Daily Morning Note – 19 July 2021


Asian stocks are set to dip Monday amid concerns about elevated inflation and the impact of the delta Covid-19 variant on plans for economic reopening. Oil slipped after OPEC+ reached a deal on boosting supply.

Futures slid in Japan, Australia and Hong Kong. U.S. contracts wavered after the S&P 500 fell for the first week in four. Traders are also monitoring the surprising rally in Treasuries, which pushed the 10-year yield lower for a third week. Currencies were steady in early Asian trading.

Oil slipped after OPEC+ agreed to boost production into 2022, resolving an internal dispute that had shaken the alliance.


SG News

Property giant CapitaLand‘s restructuring plan is “fair and reasonable”, the independent financial adviser (IFA) in the deal said in a letter on July 17. The independent directors have thus recommended that shareholders green-light both a capital reduction exercise and a scheme of arrangement when they vote on the planned transaction next month. CapitaLand in March proposed to split its business into a privately-held development arm, as well as a new, listed unit for investment management platforms and lodging.

A wholly-owned subsidiary of Frasers Logistics & Commercial Trust (FLCT) trustee has priced S$150 million of its maiden sustainability notes due 2028. The seven-year, fixed-rate notes carry a coupon of 2.18 per cent per annum and fall under FLCT’s S$1 billion multicurrency debt issuance programme. They are expected to be issued on July 26. They are rated BBB+ by S&P. The issuance was three times subscribed based on a final order book which was over S$450 million. The manager said the deal was underpinned by “exceptionally strong demand” from institutional investors. Three-quarters of the notes were allocated to fund manager and insurance accounts, 19 per cent went to banks and public sector accounts, while 6 per cent went to private banking accounts.

Mainboard-Listed Qian Hu Corporation returned to profitability in the financial first half ended June 30, with net profit of S$856,500, compared to a loss of S$525,237 in the year-ago period, the integrated fish service provider announced in a results filing on Friday after market close. This came on the back of a 19.5 per cent rise in revenue to S$39.7 million, with a sustained recovery in its ornamental fish and aquaculture business, said Qian Hu. Sales of aquarium and pet accessories have reached pre-pandemic levels, it added. Earnings per share for the six-month period were 0.75 Singapore cent, compared to a loss per share of 0.46 cent in the year-ago period. No dividend was recommended. The segment with the most revenue growth was fish exports, rising 29.5 per cent to S$15.4 million with the lifting of border restrictions and the gradual resumption of air traffic.

US News

Google has parted ways with its VP of developer relations for Google Cloud, according to an internal email that employees said followed a contentious all-hands meeting about antisemitism. “I wanted to share that today is Amr Awadallah’s last day at Google,” Eyal Manor, Google Cloud vice president of engineering and product, wrote in the email to staff Thursday evening and viewed by CNBC. “Effective immediately, the Cloud DevRel organization will report into Ben Jackson, who will report into Pali Bhat.”

Tesla just introduced a way for customers to subscribe to its premium driver assistance package for $199 a month, rather than paying $10,000 up front. Marketed as Full Self-Driving capability (or FSD), the driver assistance system does not make Tesla’s electric vehicles safe for use without an attentive driver behind the wheel. One eligible owner shared a notice they received from Tesla on Friday with CNBC, which said: “Full Self-Driving capability is now available as a monthly subscription. Upgrade your Model Y … for $199 (excluding taxes) to experience features like Navigate on Autopilot, Auto Lane Change, Auto Park, Summon and Traffic Light and Stop Sign Control. The currently enabled features require active driver supervision and do not make the vehicle autonomous.”

A landmark deal to close cross-border tax loopholes is ultimately likely to fail to remove the incentive for some of the world’s largest companies to shift their profits abroad, experts said, with one describing the proposed reform as “shockingly” unfair for low-income countries. It comes shortly after G-20 finance ministers backed a plan to ensure multinational companies pay their fair share of tax wherever they operate. The pact, championed by the Organization for Economic Cooperation and Development, is expected to put in place a minimum global corporate tax rate of 15%. It is intended to reform the global tax system to make it fit for the digital age and is likely to impact many companies, including Amazon, Google and Nike. The aim is for world leaders to finalize the deal at an October summit in Rome.

Binance will no longer offer digital versions of stocks like Tesla, Apple and Coinbase, as the cryptocurrency exchange faces growing pressure from regulators around the world. The world’s top digital currency exchange by trading volume said in a blogpost Friday that it would end support for “stock tokens,” crypto assets tied to the value of certain shares. Binance had offered the tokens through a partnership with CM-Equity AG, a licensed investment firm based in Germany. According to Binance, each token was fully backed by shares held by CM-Equity AG.

Chinese smartphone maker Xiaomi was the second-largest smartphone maker in the second quarter, overtaking Apple, according to analyst firm Canalys. Xiaomi had a 17% share of global smartphone shipments, ahead of Apple’s 14% and behind Samsung’s 19%. “Xiaomi is growing its overseas business rapidly,” Canalys research manager Ben Stanton said in a press release, noting shipments increased 300% year on year in Latin America and 50% in Western Europe. The Chinese smartphone maker posted year-on-year smartphone shipment growth of 83% versus 15% for Samsung and 1% for Apple. Stanton noted, however, that Xiaomi phones are still skewed toward the mass market, with the average selling price of its handsets 75% cheaper than Apple’s.

The Organization of Petroleum Exporting Countries (OPEC) and its non-OPEC allies reached a deal Sunday to phase out 5.8 million barrels per day of oil production cuts by September 2022 as prices of the commodity hit their highest levels in more than two years. Coordinated increases in oil supply from the group, known as OPEC+, will begin in August, OPEC announced in a statement. Overall production will increase by 400,000 barrels per day on a monthly basis from that point onward. The International Energy Agency estimates a 1.5 million barrel per day shortfall for the second half of this year, indicating a tight market despite the gradual OPEC supply boost.

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


SG Bonds Weekly – Fed remains dovish despite inflation

Credit Analyst: Timothy Ang

– Jerome Powell affirms the Federal Reserve will provide stimulus to aid economic recovery despite the highest inflation rate in a decade.

– 10y US Treasury yields rallied from a mid-week high of 1.42% to print below 1.3%.

– Activity in Asia primary market picked up this week with 21 bonds priced over 19 deals.

>> Read more research reports

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