Daily Morning Note – 20 January 2022

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PHILLIP SUMMARY

Market sentiment in Asia cooled as investors continue pricing in a more aggressive Federal Reserve tightening ahead. Still, the Straits Times Index bucked the regional trend, rising by 3.90 points or, 0.12 per cent, to close at 3,283.94. Across the Singapore market, decliners beat advancers 267 to 185 after 1.34 billion shares worth S$1.22 billion changed hands

Wall Street’s main indexes ended sharply lower on Wednesday, with the tech-heavy Nasdaq confirming it was in a correction, after a diverse set of corporate earnings and as investors continued to worry about higher US Treasury yields and the Federal Reserve tightening monetary policy. The Nasdaq ended down 10.7 per cent from its Nov 19 closing record high, as stocks sold off into the market close. A correction is confirmed when an index closes 10 per cent or more below its record closing level. The Dow Jones Industrial Average fell 339.82 points, or 0.96 per cent, to 35,028.65, the S&P 500 lost 44.35 points, or 0.97 per cent, to 4,532.76 and the Nasdaq Composite dropped 166.64 points, or 1.15 per cent, to 14,340.26.

Stocks to watch: Vertex Technology Acquisition Corporation Ltd


BREAKING NEWS

SG

Certificate of entitlement (COE) prices ended higher across all categories in the latest bidding exercise on Wednesday (Jan 19). The category for cars above 1,600cc and 130hp saw the biggest hike. At S$82,001, it represented a 5.5 per cent increase over the S$77,700 from the last bidding exercise on Jan 5. The next biggest mover was the category for motorcycles. From S$9,689 before, it rose by 3.2 per cent to hit S$10,000. Commercial vehicle COE premiums adjusted upwards by a much milder 1.9 per cent, from S$42,200 to S$43,001. The price of Open COE, which can be used for all vehicle types other than motorcycles, also moved very slightly from an already high S$82,501 before to S$83,911, representing a 1.7 per cent increase.

Vertex Technology Acquisition Corporation Ltd saw the public offer tranche 36.0 times subscribed at the close of its initial public offering (IPO), it said on Wednesday (Jan 19). Units are expected to start trading on the Singapore Exchange mainboard at 2pm on Thursday. VTAC, Singapore’s first listed special purpose acquisition company (SPAC), had offered 11.8 million units at S$5 apiece. Some 600,000 units were offered to the public, with more than 3,700 valid applications received for about 21.6 million units. There were roughly 890 successful applicants in the public offering. The international placement tranche of 11.2 million units was about 8.8 times subscribed, with indications of interest received for 98.6 million units. This placement was open to institutional and other investors in Singapore, as well as foreign institutional and selected investors outside the United States.

THE Trendlines Group inked a conditional subscription agreement with FEA Innovations, Palm Tree, Avztim and the company’s controlling shareholder Librae Holdings to subscribe for a total of S$20.3 million in new ordinary shares, Trendlines announced on Wednesday (Jan 19). Librae Holdings will subscribe for S$11.9 million, FEA Innovations and Palm Tree for S$3.4 million each, and Avztim for S$1.6 million. Together, subscription shares are expected to represent about 17.59 per cent of the enlarged share capital. Shares are allocated at a price of S$0.12 for each ordinary share. This is a 15 per cent premium to the weighted average share price based on the trades done on the Singapore Exchange on Wednesday (Jan 19), when the subscription agreements were signed, the Israel-based incubator said.

US

United Airlines reported another quarterly loss on Wednesday on the lingering drag from Covid-19 but offered an upbeat outlook on a travel comeback later in 2022 and in future years. The US carrier acknowledged that it is beginning 2022 “with a scaled-back schedule” following the latest uptick in virus cases, but will “nimbly ramp up” capacity later in the year, according to a news release. “While Omicron is impacting near-term demand, we remain optimistic about the spring and excited about the summer and beyond,” said United chief executive Scott Kirby. United reported a fourth-quarter loss of US$646 million, about a third of the loss from the year-ago period, but far from the US$641 million profit in the 2019 period. Revenues were US$8.2 billion, more than twice the level in 2020 but a 25 percent drop from the figure in the 2019 quarter.

Morgan Stanley beat quarterly profit expectations on Wednesday as the Wall Street investment bank capitalised on a boom in mergers and acquisitions and generated robust fees from advising on deals. The bank’s wealth management unit also turned in a strong fourth quarter with revenue rising more than 10 per cent to US$6.25 billion. Morgan Stanley’s results rounded out a mixed earnings season for the nation’s largest banks that rode the M&A boom, but were dragged down by weak trading and higher expenses, which surged as they splurged to retain key personnel in a race for talent. Dealmaking activity is expected to remain robust despite the prospect of debt becoming costlier, while Main Street lenders are expected to post healthier profits from consumer lending as interest rates are likely to rise later this year.

US buyout fund Bain Capital is in final talks to buy French IT services firm Inetum in a deal worth about US$2.27 billion that would boost its presence across Europe’s tech sector, sources familiar with the matter told Reuters. The deal will see Inetum – formerly known as Gfi Informatique – returning into private equity hands after being sold to Qatar’s group Mannai Corp in 2016, the sources said, speaking on condition of anonymity. Bain is putting the finishing touches to the transaction which could be signed as early as this week and would value the 52-year old French firm at roughly 2 billion euros (S$3.05 billion), one of the sources said.

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

Technical Pulse: Wilmar International Ltd

Recommended: Technical BUY; Analyst: Chua Wei Ren

Wilmar International Ltd (SGX: F34) The downtrend threat is likely to be over after recent technicals indicate a potentiall bullish reversal to the upside

Buy stop: 4.35 Stop loss: 4.15 Take profit 1: 4.55 Take profit 2: 4.66

Technical Pulse: Frencken Group Ltd

Recommended: Technical BUY; Analyst: Chua Wei Ren

Frencken Group Ltd (SGX: E28) The downtrend threat is likely to be over after recent technicals indicates a potentiall bullish reversal to the upside

Buy spot: 1.79 Stop loss: 1.70 Take profit 1: 1.94 Take profit 2: 2.10

POEMS Podcast: Let the Money Talk

Recent Podcasts:

Daily Morning Note. 19 January, 2022

Daily Morning Note – January 18, 2022

Daily Morning Note – January 17, 2022

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