Daily Morning Note – 2 April 2019

WEEKLY MARKET OUTLOOK WEBINAR

Register HERE for MONDAY’s 11.15am webinar.

Archived webinars available.

YOUR PHILLIP SUMMARY

The Dow Jones Industrial Average DJIA, +1.27% jumped 301 points, or 1.2%, to 26,236, on pace for its best daily gain since Feb. 15, according to FactSet data. Meanwhile, the S&P 500 index SPX, +1.16% climbed 30 points, or 1.1%, to 2,865, with the financial sector gaining 2.2% and the index’s industrials sector advancing 1.8%. The Nasdaq Composite Index COMP, +1.29% gained 91 points, or 1.2%, to 7,820. Upbeat global economic reports in the U.S. and China are helping to foster a strong start for to the second quarter. The Institute for Supply Management’s manufacturing index showed that activity in the sector accelerated, coming in at a stronger-than-expected 55.3 in March versus a two-year low of 54.2% a month earlier. The hotter-than-expected U.S. data followed the Caixin China manufacturing purchasing managers index, which rose to 50.8 in March from 49.9 in February, rebounding to expansionary territory for the first time in four months.



RESEARCH REPORT

Singapore Banking Monthly – Mortgage repricing to offset loan growth deceleration

Analyst: Tin Min Ying; Recommendation: Overweight (Maintained)

– February’s mortgage loan growth continues to decelerate to 1.2% YoY, dipping
below last month’s 17-year low of 1.6% YoY.

– February’s total loan growth remained flat at 3.3% YoY, held up by building and
construction loans (+12.7% YoY).

– February’s domestic deposits rose 6.3% YoY, boosted by fixed deposit growth of
18.9% YoY, the fastest in eleven years. CASA contracted 1.0%.

– March’s 3-month SIBOR and SOR dip modestly by 0.8bp and 8.1bps to 1.944%
and 1.933% respectively.

– Maintain OVERWEIGHT for the Singapore Banking Sector.


BREAKING NEWS

Oil rises to 2019 highs as demand outlook improves. Oil climbed about 2 per cent to new 2019 highs on Monday, with Brent crude touching US$69 a barrel, after positive signs for the global economy and tighter supplies drove both benchmarks’ largest first-quarter gains in nearly a decade. Brent crude ended the session up US$1.43, or 2.1 per cent, at US$69.01 a barrel after rising to US$69.19, its highest since November. The global benchmark rose 27 per cent in the January-March period. US West Texas Intermediate (WTI) futures settled up US$1.45, or 2.4 per cent, at US$61.59 per barrel, after reaching their highest in nearly five months at US$61.72. WTI gained 32 per cent in the first quarter.

Keppel O&M announces novation of contract from BOTL to Borr Drilling. The agreement is to replace the construction contract of the jackup rig currently being built by Keppel Fels for BOTL, to Borr Drilling. Under the deal terms, Borr Drilling will take over the contract of the jackup rig from BOTL, which has already paid Keppel FELS in full for the rig, except for the portion of extension costs to be due at delivery. Based on the construction contract, the delivery schedule of the rig remains as January 2020.

Keppel acquires stake in electric vehicle battery businesses for US$50m. Envision AESC Group recently acquired Automotive Energy Supply Corporation (AESC), a former venture between Nissan Motor Company (Nissan) and the NEC Group. It has also acquired the entire share capital of NEC Energy Devices, a battery electrode manufacturing company owned by NEC Corporation. Envision AESC and Nissan hold about 80 per cent and 20 per cent of the shares of the newly established Japanese holding company, Envision AESC Group, respectively.

SIA Engineering Company signs S$1.4b services agreement with SIA. The new agreement, commencing Apr 1, 2019, is for a term of two years, with an option to renew for a further period of two years. SIAEC’s support of the SIA fleet covers a broad spectrum of maintenance, repair and overhaul and fleet management support services. The agreement, if renewed after the first two years, is expected to yield a labour revenue of S$1.3 billion to S$1.4 billion over the four-year term.

KPMG questions KS Energy’s ability to continue as a going concern. It noted in its independent auditors’ report that it has taken into account that the group incurred a net loss of S$53.9 million for FY2018 and, as at end-2018, the group’s and company’s current liabilities exceeded current assets by S$18.3 million and S$2.5 million respectively. The group and company also had deficits in shareholders’ equity of S$10.3 million (excluding non-controlling interests) and S$11.7 million respectively.

Olam secures world’s first digital loan of US$350m. The food and agri-business company said this is the world’s first “digital loan” – where the pricing of the facility is linked to Olam’s “digital maturity score”, thereby supporting Olam in its ongoing efforts towards digital transformation. The digital maturity score is determined by the Boston Consulting Group using its proprietary “Digital Acceleration Index” methodology which assesses Olam across four criteria, namely: (a) business strategy driven by digital, (b) digitising the core, (c) new digital growth and (d) enablers.

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

Clients of Phillip Securities can keep updated with Country Strategy and Singapore Sector Reports by logging into: www.poems.com.sg > STOCKS > Research

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

Important Information

Disclaimer
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 “as 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.