DAILY MORNING NOTE | 22 January 2024

Trades Initiated in the past week


Week 4 Equity Strategy: Last week there was notable optimism over AI-related hardware stocks, with TSMC’s revenue guidance of low to mid-20% growth for 2024. Bulk of the growth comes from high performance computing (or AI). The upbeat news was followed by Supermicro (AI computer server) raising its December quarter sales guidance by around 30% to US$3.6bn-3.65bn. The Nvidia’s share price reached record levels. We believe the impact on Singapore semiconductor stocks, which are more reliant on equipment sales, may be more restrained. TSMC capex guidance for 2024 was largely unchanged at US$28bn-32bn (2023: $30bn). Nevertheless, the positive sentiment on the semiconductor sector will keep valuations elevated.

Shifting to other corporate news, the delay in Thailand’s government Bt500bn digital scheme will be a near-term negative for Thai Beverage. Despite a 50% jump in new residential launches in 2023 to around 7600, units sold were down 10%. We expect transaction volumes to be sustained in 2024 with the 11,000 units planned for launch. This 45% surge in new launches is expected to support real estate agencies like PropNex, despite weakening demand momentum. News of EC World’s sponsor obtaining mortgages without the REIT manager’s knowledge was a shock. In China, the legal seal (or stamp), equivalent to a “wet” signature to obtain loans, is tightly safeguarded. It is stored in safes monitored by surveillance cameras. Access to the safe also requires two separate authorised personnel with approval by the legal rep.

In macro news, US retail sales have been surprisingly healthy. December beat forecast with a rise of rise 4.5% YoY. In China, the narrative remains of weak private investment and resilient consumer spending. The private sector is contracting their investments by an unprecedented 5%, especially in real estate. Property sales in China were down 26% YoY in December. Retail sales have been more resilient with a base effect help. In December, retail sales were up 7.4% YoY with auto sales rising 23% to a record 3.15mn units. The resilient consumer spending will only push back expectations of interest rate cuts.

Paul Chew
Head Of Research

Singapore stocks rose with most key bourses in Asia-Pacific on Friday (Jan 19), taking their cue from the better showing in global equity markets overnight. The benchmark index was up 12.51 points or 0.4 per cent to 3,152.29 points for the day, but was 1.2 per cent lower for the week. Key regional indices mostly ended higher on Friday, but not those in mainland China and Hong Kong after the People’s Bank of China announced its decision not to cut interest rates.

Wall Street stocks rallied Friday (Jan 19) , boosted by the tech sector, with the S&P 500 and Dow hitting fresh records. The broad-based S&P 500 advanced 1.2 per cent to close at 4,839.81, surpassing its last all-time high set in 2022. The Dow Jones Industrial Average gained 1.1 per cent at 37,863.80, also reaching new heights, while the tech-heavy Nasdaq Composite Index surged 1.7 per cent to end at 15,310.97.

Top gainers & losers


Events Of The Week



Sales of two projects – Hillhaven in District 23 and freehold development The Arcady at Boon Keng in District 12 were off to a slow start. Hillhaven sold 59 out of 179 units (33%) with prices starting from S$1,903 per square foot. The Arcady sold 51 of its 172 units with prices starting from less than $2,400 per sq ft (psf).

The Ascott Limited, CapitaLand Investment lodging business unit, sees strong potential coming from Japan, a market poised for further growth post-pandemic. Ascott has some 2,900 units in 22 operating properties spanning five cities in Japan. This is more than double the size of its previous portfolio of Japanese properties, before its acquisition of serviced apartment provider Oakwood Worldwide from Mapletree Investments in the second half of 2022.

As part of No Signboard’s annual report release last Friday (Jan 19), the company’s auditor, PKF-CAP, flagged uncertainty over the company’s ability to continue as a going concern. The auditor noted that the company posted a net loss of S$4.7 million for the financial year ended Sep 30, 2022, with net cash outflow from operating activities of S$982,000.

IFAST Corporation has secured in-principle approval from the Securities Commission Malaysia to operate a bond marketplace through its subsidiary Bondsupermart Malaysia.In a bourse filing on Saturday (Jan 20), the company said that Bondsupermart aims to be a “centralised and easily accessible” marketplace to buy and sell bonds.

Reliance Industries, India’s most valuable company, reported third-quarter revenue that missed estimates due to lower price realisation on its refined products and shutdown of units at its refinery. The Mukesh Ambani-led conglomerate said its consolidated revenue from operations rose 3.6 per cent to 2.28 trillion rupees (S$36.8 billion). Analysts had expected revenue of 2.31 billion rupees, according to LSEG data.

At the company’s annual general meeting held last Friday (Jan 19), Jumbo Group’s shareholders approved the renewal of its share buyback mandate. In a bourse filing, the food and beverage player said that it will offer S$0.26 in cash per share to buy back up to 10 per cent of the company’s 643,658,465 shares in issue. The offer represents a 6.1 per cent discount to the average market price of the company’s shares over the last five market days before the offer was announced.


The US dollar edged lower on Friday (Jan 19), pausing after five straight sessions of gains but still poised for a weekly climb, as recent economic data and comments from Federal Reserve officials dampened expectations of rapid cuts in interest rates. Overall index of consumer sentiment came in at 78.8 this month, the highest reading since July 2021, compared with 69.7 in December and the 70.0 estimate of economists polled by Reuters.

Economists project the government’s initial reading of gross domestic product – the sum of goods and services produced – to show an annualised 2 per cent increase, according to the median estimate in a Bloomberg survey. That would follow the 4.9 per cent Q3 advance and mark the strongest back-to-back quarters of growth since 2021.

Russian state news agency RIA said on Sunday (Jan 21) that it had calculated the West stood to lose assets and investments worth at least US$288 billion if it confiscated frozen Russian assets to help rebuild Ukraine, and Moscow then retaliated. After President Vladimir Putin sent forces into Ukraine in February 2022, the US and its allies prohibited transactions with Russia’s central bank and finance ministry, blocking around US$300 billion of sovereign Russian assets in the West.

Swiss industrial supplier ABB fell the most in three months on news that the US Congress is reviewing its relations with China. The main investigation focuses on Shanghai Zhenhua Heavy Industries (ZMPC), according to a letter from Congress, with ABB becoming involved because it is a sub-supplier to the Chinese state-owned manufacturer of container cranes.

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


Singapore REITs Monthly – Rate cut expectations fuelled rally

Recommendation: Overweight (Maintained)

Analyst: Darren Chan

– The S-REITs Index continued to rally 8.9% in December after gaining 6.7% in November, on expectations of interest rate cuts in 2024. The top performer for the month was Prime US REIT (PRIME SP, BUY, TP US$0.37) – it gained 95.1%, while the worst performer was Lippo Malls Indonesia Retail Trust (LMRT SP, non-rated) – it fell 10.5%. The overseas commercial sub-sector was the outperformer in December, gaining 39.7%, lifted by Manulife US REIT’s recapitalisation plan. The worst performing sub-sector was overseas retail – it gained 2.1%, dragged by LMRT after Fitch downgraded its long-term issuer default rating to a ‘C’.

– S-REITs are now trading at a forward dividend yield of c.5.8%, 0.4x s.d. below the mean of 6.1% and a P/NAV of 0.93x, 1.1x s.d. below the mean of 1.03x. Despite the recent rally, we are overweight S-REITs as we enter a monetary easing cycle.

– We remain OVERWEIGHT on S-REITs. We continue to favour REITs with a healthy balance sheet, strong sponsors, and improving operating metrics such as REITs in the hospitality and retail sub-sector. Catalysts are expected from a pick-up in the economy, asset recycling and interest rate cuts. Top picks are CapitaLand Ascott Trust (CLAS SP, BUY, TP S$1.04) and Frasers Centrepoint Trust (FCT SP, ACCUMULATE, TP S$2.29).

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