DAILY MORNING NOTE | 21 March 2024

Trades Initiated in the past week

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Singapore shares ended marginally higher on Wednesday (Mar 20), despite an overnight rally on Wall Street that saw the S&P 500 hitting a record high. Seatrium continued to account for the lion’s share of total trading volume, with 1.2 billion shares of the offshore and marine counter transacted. Its shares were flat at S$0.079. Glove maker Top Glove posted an 8.9 per cent or S$0.02 rise in its share price to S$0.245, after reporting a 68.9 per cent year-on-year lower loss of RM51.2 million (S$14.5 million) for the second quarter to February due to cost-cutting. Wilmar International closed S$0.01 or 0.3 per cent lower at S$3.40, after the agribusiness announced that its wholly owned subsidiary, Wilmar Pakistan, intends to increase its stake in Pakistan-listed Unity Foods by acquiring up to 277.1 million shares through a public offer. Wilmar Pakistan has a total effective shareholding interest of 28.97 per cent in Unity Foods.

Major Wall Street indices surged to fresh records on Wednesday after the Federal Reserve reaffirmed plans for interest rate cuts in the coming months, cheering investors who had feared a retreat. The US central bank as expected opted to keep interest rates unchanged for a fifth consecutive meeting. The Fed also stayed the course in its forecast for three rate cuts in 2024, despite recent inflation data that topped estimates. “Inflation is still too high,” Fed Chair Jerome Powell told a news conference. But despite the recent uptick, Powell said this year’s inflation data “haven’t really changed the overall story, which is that of inflation moving down gradually on a sometimes bumpy road toward two per cent.” Fed policymakers also updated their economic forecasts, sharply upgrading the US growth outlook for this year to 2.1 per cent, from 1.4 per cent in December. The three major US indices pushed to all-time closing records, with the Nasdaq winning the most at 1.3 per cent.

Top gainers & losers

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Events Of The Week

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SG

Top Glove Corporation executive chairman Lim Wee Chai expects the company to return to the black by FY2025, as Malaysian glove-makers continue to close the price gap with competitors in Thailand and China. Speaking at Top Glove’s second-quarter earnings briefing on Wednesday (Mar 20), Dr Lim noted that Thai and Chinese glove-makers were increasing their glove prices. This has resulted in an overall increase in the average selling prices (ASPs) of the products. This, in turn, has allowed Top Glove to raise its own prices. It had attempted to do so in the past, but was unable to sustain the move due to its non-Malaysian peers’ low prices.

Dr Loo Choon Yong, the CEO and a substantial shareholder of Raffles Medical Group, has acquired 100,000 units in the company for $103,000 or $1.03 each. The shares were sold via market transaction on March 19. After the purchase, Loo’s direct stake in Raffles Medical has increased to 11.573% from 11.568% previously. In addition, Loo has a deemed interest in another 783.8 million shares, giving him a total interest of 998.75 million shares, or 53.782%. Units in Raffles Medical closed 1 cent higher or 0.97% up at $1.04 on March 20.

No signboard’s controlling shareholder and executive chairman, who collectively hold 55 per cent of the company’s shares, have agreed to sell all their shares to three investors for S$500,000. Controlling shareholder GuGong and No Signboard executive chairman Lim Yong Sim collectively hold 254.4 million shares in the company. They have agreed to sell their shares to Wang Huan, Qi Aina and Yang Ji Hui, who are investors with business interests in China, the company said in a bourse filing on Wednesday (Mar 20). The company said the purchasers are independent from each other and are not acting in concert. They also do not have the right to nominate any directors onto the board. None of the investors are related to GuGong, Lim, the company, white-knight investor Gazelle Ventures, or any other substantial shareholder or director, No Signboard added. In a separate announcement, No Signboard also said that Lim tendered his resignation as executive chairman to “pursue other personal interests and following the sale of his existing interest in the company”.

Union Gas Holdings has announced its intention to broaden its fuel product offerings to include electric vehicle (EV) charging solutions after signing a memorandum of understanding (MOU) with Hong Kong-based charging solutions provider Deltrix Limited. Union Gas currently operates four EV charging nozzles at its headquarters at 89 Defu Lane 10 with plans to progressively add 12 more charging nozzles to this location over the next two years. It also intends to install charging stations at its Cnergy fuel station at 50 Old Toh Tuck Road in due course as well as explore other potential locations across Singapore. Besides Singapore, Union Gas’ MOU with Deltrix also covers Japan and the Southeast Asia region. However, tthe company plans to firmly establish its network in Singapore before exploring opportunities to replicate the business operations in other markets.


US

The US will award Intel US$8.5 billion in grants and as much as US$11 billion in loans to help fund an expansion of its semiconductor factories, the Commerce Department announced on Wednesday (Mar 20), marking the largest award from a programme designed to reinvigorate the domestic chip industry. The package will support more than US$100 billion in US investments from Intel, including efforts to produce cutting-edge semiconductors at large-scale plants in Arizona and Ohio, the department said on Wednesday. The money also will help pay for equipment research and development and advanced packaging projects at smaller facilities in Oregon and New Mexico. In addition, Intel has indicated that it plans to tap investment tax credits from the Treasury Department that could cover as much as 25 per cent of capital expenditures, according to the Commerce Department. The subsidies come from the 2022 Chips and Science Act, which set aside US$39 billion in grants – plus loans and guarantees worth US$75 billion – to convince chip companies to build factories on American soil. The hope is to reverse a decadeslong shift of semiconductor production to Asia. Commerce Secretary Gina Raimondo has said the US aims to produce one-fifth of the world’s advanced logic chips by the end of the decade, and that Intel’s investments are a key part of that goal. For Intel, the facilities are part of an ambitious turnaround bid under chief executive officer Pat Gelsinger. The effort has included building up a foundry business – an operation that makes chips for other companies – and Intel recently secured Microsoft Corp. as a high-profile customer.

One of the oldest companies in tech has been quietly trouncing some of the hottest stocks on Wall Street. International Business Machines (IBM) recently hit its highest since 2013, putting it about 6 per cent below an all-time high as investors bet that a turnaround is finally bearing fruit after years of tepid growth and share-price returns. Compared to the Magnificent Seven, IBM’s roughly 19 per cent gain this year, including dividends, trails only Nvidia and Meta Platforms. “IBM has been discounted by the rest of the industry, but it has made a lot of investments in both cloud and AI, and with a strong AI business, we could see growth inflecting higher,” said Jethro Townsend, portfolio manager at Nia Impact Capital. He cites the firm’s cash flow generation and “healthy” dividend yield as factors that provide room for it to re-rate higher. Much of the year’s advance followed IBM’s results in late January, when it gave a better-than-expected forecast for both free cash flow and revenue and said it was seeing growing demand for its AI products. The company has also cut jobs and expects to pause hiring for roles that could be replaced with AI, which is seen as a potential tailwind for margins.

Manulife Financial is facing a divided global office market, with the value of its United States office investments having plummeted by as much as 40 per cent from a pre-pandemic peak, according to chief financial officer Colin Simpson. The North American market has been deeply impacted by the shift to remote work, with US office vacancy rates surging to a record 19.7 per cent at the end of last year. This stands in contrast to Asia, where office buildings are relatively full, Simpson said. The worst may be over for the downturn in office property values, said Simpson. But he warned that advancements in artificial intelligence may erode white-collar employment, stifling any potential rebound in demand for desks. The Toronto-based life insurer reported a 12 per cent year-over-year decrease in the value of its income-producing commercial office properties globally, which totalled C$4.8 billion (S$4.8 billion) as at Dec 31. Including minority ownership in certain real estate funds, Manulife had C$6.3 billion in global office holdings last year, about a quarter of which are in the US.

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


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