DAILY MORNING NOTE | 2 October 2023

Technical Monthly September 2023

Analyst: Zane Aw

– Review of asset classes performance in September – Most ETFs were down over 3-4%, ETF tracking Oil (XOP) was unchanged and the only gainer was ETF tracking Bitcoin (BITO) which was up nearly 3%

– For the current trends of the ETFs tracking the various asset classes, that of Oil, Bitcoin, Singapore Equities and Hang Seng Index are in a range consolidation phase. S&P 500, US Treasury Bond and Gold remain in a downtrend

– In terms of the outlook for these ETFs, further downside is likely for Gold and Hang Seng Index with weak price action expected to continue. For S&P 500, US Treasury Bond and Singapore Equities, some recovery in price is expected with high likelihood of rangebound trading if the prices rebound from near-term supports. Oil and Bitcoin have potential to post gains should the prices breakout of their current consolidation phases

Thai SDR Monthly September 2023

Analyst: Zane Aw

– Review of performance in September – Airports of Thailand Public Co. and CP All Public Co. Ltd were down over 3% and 7% respectively while PTT Exploration & Production Public Co. Ltd continued its bullish momentum and gained close to 8%

– For the current trends of the Thai listed counters, Airports of Thailand Public Co. and CP All Public Co. Ltd are in a range consolidation phase. PTT Exploration & Production Public Co. Ltd is in an uptrend

– In terms of the outlook for these counters, Airports of Thailand Public Co. and CP All Public Co. Ltd are likely to trade rangebound should the prices rebound from their respective near-term supports while we can expect PTT Exploration & Production Public Co. Ltd to consolidate its recent gains in the month ahead

Market trend analysis report “Topic #8 – S&P 500 tends to underperform following US yield curve uninversion”

Analyst: Zane Aw

– With the yield curve steepening lately where the 10-Year treasury yield is rising faster than the 2-Year treasury yield, the yield curve is approaching its closest to uninversion since the banking crisis took place in March. This report looks at the consequence on S&P 500’s performance when the yield curve uninverts and steepens thereafter

– Looking at the 3 instances in 1990, 2001, 2007 (excluding 2019 due to unprecedented US$2.2 trillion stimulus following the COVID-19 crisis) when the yield spread steepened significantly post uninversion, the S&P 500 has declined on average over 7% 6 months and over 9% a year after uninversion takes place, respectively

– In addition, in every instance following uninversion, the US economy went into recession within 2 years, with the median time at 16 months. A plausible reason why the yield curve can predict recessions is because market participants anticipate the Fed will cut policy rates to provide monetary policy accommodation during a downturn. Long-term bonds which are more sensitive to interest rates than short term ones, will decline in price at a faster rate, resulting in long-term and short-term yield differential to increase and cause the yield curve to steepen

Week 40 equity strategy: Once again we go through the drama of a US government shutdown. The threat has been averted for 45 days. Every year the government must approve the discretionary spending (or appropriation bill) for the upcoming fiscal year from October. It affects around 25% of the government’s total spending. There have been 20 shutdowns since 1977. The longest was 34 days in late December 2018. According to the CBO, the impact of that shutdown was 0.02% points in real GDP. Thus, the impact on the equity market is minimal.

Shifting focus, we have more confidence the Fed will refrain from hiking interest rates. Core PCE inflation continues to trend downwards. August was the lowest monthly increase in more than three years. At the current pace, inflation could hit the Fed’s target by mid-2024. Fed Vice-Chair John Williams said that rates are at, or near, the peak but need to be restrictive for some time. In Singapore, the population surged by a record 281k, or 5%, to 5.9mn. The jump in population will benefit the domestic economy, especially rental properties such as worker dorms and co-living. At 5.9mn, it is still below the 2013 white paper low case of 6mn by 2023.

Paul Chew
Head Of Research

Singapore stocks ended higher on Friday (Sep 29), tracking overnight gains on Wall Street. It rose 0.3 per cent or 10.42 points to 3,217.41. Across the broader market, gainers outnumbered losers 379 to 229, after 1.5 billion securities worth S$968 million changed hands. The Nikkei 225 Index lost 0.1 per cent, while the Hang Seng Index gained 2.5 per cent.

US stocks finished mixed on Friday (Sep 29), reversing some earlier gains to close out a gloomy month of trading ahead of a likely government shutdown starting this weekend. The Dow Jones Industrial Average finished down 0.5 per cent at 33,507.50, while the broad-based S&P 500 ended the day down 0.3 per cent 4,288.13. The tech-rich Nasdaq Composite Index etched out a small gain, climbing 0.1 per cent to 13,219.32.

Top gainers & losers





Singapore Land Group will embark on a partial redevelopment of shopping mall Marina Square, the real estate company announced in a Friday (Sep 29) bourse filing. SingLand received provisional permission from the Urban Redevelopment Authority in Q3 for the project. It is now working with professional advisers on obtaining further approvals from relevant authorities. The timeline has not been determined. The project is part of SingLand’s long-term strategy that “seeks to unlock value from its portfolio of assets”, the company said in its filing. SingLand shares ended flat at S$2.05 on Friday.

Niks Professional, a Singapore-based provider of dermatology and aesthetic medical services, on Friday (Sep 29) lodged a preliminary prospectus for a Catalist listing. Founded in 1998 by a husband-and-wife team, the company has three clinics across Singapore: in Orchard, Jurong East and Tampines. Its five doctors offer medical consultation and services such as light and laser procedures, injectables and mole removals. Besides clinics, the company has three retail outlets that sell Niks skincare products and provide facial services. It also distributes Niks skincare products to 11 regional agents in China, covering 13 provinces and one city. Niks Professional recorded S$2.8 million in net profit for FY2022, down from S$3.3 million the previous year. Its FY2022 revenue stood at S$11.1 million, down 5.2 per cent.

mm2 Asia is tapping shareholders again for funds with, a plan to raise up to $34.9 million in net proceeds with a rights issue, which is supported by both its second and third largest shareholders. Under terms of a rights issue announced on Sept 29, mm2 Asia , whose business of producing content and organising concerts was hit during the pandemic, is offering existing shareholders the chance to subscribe for 1 new share for every 2 shares they now hold, at 2 cents each. At this price, it represents a significant 50% discount off mm2’s last traded price of 4 cents. The company’s share price is down 20% year to date and changed hands at its peak of 48 cents back in Jan 2017.


US carmaker Tesla on Sunday (Oct 1) released an updated version of its Model Y in China, with minor changes to the vehicle’s exterior and interior. Among the changes is a slightly faster 0-100 kmh acceleration time of 5.9 seconds, a new wheel design and added ambient lighting, indicated a post by Tesla’s official WeChat account. The starting price in China for the Model Y, the company’s global bestseller, was unchanged at 263,900 yuan (S$49,366).

Oil prices settled 1 per cent lower on Friday (Sep 29) due to macroeconomic concerns and profit taking, but rose about 30 per cent in the quarter as Opec+ production cuts squeezed global crude supply. Front-month Brent November futures settled down 7 cents to US$95.31 per barrel at the contract’s expiry, up about 2.2 per cent in the week and 27 per cent in the third quarter. The more liquid Brent December contract was settled down 90 cents to US$92.20 per barrel. US West Texas Intermediate crude (WTI) settled down 92 cents to US$90.97, up 1 per cent in the week and 29 per cent in the quarter. With oil futures inching closer to US$100 a barrel, many investors took profits on the rally given ongoing macroeconomic concerns.

The US dollar was on track to post its biggest quarterly gain in a year on Friday (Sep 29) and gains for the 11th consecutive week as investors priced in the likelihood of a still solid economy and higher rates for longer. The greenback retraced most earlier losses against a basket of currencies to be only slightly lower on the day, following data that showed that US consumer spending increased in August, but underlying inflation moderated, with the year-on-year rise in prices excluding food and energy slowing to less than 4.0 per cent. The dollar index, which tracks the US currency against six others, fell 0.05 per cent to 106.09 on Friday and is track to end the quarter up 3.13 per cent and post an 11th straight weekly rally – its longest such run in nine years.

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


Sasseur REIT – Growth drivers intact

Recommendation: BUY (Maintained), Last Done: S$0.68

Target price: TP: S$ 0.90, Analyst: Liu Miaomiao

– We visited the outlet malls in Chongqing Liangjiang, Chongqing Bishan and Xi’an (ROFR asset) during SASSR’s Anniversary Sales. Outlet sales at the Sponsor Group level increase 39% YTD as of Sept 22, 2023. Sales for the past nine months have outperformed the entire year of FY23 due to the pent up demand and clear value proposition for its products.

– We expect VIP membership at the REIT level to continue increasing after the Anniversary sales (3.2 million as of 1H23), as the average spending per customer tends to be higher during this period, resulting in a higher conversion rate to VIP status. Additionally, we project that VIP members will contribute to more than 60% of the total sales in FY23.

– Potential accretive acquisition of Xi’an asset to raise DPU by c.4% in FY24 as the gearing is currently 26.2% with debt headroom of c. S$811 mn.

– We maintain our BUY recommendation with unchanged DDM-TP of S$0.90 and FY23-24e dividend yield of 9.6% – 9.9%.

PSR Stocks Coverage



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