DAILY MORNING NOTE | 19 April 2023

Singapore stocks slid 0.3 per cent or 9.7 points to 3,309.56 points on Tuesday (Apr 18) as most key indices in the Asia-Pacific closed in the red after China released its economic data. In spite of better-than-expected Chinese economic output data, most of the indices in the region failed to sustain the initial lift from the upside surprise after a closer scrutiny showed that the Chinese economic recovery in the first quarter has been uneven. Singapore shares were mainly down, with the banking trio among the 12 index counters closing in the red, while another 11 were flat. OCBC closed down 0.8 per cent at S$12.78, UOB declined 0.7 per cent to S$29.85 and DBS slid 0.3 per cent to S$32.75. Singapore conglomerate Sembcorp Industries was the worst performer with a 1.4 per cent decline to S$4.25.

Wall Street stocks finished little changed on Tuesday following a flattish day of mixed bank earnings and good Chinese economic data. Bank of America climbed 0.6 per cent after reporting higher profits thanks to a boost from higher interest rates, while Goldman Sachs dropped 1.7 per cent following results that were hit by a slowdown in corporate mergers. The Dow Jones Industrial Average ended down less than 0.1 per cent to 33,976.63. The broad-based S&P 500 added 0.1 per cent at 4,154.87, while the tech-rich Nasdaq Composite Index slipped less than 0.1 per cent at 12,153.41.

SG

Keppel Pacific Oak US Reit (KORE) posted an adjusted distributable income of US$13.1 million for its first quarter ended Mar 31, 2023, down 12.5 per cent from US$14.9 million a year earlier. This was mainly due to the divestment of properties Northridge Center I and II, and Powers Ferry in the second half of 2022, the Reit’s manager said in a business update on Tuesday (Apr 18). All three properties are freehold office buildings in Atlanta, Georgia. The manager noted that financing costs had risen as a result of rising interest rates. The distributable income for Q1 2022 was adjusted to assume that the base fees for that quarter were paid in cash rather than units, given that the Reit’s manager had chosen to receive all its base fees for Q1 2023 in cash.

Data centre-focused Keppel DC Reit’s distribution per unit (DPU) rose 3 per cent to 2.541 Singapore cents for its first quarter ended Mar 31, 2023, from 2.466 cents the year before. This was mainly due to an increase in gross revenue from the acquisitions of Guangdong Data Centre 2 and the building shell of Guangdong Data Centre 3; the completion of asset enhancement initiatives (AEIs), renewals and income escalations; as well as tax savings, the Reit’s manager said in a business update on Tuesday (Apr 18). The gains were partially offset by net lower contributions from some of the Reit’s colocation assets in Singapore due to higher facilities expenses.

Keppel Infrastructure Trust’s wholly-owned subsidiary City Energy is working with a Petronas unit to study the feasibility of importing hydrogen from Malaysia to Singapore, it announced on Tuesday (Apr 18). The study follows the Singapore government’s launch of an import-reliant hydrogen strategy last October, with Deputy Prime Minister Lawrence Wong announcing that hydrogen could supply up to half of Singapore’s power needs by 2050 if technology continues to advance.

After reversing into profitability during the FY2022 ended Sept 30, 2022, Sen Yue Holdings is reporting another surge in earnings for the 1QFY2023 ended Dec 31, 2022. During the quarter, the company reported a profit of $12.4 million, up from the $1.1 million loss in the 1QFY2022. Revenue for the quarter surged around 5.6 times to $29.5 million from the previous period’s $5.2 million. The y-o-y growth was attributable to the normalisation of operating activity after the lifting of the judicial management order placed on the company’s wholly-owned subsidiary, SMC Industrial in August 2022. The transition into the lithium battery recycling business also contributed to the higher revenue, says the company.

Mainboard-listed Marco Polo Marine has signed a memorandum of understanding (MOU) with Amogy Inc to install a proprietary ammonia-to-power system in the company’s existing or newly built wind vessels. Marco Polo Marine is an integrated marine logistics company engaged in shipping and shipyard operations across the Asia-Pacific region. This MOU is part of its efforts to decarbonise the shipping sector and reduce the carbon footprint of offshore wind farms. It will also enable Amogy to fine-tune its ammonia-to-power solution to support specific types of wind vessels.

US

Goldman Sachs Group’s first-quarter profit fell 19 per cent as sluggish dealmaking eroded the Wall Street giant’s fees from investment banking, while losses from the sale of some loans from its consumer unit, Marcus, weighed on the results. Goldman booked a US$470 million loss on the sale as the bank rejigs its strategy after a foray into consumer banking, which chief executive David Solomon had championed for years, flopped. It is also exploring strategic options for its consumer platform business, which has lost about US$3 billion in three years, executives told investors in February.

Bank of America’s (BofA) first-quarter profit beat analysts’ estimates as it collected hefty interest payments from customers, while its bond traders had their best quarter in a decade. Rival banking giants JPMorgan Chase and Citigroup also reaped windfalls from higher interest payments in the first quarter, while setting aside billions of US dollars to prepare for a worsening economy. “Results were strong despite a challenging economic environment with market and banking sector volatility,” Bank of America chief financial officer Alastair Borthwick said on Tuesday (Apr 18).

US weapons maker Lockheed Martin’s first-quarter results surpassed Wall Street targets on Tuesday (Apr 18) despite parts and labour shortages, as simmering geopolitical tensions fuelled demand from both US and international customers. Shares of the company rose as much as 2.3 per cent to about US$501 in premarket trading. Rising tensions in Europe, the South China Sea and the Indo-Pacific region have translated to more orders for Lockheed’s F-35 fighter aircraft, missiles and other defence equipment, driving quarterly net sales of US$15.13 billion above estimates of US$15.03 billion.

UBS on Tuesday (Apr 18) said it is making changes to its US$6 billion share buyback programme following its takeover of Credit Suisse. Switzerland’s biggest bank said it will use some of the shares for the takeover – rather than cancelling them as originally planned – after getting approval from the Swiss Takeover Board. UBS agreed in March to buy rival Credit Suisse for three billion Swiss francs (S$4.5 billion) in stock, and agreed to assume up to five billion Swiss francs in losses. This came in a merger engineered by Swiss authorities, to avoid more market-shaking turmoil in global banking.

GSK agreed to buy Canadian biotech Bellus Health for about US$2 billion to bolster its pipeline of experimental medicines. The UK drugmaker will pay US$14.75 per share in cash for Bellus, a 103 per cent premium to the stock’s Monday close, it said in a statement on Tuesday (Apr 18). The deal is expected to yield multi-billion-dollar annual sales in the single digits, Luke Miels, GSK’s chief commercial officer, said on a call with reporters.

BNP Paribas, the eurozone’s biggest bank, said on Tuesday (Apr 18) its wealth management arm will launch in Thailand to expand its presence in Asian markets. The new wealth management unit will provide clients access to international capital markets by using BNP Paribas’ platform in Singapore, the bank said. BNP Paribas named Daniel Peter as chief executive of the wealth management unit in Thailand.

Consumers are starting to fall behind on their credit card and loan payments as the economy softens, according to executives at the biggest US banks, although they said delinquency levels were still modest. Profits at Bank of America, JPMorgan, Wells Fargo and Citigroup beat analyst forecasts as lending giants earned a windfall from rising interest rates. But industry chiefs warned that the strength would tail off this year as a recession looms and customer delinquencies climb.

Airbus has started notifying airlines about delivery delays in 2024 for its best-selling A320neo family of jets, with several hundred of the single-aisle planes set to be postponed by as much as three months, industry sources said on Tuesday (Apr 18). Airbus confirmed unspecified delays for 2024 in a statement to Reuters but said they did not reflect any worsening of supply chain problems since it revised production plans earlier this year. It reaffirmed production targets for 2024 and beyond.

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

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