Daily Morning Note – 21 Sep 2020
PHILLIP SUMMARY
U.S. stock futures dipped on Sunday night as the market tried to bounce back from its longest weekly losing streak in about a year. Dow Jones Industrial Average futures were down by 56 points, or 0.2%. S&P 500 futures slipped 0.2% and Nasdaq 100 futures traded 0.1% lower. The S&P 500, Dow Jones Industrial Average and Nasdaq Composite all fell for a third straight week. That marks the market’s longest weekly slide since 2019.
Those declines came as tech shares — which led the broader market off its coronavirus lows and into record territory — struggled. Facebook, Amazon, Apple, Netflix, Google-parent Alphabet and Microsoft all posted steep weekly losses. The S&P 500 tech sector pulled back by 1%. Tech was under pressure last week in part because of valuation concerns within the space as well as options of individual stocks, ETFs and indexes expired.
BREAKING NEWS
Democratic donors smashed fundraising records after the death on Friday of US Supreme Court Justice Ruth Bader Ginsburg, funneling more than US$90 million to candidates and progressive groups in just over 24 hours.
Democratic presidential candidate Joe Biden urged Senate Republicans not to vote on any candidate nominated to the Supreme Court as the November election approaches, calling his rival Donald Trump’s plan an “exercise of raw political power.”
Several global banks moved large sums of allegedly illicit funds over a period of nearly two decades, despite red flags about the origins of the money, BuzzFeed and other media reported on Sunday, citing confidential documents submitted by banks to the US government.
UBS Group has experimented with virtual reality headsets for its bankers to simulate the trading floor experience at home, the Financial Times reported. The investment bank has tried Microsoft’s HoloLenses with its London traders, the newspaper said.
Singapore Exchange (SGX) on Sunday night said that it will not be acceding to watch-listed construction firm Swee Hong’s delisting appeal as well as its request for an extension of six months for the company to submit its resumption proposal. As a result, Swee Hong will have to delist by Sept 23, 2020.
FIRST Reit’s manager said on Sunday that it has a received a non-binding proposal regarding a proposed rental restructuring from former parent company PT Lippo Kawaraci Tbk.
Raffles Education said in a bourse filing on Saturday that the requisition notice by substantial shareholder Oei Hong Leong, Oei Hong Leong Art Museum Limited and Indian edtech businessman Shantanu Prakash to hold an extraordinary general meeting (EGM) is without merit.
US President Donald Trump said on Saturday he supported a deal in principle that would allow TikTok to continue to operate in the United States, even as it appeared to conflict with his earlier order for China’s ByteDance to divest the video app.
Source: SGX Masnet, The Business Times, Bloomberg, Channel NewsAsia, Reuters, PSR
TECHNICAL REPORTS
SATS Ltd
Analyst: Chua Wei Ren
Recommended Action: Technical SELL
SATS Ltd (SGX: S58) bearish downside has acted according to our analysis dated on 26th August. Recent technical also add on to the probability of further strong downside.
Alibaba Group Holdings Ltd
Analyst: Chua Wei Ren
Recommended Action: Technical BUY
Alibaba Group (US: BABA) on our report dated 1st September, we were positive that wave 5 would go beyond US$300.00 and terminate near US$305.67. However, prices reverse sharply near 200.00% extension level and rebounded at US$268.00 according to our strategy plan B. Based on the wave analysis, we believe that Alibaba will have further correction to the downside.
Apple Inc
Analyst: Chua Wei Ren
Recommended Action: Technical BUY
Apple Inc (US: APPL) primary phase 5-wave impulse has complete after the stock forms a divergence, signalling an end of a 5-wave trend on 2nd September 2020. Based on the technical and wave analysis, we are looking at further downside.
>> Read more technical reports
RESEARCH REPORTS
First Sponsor Group Limited – Your financier, developer and landlord
Recommendation: BUY (Initiation), Last Done: S$1.25
Target Price: S$1.65, Analyst: Tan Jie Hui
– Unrecognised property development revenue of S$586mn with another S$1.95bn worth of gross development value (GDV) for unlocking, equivalent to 5-6 years of sales.
– Property financing loan book grew at 19% CAGR in the past 5 years. Securitised loans offer recurring income with returns of low-mid teens. We are estimating loan book growth of around 8% for FY20e and FY21e.
– Initiate coverage with BUY and target price of S$1.65.
SG Bonds Weekly – Week 39
Credit Analyst: Timothy Ang
– Asia new issue pipeline remains increasingly active with 5 new mandates outstanding from the ones announced in the last two weeks.
– Fed Chair Jerome Powell will appear alongside Treasury Secretary Steven Mnuchin before the Senate Banking Committee to give their quarterly CARES Act report to Congress on Thursday.
Phillip Model Bond Portfolio – Review
Credit Analyst: Timothy Ang
– The Phillip Model Bond Portfolio total return outperformed the benchmark Thomson Reuters/iEdge SFI Corporate Index by 0.05% for the month.
– Given the potential risk of bear steepening as inflation expectations rise, we take comfort that the portfolio is relatively short dated with bonds maturing/calling within 2 to 6 years.
– We maintain the holdings in the portfolio for the month.
HK Reports – Read up on our Hong Kong reports here
RESEARCH VIDEOS
Webinar Of The Week
Market Outlook: (PSR) Sembcorp Industries (Initiation), SG REIT Monthly, Asia Technical Outlook, SG Weekly
Date: 14 September 2020
Updates summarised in 3 minutes
Phillip Research in 3 minutes: #25 – Prime US REIT; Initiation
For more videos on Phillip in 3 Mins
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