DAILY MORNING NOTE | 22 June 2023

Singapore stocks gained 0.1 per cent on Wednesday (Jun 21), despite US stocks sliding in the overnight session. Sembcorp Industries was the top gainer, up 4.5 per cent or S$0.23 to S$5.38. Keppel Corporation also made strides, ending the day up 1.5 per cent or S$0.10 to S$6.70. The three local banks were mixed at market close. DBS was up 0.6 per cent or S$0.20 to S$31.35; UOB finished the day at S$27.99, up 0.3 per cent or S$0.09. However, OCBC dipped 0.4 per cent or S$0.05 to S$12.51.

Wall Street stocks fell for a third straight session on Wednesday (Jun 21) as markets took in hawkish Federal Reserve commentary. The Dow Jones Industrial Average shed 0.3 per cent to 33,951.52. The broad-based S&P 500 declined 0.5 per cent to 4,365.69, while the tech-rich Nasdaq Composite Index dropped 1.2 per cent to 13,502.20.

SG

The Monetary Authority of Singapore (MAS) has imposed composition penalties amounting to S$3.8 million on DBS, OCBC, Citibank and insurer Swiss Life (Singapore) for breaching its anti-money laundering and countering the financing of terrorism requirements. On Wednesday (Jun 21), MAS said the breaches were identified during its examinations following news of irregularities in German payments provider Wirecard’s financial statements, and the alleged involvement of Singapore-based individuals and entities in the matter. Of the four financial institutions, DBS was imposed the largest composition penalty – amounting to S$2.6 million – for breaches between July 2015 and February 2020, in relation to the accounts of 11 corporate customers.

GIC is seeking to increase its exposure to US-focused funds via venture capital funds and technology companies. GIC’s funding in venture capital groups also comes despite a drop in venture capital funding. GIC’s interest in the US comes in contrast to its investments in China, which have been slowing down. GIC signed 63 deals that involved US-based private companies in 2022 and 2021, 61.5% higher than the 39 deals that were signed in 2019 and 2018 while making two direct investments in Chinese companies in 2022, down from the 16 deals in 2021.

The holders of Astrea V private equity (PE) bonds will receive semi-annual interest payments ranging from 3.85 per cent to 5.75 per cent per annum in the latest distribution, said Azalea Investment Management. It added that Class A bonds have been fully reserved a year ahead of schedule. A report by Azalea published on Tuesday (Jun 20) on its eighth semi-annual distribution said holders of Class A-1 bonds would receive 3.85 per cent per annum in semi-annual interest, while those holding Class A-2 would receive 4.5 per cent per annum and Class B, 5.75 per cent per annum. Astrea private equity bonds are asset-backed securities backed by cash flows from PE Funds invested by Azalea. The company is a wholly-owned subsidiary of Seviora, and indirectly owned by Temasek.

Certificate of Entitlement (COE) prices for June’s second round of bidding ended with stable, mixed results for all categories, although the premium car category, Category B, hit a record high of S$121,000. COE prices for Category A, the category for mainstream cars with engines up to 1,600cc in capacity and with less than 97 kilowatts of output, fell 1.8 per cent or S$1,795 to S$96,206. Prices for Category B, the category for cars with engines of more than 1,600cc in capacity or with more than 97 kilowatts of output, increased 0.3 per cent or S$298 to S$121,000, a new record for the category. Prices for Category C, applicable to commercial vehicles, increased 1.6 per cent or S$1,339 to S$83,140. Prices for Category D, used for motorcycles, fell 2.7 per cent or S$292 to S$10,709. Category E, the open category which can be used to register any motor vehicle except motorcycles, increased by 1.8 per cent or S$2,111 to S$123,000.

US

Federal Reserve Chairman Jerome Powell on Wednesday affirmed that more interest rate increases are likely ahead until additional progress is made on bringing down inflation. Speaking a week after Federal Open Market Committee officials decided for the first time in more than a year not to push rates higher, the central bank leader indicated that the move likely was just a brief respite rather than an indication that the Fed is done hiking. “Nearly all FOMC participants expect that it will be appropriate to raise interest rates somewhat further by the end of the year,” Powell said in prepared remarks for testimony he will deliver to the House Financial Services Committee.

The Federal Trade Commission sued Amazon.com on Wednesday, alleging the retail giant worked for years to enroll consumers without consent into Amazon Prime and made it difficult to cancel their subscriptions to the program. The FTC’s complaint, filed in federal court in Seattle, alleged that Amazon has duped millions of consumers into enrolling in Amazon Prime, a subscription service costing $139 annually. The FTC’s complaint alleged that Amazon used “manipulative, coercive, or deceptive user interface designs known as dark patterns” to dupe users into automatically renewing Prime subscriptions. “Amazon leadership slowed or rejected changes that would’ve made it easier for users to cancel Prime because those changes adversely affected Amazon’s bottom line,” the FTC added.

Microsoft on Wednesday (Jun 21) introduced a new computing service aimed at helping chemical companies speed up the research and development of new materials. Azure Quantum Elements, as the service is called, relies on computing power to help chemical companies simulate huge numbers of possible combinations of atoms. The point is to use computers to explore possible new materials virtually and then simulate how those materials would interact with the real world. The new offering uses a combination of existing quantum computers, artificial intelligence and conventional high-performance computing systems. In a press release, Microsoft said that the system has helped some early customers speed up their development processes by as much as six months. Microsoft said that BASF, AkzoNobel, AspenTech, Johnson Matthey, SCGC and 1910 Genetics have been testing the system.

Alphabet’s Google must pay patent holding company Personal Audio US$15.1 million for infringing two patents related to audio software, a Delaware federal jury said in a verdict made public on Wednesday (Jun 21). Personal Audio had argued that Google’s music app Google Play Music featured playlist downloading, navigation and editing features that violated its patent rights. The jury also said that Google infringed the patents wilfully, which could lead to a judge increasing the award by up to three times the verdict amount.

Intel said on Wednesday (Jun 21) it would sell one-fifth of its stake in IMS Nanofabrication to private equity firm Bain Capital in a deal valuing the Austrian producer of chipmaking tools at about US$4.3 billion. Intel’s stake sale of 20 per cent was valued at US$860 million. IMS, which was acquired by Intel in 2015, makes equipment that are critical for companies that make chips. It has delivered a significant return on investment to Intel while growing its workforce and production capacity by four times. Bain Capital’s investment in IMS will put it in a position to capture significant market share for its tools that are being widely adopted by chipmakers, Intel said.

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

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