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
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.
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
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