Daily Morning Note – 22 October 2021
Asian stocks looked set for a mixed start and U.S. futures dipped amid some disappointment over earnings and as a China Evergrande Group payment deadline looms. Treasury yields rose on inflation worries.
Australian shares slipped Friday, while futures slid for Japan and climbed for Hong Kong. The S&P 500 edged up to a record but the mood soured after the cash session when Snap Inc. — owner of the Snapchat app — tumbled on a tempered earnings outlook, hurting other technology shares in late trading. Nasdaq 100 and S&P 500 futures fell, with the former underperforming.
Treasury yields advanced as traders ramped up expectations for the pace of Federal Reserve tightening to fight price pressures stoked by pandemic-era supply chain snarls. Market-implied expectations for U.S. inflation for the next half-decade surged to the highest in about 15 years. The dollar held a climb.
Sabana Industrial Reit (Sabana Reit) logged a portfolio occupancy of 85.3 per cent as of Sept 30, the highest level since early 2018, its manager announced in a quarterly business update on Thursday (Oct 21) evening. The Reit, which removed its Shari’ah compliance status as of Thursday, has also named a new chief financial officer, Lim Wei Huang and head of real estate, Jessica Yap Pui Ling. Their appointments take effect on Nov 1. The three-year high in occupancy was mainly due to the Reit’s multi-tenanted properties, where the occupancy rate stands at 90.7 per cent, the highest in nearly eight years. Its new lifestyle mall NTP+, located in New Tech Park in Lorong Chuan, has also attained full occupancy since opening in Q2.
Online takeaway delivery firm Foodpanda is partnering with Indian virtual kitchen company Rebel Foods to roll out the latter’s virtual restaurant brands at 2,000 outlets across 10 Asian countries, Foodpanda’s chief operating officer (COO) said. “Foodpanda is Asia’s largest food delivery company … while Rebel Foods is the largest virtual brands operator in the world,” said COO Pedram Assadi. “This is the largest virtual food brand partnership of its kind.” Under the deal, Foodpanda, which is owned by Berlin-based Delivery Hero, has recruited and trained hundreds of outlets to franchise the global restaurant brands created by Rebel Foods and offer their food on its platform. Mumbai-based Rebel Foods, which offers multiple cloud kitchen brands across countries including India and the United Arab Emirates, raised US$175 million this month at a US$1.4 billion valuation. It plans to launch an initial public offering IPO in the next two years.
Grab Financial Group (GFG), the financial services arm of Grab, is expanding its merchant services, including offering more “buy now pay later” (BNPL) options. It has inked new partnerships with payment gateways, 2C2P, Razer Merchant Services and iPay88 among others to increase merchant adoption of its BNPL service, PayLater. “In the 5 months after enabling PayLater, we have had a 3X increase in our monthly average TPV and monthly transactions on GrabPay,” said Toh Teck Oon, director, Megafurniture. The BNPL space is highly competitive, with GFG pitting itself against other pure-play BNPL players such as Atome, Hoolah, Pace and Rely. These players haven’t been idle either, with Atome inking a US$500 million financing deal earlier in October.
DBS and Standard Chartered (StanChart) are among the lenders planning to bid for Citigroup consumer banking assets in Asia as the US lender divests units across 5 markets in the region. Binding bids for Citigroup’s retail assets in Indonesia, the Philippines, Taiwan and Thailand are due on Friday (Oct 22), while offers for the India unit are due next week, said people familiar with the matter, who asked not to be named. The sales offer the buyers a chance to scale up high-end credit card and wealth businesses – whose appeal to banks lies primarily in their high fees rather than interest income – in regions that no longer fit in Citigroup’s refreshed strategy.
The number of Americans filing new claims for unemployment benefits dropped to a 19-month low last week, pointing to a tightening labour market, though a shortage of workers could keep the pace of hiring moderate in October. Initial claims for state unemployment benefits fell 6,000 to a seasonally adjusted 290,000 for the week ended Oct 16, the Labor Department said on Thursday (Oct 21). That was lowest level since the middle of March in 2020, when the nation was in the early stage of the Covid-19 pandemic. It was also the second straight week that claims remained below 300,000 as employers hold on to workers in the face of an acute labour shortage. Economists polled by Reuters had forecast 300,000 claims for the latest week. Claims have declined from a record high of 6.149 million in early April 2020. A 250,000-300,000 range for claims is seen as consistent with a healthy labor market.
Gold prices inched up on Thursday (Oct 21), extending gains into a third session as a softer dollar made the metal cheaper for buyers holding other currencies. Spot gold rose 0.2 per cent to US$1,784.96 per ounce by 1.46 am GMT. US gold futures were little changed at US$1,784.60. Bullion prices have traded between US$1,759 and US$1,788 this week. A weaker dollar on Thursday kept the metal close to the higher end of this range. Two US Federal Reserve officials said on Wednesday (Oct 20) while the central bank should begin winding down its stimulus measures, it was too soon for interest rate hikes.
Oil tumbled on Thursday as a forecast for a warm US winter put the brakes on a rally that drove prices to a three-year high above US$86 a barrel early in the session on tight supply and a global energy crunch. Winter weather in much of the United States is expected to be warmer than average, according to a National Oceanic and Atmospheric Administration released Thursday morning. “The report, indicating drier and warmer conditions across the southern and eastern US, is putting pressure on the complex,” said Bob Yawger, director of energy futures at Mizuho. Brent crude fell US$1.21 to US$84.61, after reaching a session high of US$86.10, highest since October 2018. US West Texas Intermediate crude settled down 92 cents to US$82.50.
The US Federal Reserve on Thursday announced stricter investment rules for central banker officials following recent controversies over trading activities. The rules would prohibit Fed officials holding individual stocks, prohibit trading during times of unusual market stress, require pre-approval of trades, and more frequent disclosure of trading activity to “help guard against even the appearance of any conflict of interest,” the Fed said. “These tough new rules raise the bar high in order to assure the public we serve that all of our senior officials maintain a single-minded focus on the public mission of the Federal Reserve,” Fed Chair Jerome Powell said in a statement.
Source: SGX Masnet, The Business Times, Bloomberg, Channel NewsAsia, Reuters, CNBC, PSR
Technical pulse: Thai Beverage PCL
Recommended: Technical BUY; Analyst: Chua Wei Ren
Thai Beverage (US: Y92) has finally seen some light at the end of the tunnel after technical has shown promising signals to the upside
Buy stop: 0.710 Stop loss: 0.670 Take profit 1: 0.790 Take profit : 0.830
Technical pulse: China Shenhua Energy Co ltd
Recommended: Technical BUY; Analyst: Chua Wei Ren
China Shenhua Energy (HKEX: 1088) technical price action sees a potential rebound to the upside after a short-term consolidation from Mid-September to present
Buy spot: 18.62 Stop loss: 15.70 Take profit 1: 24.40 Take profit : 25.88
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Date: 18 October 2021
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