DAILY MORNING NOTE | 20 March 2024

Trades Initiated in the past week

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Singapore shares were flat on Tuesday (Mar 19) in spite of overnight gains on Wall Street, as investors wait for the outcome of the US Federal Reserve’s policy meeting on Wednesday. Seatrium was the top traded stock with 880.1 million shares transacted as the offshore and marine player slid a further 2.5 per cent or S$0.002 lower to S$0.079, breaching its 52-week-low. Manulife US Real Estate Investment Trust (Reit) units were 1.8 per cent or US$0.001 lower at US$0.056, after its manager said that its chief executive officer, deputy CEO, chief financial officer and chief investment officer will all be replaced on Jun 30. Singapore Post (SingPost)6.6 per cent or S$0.025 higher at S$0.405, after it announced the completion of a strategic review that aims to unlock value. It is looking at divesting its non-core assets, including its flagship retail-commercial mixed development SingPost Centre, as well as considering floating its Australian business among some initiatives that stemmed from the review.

THE S&P 500 finished at a fresh record on Tuesday as US stocks shook off a lackluster open to move higher ahead of a Federal Reserve decision.

All three major indices advanced, with the S&P 500 at 5,178.51, up 0.6 per cent, topping a record set a week ago.

The Dow Jones Industrial Average jumped 0.8 per cent to 39,110.76, while the tech-rich Nasdaq Composite Index climbed 0.4 per cent to 16,166.79.Major indices had opened mostly lower after the Bank of Japan finally pivoted its monetary policy, becoming the last major central bank to lift interest rates. The decision came ahead of Wednesday’s announcement by the Fed. While the US central bank is widely expected to keep interest rates unchanged, its decision will be analysed as far as setting expectations for future interest rate cuts.

Top gainers & losers

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Events Of The Week

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SG

The Bank of East Asia (BEA) and Wilmar International have entered into an agreement for a two-year US$100 million sustainability-linked loan, the second between BEA and Wilmar. The interest margin under the facility will be reduced on a tiered basis if Wilmar achieves certain pre-determined sustainability performance targets that cover a comprehensive range of environmental, social and governance (ESG) metrics. These targets include Wilmar’s internal key performance indicators as well as external benchmarking standards, one of which is its continued inclusion in the Dow Jones Sustainability Indices (DJSI) World Index. First published in 1999, the DJSI World Index represents the top 10% of the largest 2,500 companies in the S&P Global Broad Market Index based on long-term ESG criteria.

Frasers Logistics & Commercial Trust (FLCT) has priced a $175 million 5-year bond which will be issued on March 26. Guaranteed by Perpetual (Asia) in its capacity as trustee of FLCT, the senior notes will carry a coupon of 3.83% per annum, payable semi-annually in arrear, and will mature on March 26, 2029. The issue has an expected and guarantor rating of BBB+ by S&P Global Ratings. The net proceeds from the issuance will be used for refinancing of existing borrowings, financing or refinancing of acquisitions, investments, asset enhancement works and developments, as well as working capital requirements and general corporate purposes.

According to Frasers Hospitality Trust’s manager on March 19, Frasers Property the sponsor, has given its intention to sell the hotel to a third party. Under an existing agreement, FHT has the first right of refusal over the property, which has a remaining lease of 45 years. “The managers have considered the opportunity and is of the view that acquiring the property does not meet” FHT’s prevailing investment strategy. “As such, the managers have decided not to exercise the ROFR. “The managers will continue to explore opportunities from both the sponsor and third parties which are in line with FHT’s investment strategy,” says FHT.

Mainboard–listed company Second Chance Properties expects net profit for its first half ended Feb 29, 2024 to “decrease significantly” on year. This is compared to net profit of S$9.2 million in the same period a year earlier, the company said in a bourse filing on Tuesday (Mar 19). The expected decrease is likely due to lower gains on disposal of investment properties in H1. The company disposed of two investment properties this year, while it had seven disposals in 2023. Second Chance Properties also recorded unrealised foreign exchange gains in H1 2023, but expects it will post unrealised foreign exchange losses in H1 2024. It said it is still in the process of finalising the results, and expects its unaudited financial statements to be released on or around Mar 27.


US

SpaceX has started selling satellite lasers, which are used for speedy in-space communications, to other satellite firms, company president Gwynne Shotwell said at a conference on Tuesday (Mar 19). SpaceX’s thousands of Starlink satellites in low-Earth orbit use inter-satellite laser links to pass data between one another in space at the speed of light, allowing the network to offer broader Internet coverage around the world with fewer ground stations. Shotwell, speaking on a panel at the Satellite Show conference in Washington, said the company as a supplier will sell that technology to other companies. “We’ll roll that out … with our new Polaris Dawn mission coming up here this summer on a Dragon capsule,” Shotwell said, referring to an upcoming private astronaut flight with the company’s Dragon space capsule.

PepsiCo has reached an agreement to become the exclusive provider of beverages at all Subway sandwich shops in the US, replacing rival Coca-Cola as the drink supplier to one of the nation’s largest chains. Subway announced the new 10-year pact to serve PepsiCo products such as Mountain Dew sodas, Tropicana juices and Gatorade sports drinks on Tuesday (Mar 19). Coca-Cola brands like Sprite, Fanta and Diet Coke will begin to disappear from the sandwich chain beginning in January 2025, and will take several months to replace across Subway’s network of franchisee-owned restaurants. “We are committed to serving Subway through the end of this year,” Coca-Cola said in a statement. The beverage giant has served Subway’s US restaurants for nearly 20 years, the company said. Subway is Coca-Cola’s largest US fountain account by number of locations, according to Beverage Digest. Subway, which operates about 20,000 restaurants in the US and nearly 37,000 worldwide, said it’s also extending its existing agreement with Frito-Lay, PepsiCo’s snack-food unit, to provide chips and snacks at its restaurants through 2030. PepsiCo already provides beverages at Subway shops in several regions outside the US.

Jetblue Airways will eliminate unprofitable routes in California and Florida and drop service to several cities in South America, a sweeping overhaul of its network as the carrier looks to cut costs after growth attempts were twice blocked by the United States government. The carrier plans to cut nearly a third of its flights out of Los Angeles International Airport in June, including routes to Las Vegas, Miami and San Francisco, the airline said in a memo on Tuesday (Mar 19) to employees. Flights between Fort Lauderdale, Florida, and cities including Atlanta, New Orleans and Salt Lake City will also be eliminated. JetBlue is turning its focus inward after three years of failed legal battles to save an operating partnership with American Airlines Group in the US Northeast and then to preserve an acquisition of Spirit Airlines. JetBlue chief executive officer Joanna Geraghty has said her top priority is a return to consistent profits, which the carrier has not had since 2019. The changes are the most significant yet for JetBlue since activist investor Carl Icahn in February revealed a roughly 10 per cent stake and began pushing to boost shareholder value. The company has since given his investment firm two board seats.

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


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