Daily Morning Note – 22 March 2022

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PHILLIP SUMMARY

SINGAPORE shares started the week higher on Monday (Mar 21) after Wall Street posted strong gains on Friday, as talks between US President Joe Biden and Chinese President Xi Jinping over the Ukraine crisis ended without big surprises. The Straits Times Index (STI) rose 0.5 per cent or 16.75 points to 3,347.38 as at 9.01 am. Gainers outnumbered losers 99 to 26 after 104.2 million securities worth S$68.8 million changed hands. Mapletree North Asia Commercial Trust (MNACT) and Mapletree Commercial Trust (MCT) were among the most actively traded counters by volume, with 11.2 million units of MNACT and 2.2 million units of MCT transacted.

Wall Street stocks retreated on Monday, ending last week’s rally as oil prices pushed higher and the Federal Reserve’s top official delivered hawkish comments on inflation. Remarks from Baltic states favoring an embargo on Russian oil and gas helped push crude prices further above US$100 a barrel as analysts see evidence that some petroleum buyers are already “self-sanctioning” and avoiding Russian oil. Fed Chair Jerome Powell said the US central bank is prepared to raise interest rates by bigger steps than the quarter-point hike announced last week if that is what’s needed to contain “much too high” inflation. Stocks weakened after Powell’s remarks, with some observers viewing them as more hawkish than his statements at last week’s news conference. The Dow Jones Industrial Average finished down 0.6 per cent at 34,552.99. The broad-based S&P 500 slipped less than 0.1 per cent to 4,461.18, while the tech-rich Nasdaq Composite Index dropped 0.4 per cent to 13,838.46.


Top gainers & losers

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BREAKING NEWS


SG

The managers of ESR-Reit and Ara Logos Logistics Trust (ALog Trust) must surely be heaving huge sighs of relief. After a series of speed bumps, the managers of the 2 real estate investment trusts (Reits) have finally gotten the nod of approval by their respective unitholders to go ahead with the merger to form ESR-Logos Reit (E-Log Reit). At its extraordinary general meeting (EGM) at 10 am on Monday (Mar 21), unitholders of ESR-Reit voted overwhelmingly in favour of the merger. Some 98.6 per cent of unitholders voted in favour of the merger, and 98.4 per cent agreed to the issuance of new ESR-Reit units to ALog Trust unitholders at an issue price of S$0.4924 apiece as part of the consideration of the merger.

KEPPEL DC Singapore 1, the master lessee at one of Keppel DC Reit’s data centres in Serangoon North, has commenced legal proceedings against tenant DXC Technology Services Singapore (DXC) over the latter’s partial default of payment in relation to colocation services provided at the centre. The amount being disputed is approximately S$14.8 million for the 4-year period between Apr 1, 2021 and Mar 31, 2025, the real estate investment trust (Reit) manager said in a bourse filing on Monday (Mar 21). DXC has disputed their liability to make payment. The tenant occupies about 0.4 per cent of Keppel DC Reit’s total attributable lettable area as at 31 Dec, 2021, and the impact arising from the disrupted sum per annum is approximately 2 per cent of Keppel DC Reit’s distributable income for the financial year ended Dec 31, 2021. The Reit manager said it does not believe the legal dispute to have a material impact on Keppel DC Reit’s overall financial performance.

The managers of Mapletree Commercial Trust (MCT) and Mapletree North Asia Commercial Trust (MNACT) are now offering MNACT unitholders the option to receive the entire scheme consideration of their proposed merger, of S$1.1949 per unit, wholly in cash. MCT will also make a preferential offering of S$2.0039 per unit to fund the additional cash of up to S$2.2 billion required in the new cash-only option. MNACT and MCT had in December proposed a merger of both real estates investment trust (REITS), a move that has been criticised by unitholders on both sides and questioned by the Securities Investors Association Singapore (Sias). Previously, the proposed trust scheme would see MNACT unitholders receive a scheme consideration of S$1.1949 for each MNACT unit held – either in the form of 0.5963 new MCT units at an issue price of S$2.0039 each, or a combination of 0.5009 consideration units and S$0.1912 in cash.


US

Oil prices settled up more than 7 per cent on Monday, with global benchmark Brent climbing above US$115 a barrel, as European Union nations disagreed on whether to join the United States in a Russian oil embargo after an attack on Saudi oil facilities. Brent futures settled at US$115.62 per barrel, up US$7.69 or 7.12 per cent, while US West Texas Intermediate (WTI) crude futures settled at US$112.12 per barrel, up US$7.42 or 7.09 per cent. Given the uncertainty about the EU’s potential ban of Russian petroleum imports, US petrol futures jumped 5 per cent.

General Motors Co President Mark Reuss said Monday (Mar 21) that the automaker is confident in its 2022 outlook and its plans to accelerate the launch of a new Cadillac electric vehicle, despite intensifying global supply chain risks. The geopolitical risks posed to automotive supply chains by the war in Ukraine are real, he said during a conference call. But GM is managing the pressure, and is pushing ahead with its plans to speed up launches of new electric vehicles such as the Cadillac Lyriq, he said. “We are not new to this game. GM has long-term contracts for materials, and multiple sources of supply. We never have one answer.” Reuss said GM has not changed its 2022 financial outlook, which called for operating profit this year of US$13 billion to US$15 billion, following a record US$14.3 billion in operating profit for 2021.

Meta Platforms CEO Mark Zuckerberg confirmed that the company is working on the technical functionality for users to display their NFTs on Instagram. Zuckerberg also added that users could even “mint” some NFTs within the app moving forwards, according to a Bloomberg report. “We’re working on bringing NFTs to Instagram in the near term,” he said during an interview at the South by Southwest conference on March 15, though declining to share specifics on when and how the feature might work. Meta has been looking into building NFT features into their existing products such as the company’s Novi digital wallet as early as last August, according to former Meta executive David Marcus.

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


POEMS Podcast: Let the Money Talk

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