DAILY MORNING NOTE | 19 September 2023

Stock markets in the Asia-Pacific, including Singapore, mostly closed in the red on Monday (Sep 18), tracking the sharp loss on Wall Street last Friday. Singapore shares declined 17.3 points or 0.5 per cent to 3,263.39 points, after recovering some lost ground following the first trading hour. The Republic had, before the market open, released trade figures that pointed to its non-oil domestic exports sliding 20.1 per cent in August, marking the 11th straight month of contraction.

US stocks closed almost flat on Monday, as traders on Wall Street prepared for the Federal Reserve’s upcoming interest rate decision. The Fed has aggressively raised interest rates over the last 18 months to a level not seen for 22 years as it looks to quash inflation still stubbornly above its long-term target of two percent. The Dow Jones Industrial Average ended the day flat at 34,624.30, as did the tech-rich Nasdaq Composite Index, which closed at 13,710.24. The broad-based S&P 500 fared slightly better, closing up 0.1 per cent at 4,453.53.

SG

CapitaLand Investment (CLI) on Monday (Sep 18) said its regional private fund acquired a logistics property in Anseong, South Korea, for S$112 million. The move brings the funds under management of the private regional entity, called CapitaLand Open End Real Estate Fund (Coref), to more than S$1 billion, the property investment manager said. It also brings the number of South Korean assets under CLI’s portfolio to 13, comprising five logistics assets, four office assets, and four data centres under development. The high-specifications logistics property has 60,407 square metres of net leasable area and consists of two four-storey buildings with basement floors. It is located within an emerging logistics hub in the Gyeonggi province, close to primary expressways leading to Seoul and key population centres across Greater Seoul.

First Sponsor Group and its units, together with its partners comprising three high net worth individuals, have acquired an office building in Rotterdam at an agreed commercial value of 62 million euros (S$90.6 million). On Monday (Sep 18), the property developer said that the value excludes debt, as well as the cost for certain capex works and inspection works for the property. The leasehold property is Allianz Tower, an office building in Rotterdam, Netherlands, with a net lettable floor area of 19,607 square metres. It is fully leased to insurance agency Allianz Nederland Groep and the lease expires by end-2035. The lease is renewable for consecutive periods of five years each, though the tenant reserves a one-off right to terminate its agreement by end-2030 with a one-year notice period, subject to a payment.

Global investment firm KKR will commit up to S$1.1 billion for a 20 per cent stake in Singtel’s regional data centre business. In a media briefing on Monday (Sep 18), Singtel said the move will give the telco access to a wider network of global customers. It also hopes to tap KKR’s network of companies that develop new data centre cooling technologies. Stellar Asia Holdings II, a fund managed by KKR, has entered into an agreement with Singtel for the investment in ST Dynamo Investment, the holding company for Singtel’s regional data centre (RDC) business. This investment puts the enterprise value of Singtel’s overall RDC business at S$5.5 billion. KKR will also have the option to increase its stake to 25 per cent by 2027 at the pre-agreed valuation.

US

Microsoft’s Pavan Davuluri will lead a team focused on Windows software, devices portfolio and semiconductor chips, the company said on Monday (Sep 18), while announcing the departure of longtime product chief Panos Panay. The team led by Davuluri will “build silicon, systems and devices that span Windows, client and cloud for an AI world,” according to a staff email by Rajesh Jha, executive vice-president of experiences and devices group at Microsoft. Microsoft has made big bets on generative AI, integrating the technology into a wide array of its products, including cloud, search and productivity software and services such as its Office suite.

Citigroup will eliminate layers of management focused on specific regions as part of chief executive officer Jane Fraser’s biggest restructuring in at least two decades. The revamp, which Fraser unveiled last week, is meant to bring the organisational structure in line with the firm’s long-stated strategy, Citigroup will now operate five main businesses that each report directly to Fraser, eliminating the three regional chief roles that oversaw operations in about 160 countries around the world. As it seeks to reduce bureaucracy, the bank has said it will evaluate the tens of thousands of workers it has dedicated to back-office functions such as finance, human resources, operations and technology whose roles were tied to a certain region.

Instacart, the grocery delivery company that saw its business boom during the pandemic, priced its long-awaited IPO at $30 a share on Monday, and will become the first notable venture-backed tech company to hit the U.S. public market since December 2021. The offering came in at the top end of the expected range of $28 to $30 a share, and values Instacart at about $10 billion on a fully diluted basis. There were 22 million shares sold in the IPO, with 14.1 million coming from the company and 7.9 million from existing shareholders. The stock is set to debut on the Nasdaq on Tuesday under ticker symbol “CART.”

Oil prices rose on Monday after flirting with US$95 a barrel earlier in the session, as expectations of a supply deficit stemming from extended output cuts by Saudi Arabia and Russia as well as weak shale production outweighed concerns about demand. Global oil benchmark Brent crude futures settled 50 cents higher at US$94.43 a barrel after rising as high as US$94.45. US West Texas Intermediate crude futures rose 71 cents to US$91.48. Saudi Arabia and Russia this month extended a combined 1.3 million barrels per day (bpd) of supply cuts to the end of the year.

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

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