Daily Morning Note – 19 August 2021

Dear valued client,

Asian stocks are set to dip after a slide on Wall Street sparked by Federal Reserve minutes indicating officials could start paring stimulus from later this year. Futures were lower in Japan and Australia but steady in Hong Kong. U.S. contracts fluctuated after the S&P 500 and Nasdaq 100 fell for a second day. Most Fed officials agreed last month they could start slowing the pace of bond purchases later this year given the progress made toward inflation and employment goals. Treasuries and the dollar were little changed. Crude oil in New York dropped to the lowest since May after a surprise increase in U.S. gasoline inventories

European stocks held steady on Wednesday as investors favoured utilities and healthcare shares over economically sensitive sectors on rising concerns over a spike in global Covid-19 cases. The pan-European Stoxx 600 index inched up just 0.1 per cent, with automakers and miners the biggest drags. The UK’s blue-chip FTSE 100 slipped 0.2 per cent but the FTSE 250 mid-cap index inched up 0.6 per cent. France’s CAC 40 fell 0.7 per cent.

BREAKING NEWS

SG News

Mainboard-listed Tuan Sing Holdings has secured a tender for a prime freehold site at Dunearn Road for S$56 million. The 1,592.4 square-metre property is located next to and shares the same boundary as Link@896, a mixed-use office and retail building which the group acquired in 2017, it said in a bourse filing on Wednesday night. Combined together, these two properties will result in an enlarged site with a regular-shaped land parcel, ideal for more efficiency planning with wider frontage and improved visibility along Dunearn Road and Bukit Timah Road, said William Liem, chief executive officer of Tuan Sing. The acquisition will be financed by internal funds and/or bank borrowings and is expected to be completed within nine months from the date of acceptance of the tender offer.

Catalist-listed Accrelist is planning to raise up to S$3.38 million through the placement of shares and issuance of warrants to facilitate its growth plans as it seeks to ride on the rising demand for medical aesthetics services. In a filing to the Singapore Exchange on Wednesday, Accrelist said that it had entered into conditional placement letters with six placees to purchase or subscribe for 22 million ordinary shares at an issue price of S$0.07371, which represents a discount of 10 per cent over the volume-weighted average price of S$0.0819 for trades done on the Singapore Exchange on Monday this week. The placees, who are private investors, were introduced to the company by a third party, who will receive an introduction fee of 3 per cent per placement share. This will be fulfilled through the issuance of up to 660,000 shares in Accrelist at the placement price.

Singapore-listed palm oil counters enjoyed a lift in their financial results across the board amid higher crude palm oil (CPO) prices and stronger demand for their products. Year to date, palm oil futures are up 54.1 per cent as supply from producing countries Malaysia and Indonesia came under pressure due to drier weather. Data from the Malaysian Palm Oil Board (MPOB) showed that July output hit a four-month low of 1.5 million tonnes, down 16 per cent on a year-on-year (y-o-y) basis and 5 per cent on a month-on-month (m-o-m) basis. This brings CPO output for the first seven months of 2021 to 9.9 million tonnes, down 9 per cent year on year. Malaysia’s stockpile in July was also down to 1.5 million tonnes, a decline of 12 per cent y-o-y and 7 per cent m-o-m.

CosmoSteel profitable in Q3, but flags continued revenue impairment. Piping systems provider CosmoSteel Holdings said it has maintained profitability in the third quarter of its financial year ending Sept 30, but guided for further revenue impairment amid the Covid-19 outbreak. In view of the continued impact of the pandemic, the company has continued its cost-cutting measures and managed to reduce its finance costs, marketing and distribution costs and administrative expenses, it said in regulatory filing on Wednesday. It is also focusing on selling second-hand inventory at a profit, and on the reversal of whatever previous provisions made for such inventory. Still, the mainboard-listed company remains on the Singapore Exchange’s watch-list as it failed to meet the exit criteria as at June 30.

Singapore-based food-tech startup Shandi has raised more than US$700,000 in a second-seed funding round led by Tolaram Group, one of Africa’s largest packaged food conglomerates. The fresh capital will be used to set up a manufacturing facility in Singapore to commercialise and scale Shandi’s proprietary plant-based chicken products, including expanding partnerships in the food sector, said Tolaram in a media statement on Wednesday. It further said while Shandi has successfully produced chicken analogues in various formats such as pieces, shreds, strips and drumsticks, part of the proceeds would be allocated to further product innovation and development on new textures, formats, and other meat analogues.


US News

Robinhood Markets Inc said on Wednesday that lower trading activity was likely to affect its third quarter, after it reported a 131% jump in second-quarter revenue fueled in part by a surge in cryptocurrency trading. Shares of Robinhood, owner of the trading app that emerged as the gateway for investors seeking to get in on this year’s mania for so-called meme stocks, were recently down 5.32% in aftermarket trading after the brokerage said the current quarter will also be affected by fewer funded accounts. It will also record a one-time charge of $1 billion in stock-based compensation related to its initial public offering last month.

Classic car insurance company Hagerty is going public via a special purpose acquisition company, in a deal valued at more than $3 billion. The merger with Aldel Financial will provide stock market investors with a way to invest in the fast-growing classic car market, which has seen a huge run-up in valuations and popularity in recent years. Values for classic cars are up 6% over the past year, and 193% over the past decade, according to the Knight Frank Luxury Investing Index. Aside from offering insurance, Hagerty has also launched a classic car rental business, called Hagerty DriveShare, and has acquired events and other classic car related businesses, including valuation tools, memberships and specialty content for car enthusiasts.

Tencent reported a 29% rise in second-quarter profit, even as Beijing expands its scrutiny of the private sector. The Chinese gaming and social media giant said Wednesday that revenue jumped 20% to 138.3 billion yuan ($21.3 billion) for the three months ended June, compared to the same period last year, while profit rose to 42.6 billion yuan ($6.6 billion). Tencent reported results as the company and other Chinese tech firms are being rattled by Beijing’s historic crackdown on the sector. Tencent alone has lost more than $400 billion in market value after regulators bombarded the sector with penalties, new rules and orders to overhaul parts of their business.

Nvidia Corp on Wednesday said talks with regulators to clear its $40 billion proposed acquisition of British semiconductor technology firm Arm Ltd are taking longer than expected. The disclosure came as Nvidia, the world’s biggest maker of graphics chips for gamers and artificial intelligence chips for data centers, forecast third-quarter revenue above Wall Street expectations on Wednesday as it benefits from a boom in demand. But investors have focused on whether Nvidia’s move to acquire Arm will withstand regulatory scrutiny and close by March of next year as Nvidia promised. Arm has long been a neutral supplier of technology throughout the chip industry, and Nvidia competitors such as Qualcomm Inc have objected to having Arm land in the hands of a rival.


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

TECHNICAL PULSE

Ascendas Real Estate Investment Trust

Analyst: Chua Wei Ren

Recommended Action: Technical BUY

Ascendas Real Estate Investment Trust (SGX: A17U) upside has continue to go after breaking above the descending triangle based on our report on 6th July and technical indicate a strong signal that the bull will continue beyond resistance zone 2

Buy stop: 3.15 Stop loss: 3.00 Take profit 1: 3.40 Take profit 2: 3.60

Starhill Global REIT

Analyst: Chua Wei Ren

Recommended Action: Technical BUY

Starhill Global REIT (SGX: P40U) has finally broken the resistance zone highlighted in our report dated 2nd July 2021. Further technical indicate that the bullish upside is set to continue again

Buy stop: 0.620 Stop loss: 0.565 Take profit 1: 0.710 Take profit 2: 0.740

>> Read more technical reports

HK Reports – Read up on our Hong Kong reports here

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