ong

– Revenue and DPU in line with our forecast. 2Q19/1H19 DPU of 1.93/3.85 Scts
(+6.0%/+6.4% YoY) account for 24/28% of our FY19 DPU forecast.

– Potential acquisition of KDC SG 4 and repositioning of office space at KDC SG 5
from office to DC are catalyst for KDC.

– Downgrade to HOLD with a higher target price of $1.71 (previously $1.59) to
reflect better operational performance post-AEI, but downgrade KDC due to
rich valuations.


BREAKING NEWS

US housing starts fall further; permits at two-year low. Housing starts decreased 0.9 per cent to a seasonally adjusted annual rate of 1.253 million units last month as a rebound in the construction of single-family housing units was overshadowed by a plunge in multi-family homebuilding, the Commerce Department said. Data for May was revised slightly down to show homebuilding falling to a pace of 1.265 million units, instead of slipping to a rate of 1.269 million units as previously reported.

US plans different approach in leading G7 in 2020: White House official. The Trump administration plans to adopt shorter communiques and generally revamp how the Group of Seven rich nations does its work when the United States leads the body in 2020, a White House adviser said.

IMF warns rising trade-war risk is weighing on global economy. The report comes as the Washington-based fund confronts a surge in protectionism around the world that’s seen dragging on global growth, with output slowing in major economies from China to Europe and Mexico. IMF leadership also is in flux with Managing Director Christine Lagarde set to succeed Mario Draghi as president of the European Central Bank.

Oil prices fall more than 1% after US fuel inventories build. Brent crude futures were down 69 cents, or 1.1 per cent, to settle at US$63.66 a barrel. US West Texas Intermediate (WTI) crude futures fell 84 cents, or 1.5 per cent, to settle at US$56.78 a barrel. Both benchmarks shed more than 3 per cent on Tuesday. While data on Wednesday from the US Energy Information Administration showed a larger-than-expected drawdown in crude stockpiles last week, large builds in refined product inventories kept prices lower. US crude inventories fell 3.1 million barrels, EIA data showed, more than analysts’ forecasts for a decrease of 2.7 million barrels.

CCT proposes raising S$220m from private placement to fund German acquisition. Of the S$220 million to be raised, the bulk – S$216.7 million – would be used to partially fund the acquisition of a 94.9 per cent interest in the holding companies of a freehold office building in Frankfurt, Germany. This acquisition was announced on Wednesday morning. About S$3.3 million, which is approximately 1.5 per cent of the private placement gross proceeds, will be used to pay the estimated transaction-related expenses, including professional fees and expenses, incurred or to be incurred by CCT in connection with this fundraising exercise.

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

Webinar Of The Week

Market Outlook: (PSR) Ascott, SG Banking / Coal Monthly, US / China / Phillip Singapore Weekly, Technical

For more on Market Outlook

Clients of Phillip Securities can keep updated with Country Strategy and Singapore Sector Reports by logging into: www.poems.com.sg > STOCKS > Research

Read the research report(s), available through the link(s) above, for complete information including important disclosures Important Information





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