Daily Morning Note – 20 September 2018
WEEKLY MARKET OUTLOOK WEBINAR
Register HERE for MONDAY’s 11.15am webinar.
Archived webinars available.
YOUR PHILLIP SUMMARY
On Wednesday, the Dow Jones Industrial Average and S&P 500 rose close to new records, pushed by stock gains in manufacturing and finance companies. This was due to the less stringent than anticipated new tariffs implemented by the US and China.
The yield on 10-year Treasuries continued this week’s march above the much-watched 3 percent mark and on Wednesday reached as high as 3.09 percent, a level unseen since May. Oil climbed above $71 a barrel.
In the Asia-Pacific region, most of the indexes rose. The Shanghai Composite Index and Hong Kong’s Hang Seng each added more than 1%.
It is expected that the Federal Reserve will raise rates again at next week’s meeting.
First REIT – A new dawn
Recommendation: NEUTRAL (Maintained), Last Close Price
Target Price: S$1.31, Analyst: Tara Wong
– OUE Limited and OUE Lippo Healthcare (OUELH) collectively acquiring 100% of
the shares in Bowsprit Capital Corporation Limited (Bowsprit), the Manager of
First REIT (FIRT), from Lippo Karawaci (LPKR).
– OUELH also acquiring 10.63% of FIRT units from Bridgewater International
Limited (Bridgewater) (subsidiary of LPKR).
– OUELH and LPKR will each have 10.63% stake in FIRT upon completion of
– New ROFR pipeline from OUELH – which includes healthcare assets in Japan,
China, Malaysia – in addition to existing ROFR pipeline from LPKR.
– Cash infusion from LPKR’s divestment of stake in Bowsprit and FIRT through
its holding companies, will ease its cash flow status and potentially improve
receivables at FIRT.
– Maintain Neutral with an unchanged TP of S$1.31.
Singapore REITs Monthly – Monthly Tracker: September 2018
Recommendation: NEUTRAL (Maintained), Analyst: Tara Wong
Target Price: S$1.31, Analyst: Tara Wong
– FTSE S-REIT Index declined 2.6% YTD. Weakness across all sub-sectors over
the past month, with Starhill Global REIT being the top performer (+5.1%
MTD) and OUE Commercial REIT being the worst performer (-11.7% MTD).
– Sector yield spread of 296bps over the benchmark 10-year SGS (10YSGS) yield
remains close to the -1 standard deviation (SD) level as at end-August.
– 3m SOR rose to 1.65% as at end-August, near 10-year highs.
– Remain NEUTRAL on S-REITs sector. Sub-sector preferences: Office and
Stocks rose on Wednesday as higher interest rates drove gains in the banking sector. Sentiment on Wall Street was also boosted as investors bet that a trade war between the U.S. and China will not be as bad as previously feared. The Dow Jones Industrial Average closed up 158.80 points with Goldman Sachs as the best-performing stock in the index.
China will not resort to a massive stimulus as it did in 2008 to boost its economy, Prime Minister Li Keqiang said at the World Economic Forum held in Tianjin on Wednesday. Instead, the country had ample tools to offset the downward pressures facing its economy, such as stabilising investment, reducing taxes and fees, instituting a more pro-active fiscal policy and easing credit difficulties for small and medium-sized companies.
Geo Energy Resources Limited announced it is considering seeking a dual primary listing on the Main Board of HKEx. The Potential Listing may or may not involve an offering of new shares in conjunction with the Potential Listing.
Total sales for Sasseur REIT’s first day of its 10th anniversary celebrations exceeded RMB130 million, setting a new national record for outlet mall’s one day sales in China.
QAF Group clarified that the outbreak of African swine fever (“ASF”) in the People’s Republic of China has had no impact on its primary production business, under the Rivalea Group, as the business is located entirely in Australia. Nonetheless, as Australian pork producers are not permitted to export pork to the PRC, the outbreak of ASF in the PRC does not currently give rise to any export opportunity with respect to the PRC.
Source: SGX Masnet, Bloomberg, Reuters, The Business Times, Channel NewsAsia, Phillip Securities Research
Clients of Phillip Securities can keep updated with Country Strategy and Singapore Sector Reports by logging into: www.poems.com.sg > STOCKS > Research
|The information contained in this email and/or its attachment(s) is provided to you for information only and is not intended to or nor will it create/induce the creation of any binding legal relations. The information or opinions provided in this email do not constitute an investment advice, an offer or solicitation to subscribe for, purchase or sell the e investment product(s) mentioned herein. It does not have any regard to your specific investment objectives, financial situation and any of your particular needs. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of this information. Investments are subject to investment risks including possible loss of the principal amount invested. The value of the product and the income from them may fall as well as rise. You may wish to seek advice from an independent financial adviser before making a commitment to purchase or investing in the investment product(s) mentioned herein. In the event that you choose not to do so, you should consider whether the investment product(s) mentioned herein is suitable for you. PhillipCapital and any of its members will not, in any event, be liable to you for any direct/indirect or any other damages of any kind arising from or in connection with your reliance on any information in and/or materials attached to this email. The information and/or materials provided “as is” without warranty of any kind, either express or implied. In particular, no warranty regarding accuracy or fitness for a purpose is given in connection with such information and materials.|
|This e-mail and its attachment(s) may contain privileged or confidential information, which is intended only for the use of the recipient(s) named above. If you have received this message in error, please notify the sender immediately and delete all copies of it. If you are not the intended recipient, you must not read, use, copy, store, disseminate and/or disclose to any person this email and any of its attachment(s). PhillipCapital and its members will not accept legal responsibility for the contents of this message. Thank you for your cooperation.|