Daily Morning Note – 20 March 2019

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YOUR PHILLIP SUMMARY

U.S. stocks closed mostly lower Tuesday, with the Dow Jones Industrial Average snapping a four-day winning streak, as gains in consumer discretionary stocks and expectations for the Federal Reserve to continue its pledge to keep rate hikes on hold were offset by conflicting reports on U.S.-China trade talks.

Asian stocks traded mixed early Wednesday as investors held back from making big changes prior to the Federal Reserve’s policy decision. Treasuries and the dollar steadied.

Shares in Japan, South Korea and Australia edged lower. A rally in U.S. stocks earlier sputtered out after a report that U.S. and Chinese negotiators remain at odds on aspects of their current trade talks soured sentiment. A rally in oil stalled.



RESEARCH REPORT

Singapore REITs Monthly – March 2019

Analyst: Tara Wong; Recommendation: Neutral (maintained)

– FTSE S-REIT total return gained 1.5% MTD and 10.4% YTD. Strongest gains were from the
Commercial sector (+12.3% YTD) and weakest showing at the Retail sector (+7.8% YTD).

– Sector yield spread dipped further below the -1 standard deviation (s.d.) level as at end-
February to 261bps over the benchmark 10-year SGS (10YSGS) yield.

– 3m SOR continued to rise YTD, ending at 1.95% in February.

– Remain NEUTRAL on S-REITs sector. Sub-sector preferences: Office and Hospitality.

Singapore Exchange Limited – Derivatives growth the slowest in almost two years

Recommendation: ACCUMULATE (Downgrade), Last Close Price: S$7.31

Target Price: S$8.17 (previous TP: S$8.36), Analyst: Tin Min Ying

– HKEX announced the launch of futures contracts on MSCI China A Index.

– SGX’s February Derivatives Daily Average Volume (DDAV) growth was flat at 1.4% YoY,
the lowest in almost two years.

– SGX’s derivatives business accounts for c.49% of total revenue in 6M19.

– We downgrade to Accumulate at a lower TP of S$8.17 (previously S$8.36) as lowered
our FY19e earnings by 2%. We peg our TP to 23.2x P/E, at SGX’s 5-year mean.


BREAKING NEWS

Property developer Oxley Holdings has terminated a letter of intent (LOI) to sell its Mercure and Novotel Hotels to Gracious Land Pte Ltd with immediate effect, as a subsequent deposit of S$38 million was not made by the buyer. In a regulatory filing late on Tuesday night, Oxley said that among other things, the subsequent deposit, being 4 per cent of the total consideration, was not made by Gracious Land.

A SUBSIDIARY of CapitaLand Limited, CapitaLand (China) Investment Co Ltd, has divested its 100 per cent interest in Beijing CapitaLand Property Management Co (BCPM) for 20.8 million yuan (S$4.2 million), CapitaLand said in a Singapore Exchange filing on Tuesday. BCPM, whose main properties in Beijing are the clubhouse for the Orchid Garden residential development and 137 carpark lots in the La Foret residential development, was sold to a party unrelated to CapitaLand.

Yuuzoo Networks Group Corp said that it has secured commitment for a three-year, S$30 million funding facility from “Swiss-based” Asia Financial Group (AFG). According to the Tuesday announcement, YuuZoo may draw down up to S$30 million over three years by issuing YuuZoo shares to AFG at a 7.5 per cent discount to the closing price of YuuZoo stock on the drawdown date.

UOB’s wholly owned subsidiary UOB Bullion and Futures has entered into an agreement with financial services firm INTL FCStone to sell its futures and options, brokerage and clearing business for US$5 million, with a view to winding down the business following a review. In statements issued on Tuesday separately to the Singapore Exchange and to the media, UOB and INTL FCStone said respectively that the asset purchase agreement through the latter’s Singapore subsidiary hinges on the Monetary Authority of Singapore giving the green light.

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

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