DAILY MORNING NOTE | 22 June 2022

Stocks in Asia look set for a boost after a bounce in US equities, but the durability of the rebound is in doubt on ever-louder warnings about the risk of an economic downturn. Equity futures rose for Japan and Australia and were steady for Hong Kong after the S&P 500 jumped 2.4%. A gauge of Chinese shares traded in the US also rallied. Sentiment was helped by Joe Biden’s comment that recession isn’t “inevitable” (despite what Musk thinks). Meanwhile, the Japanese yen sank to a new 24-year low against the US dollar — here’s why that’s happened and what it means.

Tokyo stocks opened higher on Wednesday as investors took heart from a strong bounce back on Wall Street following last week’s rout over inflation fears. The benchmark Nikkei 225 index was up 0.67 per cent, or 175.54 points, at 26,421.85 in early trade, while the broader Topix index was up 0.70 per cent, or 13.07 points, at 1,869.27. AFP

 

Top gainers & losers

Factsheets

SG

CapitaLand Investment Limited (CLI) has established its first onshore renminbi fund in China as part of its asset-light strategy to grow its funds under management. The property player holds a 12 per cent stake in the 700 million yuan (S$144 million) fund, in partnership with a domestic asset management company, CLI said on Wednesday (Jun 22). The company also said the fund is acquiring a quality office building in Shanghai “at an attractive price”, where the transaction is expected to be completed in July 2022.

IREIT Global on Tuesday (Jun 21) announced that it has secured a 12-year lease for about 5,300 square metres (sq m) of vacant data centre space at its Sant Cugat Green building in Barcelona, Spain, representing around 20.4 per cent of the property’s total lettable area. The initial annual rent is approximately €0.7 million (S$1 million) and comes with an annual rent indexation based on a 3 per cent margin above the consumer price index in Spain, IReit said. The tenant of the new lease is a joint venture between 2 Spanish companies with operating history in the information technology and power electronics markets. The total lease duration includes a 2-year renovation phase that began on Jun 20 and is rent-free, as well as a break option at the end of the eighth year on Jun 19, 2030.

Singapore state investor GIC and Dutch pension fund APG will acquire a substantial stake in hybrid hospitality brand The Student Hotel (TSH) from asset-management business Aermont Capita, in a move that will value the European student accommodation and hotel group at €2.1 billion (S$3.1 billion). In a joint statement on Tuesday (Jun 21), the parties said that under the deal, APG and TSH’s founder Charlie MacGregor will raise their current stakes in the group. This is GIC’s first investment in TSH. The transaction is, however, subject to approval from the relevant regulatory authorities.

US

Elon Musk has sought to clarify how many Tesla workers will lose their jobs, following the launch of a lawsuit by former employees who claim the automaker breached U.S. labor laws. Musk said Tesla will reduce its salaried workforce by 10% in the next three months, while also growing the number of hourly employees. Layoffs will affect around 3.5% of Tesla’s overall workforce, Musk said, adding the actual amount was “not super material.” Salaried workers account for about two-thirds of Tesla employees, he added.

Kellogg shares jump on plans to separate into three companies. Kellogg plans to separate into three independent public companies, sectioning off its iconic brands into distinct snacking, cereal and plant-based businesses. The company said it is exploring further strategic alternatives, including a potential sale, for its plant-based business. The tax-free spinoffs are expected to be completed by the end of 2023. The announcement Tuesday comes a decade after Kellogg’s $2.7 billion purchase of Pringles, which signaled the company’s shift to focusing on the global snacks business with people increasingly eating more often between meals. Kellogg, along with rivals like Frito-Lay-owner PepsiCo and Oreo-cookie owner Mondelez, have leaned into the trend by introducing more snacks and snapping up smaller brands. On Monday, Mondelez said it is acquiring Clif Bar for $2.9 billion.

Mark Zuckerberg showed these prototype headsets to build support for his $10 billion metaverse bet. The company formerly known as Facebook is going to spend $10 billion this year on research and development on virtual reality and augmented reality technologies. On Monday, Meta CEO Mark Zuckerberg showed off how much progress the social media company has made towards that goal by revealing many of the unfinished headset prototypes the company has built in its labs. If Zuckerberg succeeds in making head-worn computers mainstream, then Meta would have a new revenue stream of hardware sales, and it would control its own hardware platform, which would make it less susceptible to platform changes from other companies. For instance, on its last earnings call, Meta said that recent privacy changes Apple made to the iPhone could cost it $10 billion in foregone revenue this year, as it hampers the company’s ability to target ads to precise audiences.

Blockchain-based payments company Roxe Holdings is nearing a deal to go public through a merger with blank check company Goldenstone Acquisition Ltd at a combined valuation of US$3.65 billion, according to people familiar with the matter. The deal bucks an unfavorable market environment with cryptocurrencies plunging in value and investors largely losing interest in special purpose acquisition companies (SPACs) of this sort partly because of disappointing returns. None of the Roxe investors plans to sell their stakes, the sources said. Goldenstone raised just US$57.5 million in its initial public offering in March this year, a slither of the deal’s value. Roxe investors are also entitled to an earnout for additional shares in the combined company if certain stock price targets are met, according to the sources.

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

Upcoming Webinars

Guest Presentation by Uni-Asia Group Limited

Date: 22 June 2022

Time: 12pm – 1pm

Register: https://bit.ly/3aJjIhD

POEMS Podcast:

Research Videos

Weekly Market Outlook: Singapore REITs Monthly, FOMC Meeting Highlights and SGWeekly
Date: 20 June 2022
Click here for more on Market Outlook.
Sign up for our webinars here, and be among the first to receive economy and market updates.

PHILLIP RESEARCH IN 3 MINS

Phillip Research in 3 minutes: #29 Keppel Corporation; Initiation
Click here for more on Phillip in 3 mins.

JOIN OUR TELEGRAM!

StocksBNB Telegram Channel

Join our Phillip Securities Research Telegram channel for the latest update on our stock coverage!

Disclaimer

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 揳s 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.

Confidentiality Note

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.