Daily Morning Note – 20 September 2021

PHILLIP SUMMARY

U.S. stock futures dipped in overnight trading Sunday after the Dow Jones Industrial Average turned in three straight weeks of losses for the first time since September 2020. Futures on the Dow shed 114 points, or 0.3%. S&P 500 futures fell 0.3% and Nasdaq 100 futures ticked 0.2% lower. Stocks have struggled in September, a seasonally weak month for the market. The Dow closed Friday’s regular session 166.44 points, or 0.5%, lower at 34,584.88. The S&P 500 shed 0.9% to 4,432.99 and the Nasdaq Composite lost 0.9% to close at 15,043.97. The S&P 500 saw its biggest trading volume Friday since July 19, more than doubling its 30-day average volume. Friday coincided with the expiration of stock options, index options, stock futures and index futures — a quarterly event known as “quadruple witching.”


BREAKING NEWS

SG News

Property developer Hatten Land said it has not received the US$60 million payment from Singapore-based Tayrona Capital Group Corp for the proposed divestment of wholly owned Malaysian unit Gold Mart, a transaction that was approved by shareholders in November last year. The completion date for the transaction was recently extended to Sept 17, 2021. The board said on Friday night that it is cognisant of the unduly long delay in completing the proposed transaction, with the completion date having been re-extended many times.

A group of minority shareholders of Darco Water Technologies have failed in their bid to sue two individuals on behalf of the company, after the High Court on Sept 14 dismissed their application for leave to commence statutory derivative proceedings against the individuals. The court also ordered that the group pay legal costs to Darco. The 10 shareholders, who hold a collective stake of 16.1 per cent in Darco, intended to pursue claims against director and deputy chairman Wang Zhi and Pek Thiam Keong over various alleged wrongdoings.

Temasek Holdings will take up 49.3 per cent of Sembcorp Marine (Sembmarine)’s rights issue, which means it will need to make a compliance offer for all shares of Sembmarine that it does not already own. In a statement late on Friday night, Sembcorp Marine its rights issue had closed on Sept 14 with valid acceptances for 15.9 billion or 84.2 per cent of the rights shares on offer. Excess applications were made for 6.3 billion rights shares, or 33.5 per cent of the total rights shares available.

Singapore is offering successful homegrown companies more funding as it tries to boost listings of high-growth technology startups on the Singapore Exchange (SGX). On Friday morning, several initiatives were announced to fund companies at the later-stage, pre-IPO and IPO stages as well as to help them defray listing costs. Both before and after listing, companies will also be able to count on new forms of support from SGX as they go about raising funds and engaging with investors.


US News

US auto safety investigators have opened a new probe into 30 million vehicles built by nearly two dozen automakers with potentially defective Takata air bag inflators, a government document seen by Reuters shows. The National Highway Traffic Safety Administration (NHTSA) on Friday opened an engineering analysis into an estimated 30 million US vehicles from the 2001 through 2019 model years.

Two US military pilots were rescued and taken to hospital Sunday after their training jet crashed into the backyard of a residence in a Texas neighborhood near Fort Worth, authorities said. Three homes were damaged in the suburb of Lake Worth, where the pilots ejected before their small US Navy jet crashed about one block from a middle school. “No resident was injured. The two pilots have been transported to the hospital,” Lake Worth fire chief Ryan Arthur told reporters.

A senior U.S. trade official privately criticised India’s July decision to ban Mastercard Inc from issuing new cards, calling it a “draconian” move that caused “panic”, according to U.S. government emails seen by Reuters. The documents show frustration within the U.S. government after India’s central bank banned new card issuance by American Express (AXP.N) and Diners Club International in April, then took similar action against Mastercard in July.

Tony Will, chief executive of CF Industries, arrived in the UK earlier after the firm stopped production at its two fertiliser plants because of soaring wholesale gas prices. Food firms are warning a shortage of CO2 is threatening produce supplies. High global demand for gas has been blamed for the recent surge in prices. Carbon dioxide is used to stun animals prior to slaughter and in dry ice form to keep food fresh for storage and transport. It is a by-product of fertiliser manufacturing.


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

RESEARCH REPORTS

City Developments Limited – AEIs and acquisitions to spearhead growth

Recommendation: BUY (Re-initiate), Last Done: S$7.25

Target Price: S$99.19, Analyst: Natalie Ong

– Catching Singapore property upcycle with a strong development pipeline of 1,746 units, translating to FY22e/23e GDV of S$2.1b/S$1.0bn

– Impending recovery of hospitality sector and monetisation of assets through potential SREIT listing to improve financial position.

– Re-initiate with BUY and RNAV-derived TP S$9.19 (35% discount). CDL is trading at an attractive 49% discount to our RNAV/share of S$14.14.

Technical analysis: US Sector Spotlight

Analyst: Chua Wei Ren

– Retail sales jumped in August with households confidently brushing off concerns of the resurgence of Covid-19.

– Core Consumer price index rose 0.1% MoM, missing analyst expectations.

– Despite the correction in the broader market, shipping, consumer and utilities are likely to stage a comeback based on the technicals.

>> Read more research reports

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