DAILY MORNING NOTE | 20 February 2024

Trade of the Day

Alphabet Inc. (NASDAQ: GOOGL)

Analyst: Zane Aw

(Current Price: US$140.52) – TECHNICAL SELL
Sell price: US$140.52 Stop loss: US$146.50 (-4.26%)
Take profit 1: US$128.50 (+8.55%) Take profit 2: US$121.50 (+13.54%)

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Trades Initiated in the past week

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Singapore shares rose 0.1 per cent or 3.97 points to 3,225.91 on Monday (Feb 19) amid optimism around how the 2024 Budget could better position local companies. Across the broader market, losers beat gainers 313 to 253, after 1.62 billion securities worth S$1 billion changed hands.

All three of the major indexes snapped five-week winning streaks. The technology-heavy Nasdaq Composite led the way down with a drop of more than 1.3%, while the benchmark S&P 500 slipped about 0.4%. The blue-chip Dow saw the narrowest loss, shedding just around 0.1%. The moves follow a losing week on Wall Street after economic data raised concerns that the Federal Reserve may not begin cutting interest rates as soon, or by as much, as market participants expected this year. Wholesale prices rose more than anticipated by economists polled by Dow Jones between December and January, according to producer price index data released Friday. That bolstered concerns over sticky inflation that were raised earlier in the week after the consumer price index came in at 3.1% on an annualized basis, higher than economists forecasted and well above the 2% goal of the Fed.

Top gainers & losers

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Events Of The Week

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SG

Mainboard-listed companies Gallant Venture and GHY Culture & Media on Monday (Feb 19) posted separate profit guidances for their full-year results. Indonesia-focused utilities provider Gallant Venture said that upon preliminary review of the group’s draft financial performance for the full year ended Dec 31, 2023, it expects to report a net loss. This is mainly due to higher finance costs and lower profit contributions from associated companies, the company said in a bourse filing. Meanwhile, concert organiser GHY Culture & Media also anticipates a net loss for the financial year ended Dec 31. The net loss is attributed to foreign exchange losses due to the Singapore dollar appreciating against the yuan, which arose as the group’s intercompany balances of its “significant” Chinese operations are denominated in Singapore dollar.

Shares of Olam Group soared on Monday (Feb 19) after the group announced it recently concluded investigations into Olam Nigeria, which turned up no evidence of involvement in a multibillion-dollar fraud. The stock closed at S$1, up S$0.12 or 13.6 per cent, as more than 10.4 million shares worth about S$10.4 million changed hands over the course of the day. No married deals took place, ShareInvestor data indicated. The counter had surged in early trade after the announcement. Olam’s investigation findings were contrary to articles published online by Daily Nigerian and PrimeBusiness.Africa in September 2023. Both reports claimed that the country’s Department of State Services was investigating Olam Nigeria, Olam Group and its subsidiaries for alleged fraud involving over US$50 billion.

Elite Commercial Reit on Monday (Feb 19) posted a distribution per unit (DPU) of 1.33 pence for the second half ended Dec 31, 2023, representing a payout ratio of 90 per cent. H2 DPU was down 40.9 per cent from the 2.25 pence paid in the same period the year before, which was based on a payout ratio of 100 per cent. Assuming a payout ratio of 100 per cent, DPU for the half-year period would be 1.48 pence, down 34.2 per cent from 2.25 pence. The drop in DPU was mainly due to a marginally enlarged unit base on a year-on-year basis. In December 2023, the real estate investment trust (Reit) launched a non-renounceable preferential offering at £0.27 per unit to raise about £28 million (S$47.2 million). Revenue for the period inched up 0.9 per cent year on year to £18.5 million from £18.4 million, mainly from rent escalations for 136 assets following inflation-linked rental uplift from Apr 1, 2023, offset by eight assets vacated in that month. Meanwhile, net property income (NPI) rose 21.1 per cent to £21.4 million from £17.6 million in the same period the previous year. The manager attributed the jump to a dilapidation settlement related to the vacated assets.

The unitholders of Dasin Retail Trust (DRT) approved the removal of its trustee-manager, Dasin Retail Trust Management (DRTM), at an extraordinary general meeting (EGM) on Monday (Feb 19). The EGM was deemed invalid by DRTM’s majority directors the day before. Disagreeing that the EGM is invalid, the requisitionists noted that the requisition notice was signed by registered unitholders representing more than 10 per cent of the total voting rights of all unitholders. The minority unitholders also passed a second resolution to internalise the trustee-manager function. Both resolutions had 99.9 per cent of the total number of units represented by votes in favour.


US

The US government is awarding US$1.5 billion to GlobalFoundries to expand semiconductor production, the Biden administration said on Monday (Feb 19), in a bid to strengthen domestic supply chains. GlobalFoundries, the world’s third-largest contract chipmaker, will build a new semiconductor production facility in Malta, New York, and expand existing operations there and in Burlington, Vermont, according to a preliminary agreement with the Commerce Department. The grant will be accompanied by US$1.6 billion in available loans, with the funding expected to generate US$12.5 billion in overall potential investment across the two states. The projects, funded under the CHIPS and Science Act, would generate more than 10,000 jobs over a decade, said Biden administration officials, adding that the positions will pay fair wages and offer benefits like childcare.

Capital One Financial is set to acquire Discover Financial Services, according to a report from The Wall Street Journal. The deal could be announced Tuesday, the outlet said, citing sources. It will be an all-stock deal and Capital One, which already uses Visa and Mastercard networks, plans to keep the Discover brand, the Wall Street Journal said. “Discover has done a better job of bringing in a lot of deposits and [has] access to a lot of institutions to run the debit card network and provide service. So it gives them a lot of deposit gathering ability, which particularly in the current market is enormously important,” said David Schiff, West Monroe’s head of consumer retail and banking.

BHP Group said on Tuesday its first-half underlying profit was largely unchanged from a year ago, citing strong revenue generation, but warned of higher costs from the lagged effect of global inflation persisting into the second-half. The world’s largest listed miner also warned the lag effect of higher interest rates will impact household consumption in the developed world in the first half of calendar 2024, but predicted strong commodity demand in China and India. BHP remained cautious on top commodity consumer China until it became clearer as to how effective its stimulus policies push will be, while noting a “more balanced” demand picture in India which has shown “continued healthy momentum.”

Pfizer’s drug to treat patients with an inflammatory bowel disease called ulcerative colitis has been approved by the European Commission, the company said on Monday (Feb 19). The approval for Velsipity follows backing from the European Medicines Agency’s panel of experts in December. The drug was approved for use in patients aged 16 or older and who did not show adequate response or were intolerant to previous treatment, Pfizer said. The approval, applicable in all 27 countries of the European Union, is based on studies from two late-stage trials that showed the drug was effective and safe in eligible patients. Pfizer said Velsipity will be available in each of the member countries after the national processes are complete, including applications for reimbursement for the drug. About 2.6 million people in Europe are living with ulcerative colitis, Pfizer says.

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


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