Daily Morning Note – 18 May 2020


U.S. stock futures advanced as investors weighed further reopening of economies around the world against fresh warnings that the road to recovery will be long. Asian stock futures pointed to a mixed start, while the yen nudged lower.

S&P 500 futures climbed 0.8%, following last week’s retreat for global shares. Equity futures edged down in Hong Kong, while those in Japan and Australia rose. Crude oil climbed. The pound dipped after a Bank of England official said the central bank is examining a range of unconventional policy tools, including negative interest rates.


China has asked trading firms and food processors to boost inventories of grains and oilseeds as a possible second wave of coronavirus cases and worsening infection rates elsewhere raise concerns about global supply lines. Both state-run and private grain traders as well as food producers were urged to procure higher volumes of soybeans, soyoil and corn during calls with China’s Ministry of Commerce in recent days, three trade sources told Reuters.

Australia urged China on Sunday to respond to its requests to discuss easing tensions between the two trading partners after Canberra called for an international enquiry into the origins of the novel coronavirus. China, accusing Australia of playing “petty tricks”, has recently suspended beef imports from four of Australia’s largest meat processors and is considering imposing hefty tariffs on imports of barley.

Banks in Asia’s financial hubs such as HSBC Holdings and Citigroup are finding that the disruption from the coronavirus outbreak is helping them push back on a threat from a new breed of virtual upstarts. With branches shut, customers social distancing and fearful of tainted cash, the brick-and-mortar giants are seeing a surge in demand for digital services for everything from wealth management to insurance. Now they are rolling out new video services and fresh mobile features for retail and affluent clients, speeding up a transformation to cement customer loyalty and reduce costs, consultants and bankers say.

Beleaguered Eagle Hospitality Trust (EHT) has posted a loss of US$8.9 million for the first quarter to March, mainly due to the impairment loss on trade receivables arising from the uncertainty on the master lessees’ ability to make rental payments and fulfil its obligations. Therefore, there is no income available for distribution for unitholders of the hospitality stapled group comprising Eagle Hospitality Real Estate Investment Trust (EH-Reit) and Eagle Hospitality Business Trust (EH-BT), according to EHT’s financial statements released on May 16.

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


Technical Analysis: Asia Markets

Key resistance level remains unbroken. Range bound expected

– Our report on 27th April 2020 indicates that the Asia market remains bearish.

– Albeit to a lesser extent, the Asian market experienced a second week of sell-down after a strong rebound 2 weeks ago.

– However, the Asia market remains range-bound after a failed attempt to rally past the indicated resistance level of 20,237.07 for Nikkei 225, 24,583.80 for Hang Seng Index and 2,669.40 for Straits Time Index.

– Price should remain range-bound for before a subsequent sell-off.

>> Read more technical reports


Thai Beverage – Dry spell in watering hole

Recommendation: BUY (Maintained), Last Done: S$0.67

Target Price: S$0.82, Analyst: Paul Chew

– 2Q20 revenue and earnings were below expectations. The 42% YoY collapse in Sabeco volumes hurt revenue and earnings. Excluding a one-off deferred tax hit of TBH1.08bn, PATMI would have risen 5% YoY.

– Spirits division revenue in 2Q20 declined 3.9% YoY due to weaker volumes but PATMI rose 9.5% YoY due to lower marketing cost.

– The ban in alcohol sales in Thailand from 10 April to 3 May, will temporarily suppress earnings in 3Q20.

– We are lowering our target price to S$0.80 (prev. S$0.95) as we cut earnings by 10%. Our BUY recommendation is unchanged. The slump in volume for Sabeco was worse than expected. And the damage from regulatory changes will linger longer than the current containment measures due to the outbreak. Nevertheless, the spirits business account for close to 90% of group earnings and we expect demand to be more resilient.

Singapore Banking Monthly – Building reserves as outlook dims

Recommendation: Neutral (Reduced), Analyst: Tay Wee Kuang

– Local interest rates continue sliding to 0.69% for 3M-SIBOR, representing a 131 bps decline YoY. This will negatively impact NIM in 2Q20. Our NIM estimates for FY20e were revised downwards by another 10 bps.

– March loans growth decelerated to 2.41% YoY, weighed down by consumer loans. We expect industry loans growth to remain intact at 2 – 3% for FY20e.

– Local banks announced their 1Q20 results, with higher levels of allowances weighing down performance.

– Tempered market volatility saw SGX’s DDAV experience a fall in April by 19% YoY. SDAV performed better with a growth of 35% YoY in April.

Reduce the Singapore Banking Sector to Neutral. Additional allowances under taken by banks as credit costs rise in the face of the pandemic will reduce earnings by 20 – 30% over the next two years. However, dividend yield of 5 – 7% remains attractive for investors

>> Read more research reports

HK Reports – Read up on our Hong Kong reports here


Webinar Of The Week

Market Outlook: (PSR) DBS, UOB, OCBC, FCT, CMT, CCT, Ascendas REIT, ART, CAPL, SSG, STRH, NLT, VMS & Phillip Singapore Weekly

Date: 11 May 2020

For more on Market Outlook

Phillip Research in 3 minutes: #21 – Singapore REITs Sector

For more videos on Phillip in 3 Mins

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

The information contained in this email and/or its attachment(s) is provided to you for information only and is not intended to or nor will it create/induce the creation of any binding legal relations. The information or opinions provided in this email do not constitute an investment advice, an offer or solicitation to subscribe for, purchase or sell the e investment product(s) mentioned herein. It does not have any regard to your specific investment objectives, financial situation and any of your particular needs. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of this information. Investments are subject to investment risks including possible loss of the principal amount invested. The value of the product and the income from them may fall as well as rise. You may wish to seek advice from an independent financial adviser before making a commitment to purchase or investing in the investment product(s) mentioned herein. In the event that you choose not to do so, you should consider whether the investment product(s) mentioned herein is suitable for you. PhillipCapital and any of its members will not, in any event, be liable to you for any direct/indirect or any other damages of any kind arising from or in connection with your reliance on any information in and/or materials attached to this email. The information and/or materials provided 揳s is?without warranty of any kind, either express or implied. In particular, no warranty regarding accuracy or fitness for a purpose is given in connection with such information and materials.
Confidentiality Note
This e-mail and its attachment(s) may contain privileged or confidential information, which is intended only for the use of the recipient(s) named above. If you have received this message in error, please notify the sender immediately and delete all copies of it. If you are not the intended recipient, you must not read, use, copy, store, disseminate and/or disclose to any person this email and any of its attachment(s). PhillipCapital and its members will not accept legal responsibility for the contents of this message. Thank you for your cooperation.


Contact us to Open an Account

Need Assistance? Share your Details and we’ll get back to you


This material is provided by Phillip Capital Management (S) Ltd (“PCM”) for general information only and does not constitute a recommendation, an offer to sell, or a solicitation of any offer to invest in any of the exchange-traded fund (“ETF”) or the unit trust (“Products”) mentioned herein. It does not have any regard to your specific investment objectives, financial situation and any of your particular needs. You should read the Prospectus and the accompanying Product Highlights Sheet (“PHS”) for key features, key risks and other important information of the Products and obtain advice from a financial adviser (“FA“) pursuant to a separate engagement before making a commitment to invest in the Products. In the event that you choose not to obtain advice from a FA, you should assess whether the Products are suitable for you before proceeding to invest. A copy of the Prospectus and PHS are available from PCM, any of its Participating Dealers (“PDs“) for the ETF, or any of its authorised distributors for the unit trust managed by PCM.  

An ETF is not like a typical unit trust as the units of the ETF (the “Units“) are to be listed and traded like any share on the Singapore Exchange Securities Trading Limited (“SGX-ST”). Listing on the SGX-ST does not guarantee a liquid market for the Units which may be traded at prices above or below its NAV or may be suspended or delisted. Investors may buy or sell the Units on SGX-ST when it is listed. Investors cannot create or redeem Units directly with PCM and have no rights to request PCM to redeem or purchase their Units. Creation and redemption of Units are through PDs if investors are clients of the PDs, who have no obligation to agree to create or redeem Units on behalf of any investor and may impose terms and conditions in connection with such creation or redemption orders. Please refer to the Prospectus of the ETF for more details.  

Investments are subject to investment risks including the possible loss of the principal amount invested. The purchase of a unit in a fund is not the same as placing your money on deposit with a bank or deposit-taking company. There is no guarantee as to the amount of capital invested or return received. The value of the units and the income accruing to the units may fall or rise. Past performance is not necessarily indicative of the future or likely performance of the Products. There can be no assurance that investment objectives will be achieved.  

Where applicable, fund(s) may invest in financial derivatives and/or participate in securities lending and repurchase transactions for the purpose of hedging and/or efficient portfolio management, subject to the relevant regulatory requirements. PCM reserves the discretion to determine if currency exposure should be hedged actively, passively or not at all, in the best interest of the Products.  

The regular dividend distributions, out of either income and/or capital, are not guaranteed and subject to PCM’s discretion. Past payout yields and payments do not represent future payout yields and payments. Such dividend distributions will reduce the available capital for reinvestment and may result in an immediate decrease in the net asset value (“NAV”) of the Products. Please refer to <www.phillipfunds.com> for more information in relation to the dividend distributions.  

The information provided herein may be obtained or compiled from public and/or third party sources that PCM has no reason to believe are unreliable. Any opinion or view herein is an expression of belief of the individual author or the indicated source (as applicable) only. PCM makes no representation or warranty that such information is accurate, complete, verified or should be relied upon as such. The information does not constitute, and should not be used as a substitute for tax, legal or investment advice.  

The information herein are not for any person in any jurisdiction or country where such distribution or availability for use would contravene any applicable law or regulation or would subject PCM to any registration or licensing requirement in such jurisdiction or country. The Products is not offered to U.S. Persons. PhillipCapital Group of Companies, including PCM, their affiliates and/or their officers, directors and/or employees may own or have positions in the Products. Any member of the PhillipCapital Group of Companies may have acted upon or used the information, analyses and opinions herein before they have been published. 

This advertisement has not been reviewed by the Monetary Authority of Singapore.  


Phillip Capital Management (S) Ltd (Co. Reg. No. 199905233W)  
250 North Bridge Road #06-00, Raffles City Tower ,Singapore 179101 
Tel: (65) 6230 8133 Fax: (65) 65383066 www.phillipfunds.com