Daily Morning Note – 23 June 2021


Asian stocks are set for a steady open Wednesday after reassuring comments on inflation and supportive monetary policy from Federal Reserve officials. The dollar and Treasury yields dropped. Futures were little changed in Japan and Australia, and rose in Hong Kong. The S&P 500 climbed a second day as Chair Jerome Powell reiterated his views that inflation pressures will be transitory even after a notable increase in recent months. U.S. equity contracts edged up in early trading. Oil traded around $73 a barrel after an industry report pointed to another decline in U.S. crude stockpiles. Bitcoin rebounded from a tumble below $30,000.


SG News

Cromwell European Reit (Cromwell E-Reit) has agreed to sell its Parc de Popey asset for 5.8 million euros (S$9.3 million) in cash to an affiliate of “one of Europe’s leading boutique real estate investment funds”, according to its manager. In a filing on Tuesday morning, the manager said the sale comes at a 53 per cent premium to the Reit’s initial public offering purchase price. The consideration is one million euros or about 21 per cent higher than the property’s latest valuation at 4.8 million euros, based on the independent valuation conducted by Savills Advisory Services as at Dec 31, 2020. Located at 5 Chemin de Popey in Bar-le-Duc, France, the non-core asset of the Reit was built in 1995 and is situated at the entrance of Bar-le-Duc within the extension of the main business district. It is located in the centre of the “Grand Est” region in the east of France, approximately 75 kilometres from Nancy, Metz and Reims.

Silkroad Nickel and its wholly-owned unit FE Resources (FER) has entered into a subscription agreement with GFL International Co – a wholly-owned subsidiary of Ganfeng Lithium Co – that will see GFL subscribing for US$15 million in exchangeable bonds. The bonds have an interest rate of 7 per cent per year and a maturity date of three years from the date of issuance. GFL will also have the right to exchange all of the bonds for a 25 per cent stake in FER during a stipulated time frame. In addition, FER has granted GFL an option to purchase newly-alloted shares in FER at an option price of US$15 million, though the option may only be exercised in conjunction with the exchange. If both are exercised, this would result in GFL owning 50 per cent of the total enlarged issued share capital of FER.

French specialty materials manufacturer Arkema announced on Tuesday that its new plant on Jurong Island is in the final stages of construction. Upon completion, it is estimated that a few hundred new jobs will be created in Singapore, including a mix of the high-skilled roles in manufacturing, processes and plant maintenance as well as opportunities in finance, supply chain, and more, said Arkema in a press release. The plant, set to open in the first half of 2022, will manufacture the company’s flagship Rilsan Polyamide 11 as well as other specialty materials, helping boost its global supply capacity by 50 per cent.

Learning solutions firm Alpha DX Group on Tuesday announced that it has entered into a non-binding memorandum of understanding (MOU) with DiDi Investments to acquire its Japan-based private higher education institution, DiDi Academy. Through the agreement, students of DiDi Academy in Japan will be able to enrol in courses including full bachelor and master degrees directly from its overseas partner universities through a universal learning platform by 2023, without needing to leave the country, said the group in a stock exchange filing. Chief executive officer of Alpha DX Daiji Yamada said: “Through this acquisition, Alpha DX is looking to accelerate its business plans to expand its academic and digital transformation service offerings in the Japanese market.”

The outlook for Olam International looks positive as countries around the world see a “sharp snapback” from the worst stage of the pandemic and commodity prices stay firm, said chief executive Sunny Verghese on Tuesday. Addressing media and analysts at a briefing to discuss a rights issue as well as a financial update for the first fiscal quarter ended March, Mr Verghese said “growing and recovering demand and tight commodity supply” have led to elevated commodity prices. But the rate of recoveries across Olam’s key markets has been uneven. China, Japan and the US, for instance, have recovered strongly. But the company is bracing for a “slightly more patchy” recovery in certain countries in South Asia, such as India and Bangladesh.

Grab and Hyundai Motor Group will launch new pilot programmes in Singapore, Indonesia and Vietnam to encourage adoption of electric vehicles (EVs) among Grab drivers and delivery persons, both companies announced in a Tuesday press statement. The aim is to lower the barrier to entry for EV adoption in South-east Asia, as well as reduce “range anxiety”, or the fear that EVs have inadequate range to reach a destination. The pilots will test new EV business models, such as battery and car leasing arrangements. EV financing options will also be tailored to Grab’s drivers and delivery persons. Grab and Hyundai will also conduct a feasibility study on the barriers to wider EV ownership and adoption, and develop a joint roadmap to make EVs more viable for on-demand services.

US News

The European Union’s top court on Tuesday ruled that Google’s YouTube and other online platforms should not be held liable for copyright-infringing uploads in certain situations. As things stand, online platforms “do not, in principle, themselves make a communication to the public of copyright-protected content illegally posted online by users of those platforms,” the European Court of Justice said. However, YouTube and other platforms could still be held liable if it “has specific knowledge that protected content is available illegally on its platform and refrains from expeditiously deleting it or blocking access to it,” the ECJ added.

The first day of Amazon’s 48-hour Prime Day event is expected to have driven the most online sales over a 24-hour period so far this year, according to new data released Tuesday. Sales during the first 24 hours of Amazon’s megasale, which kicked off at 3 a.m. ET on Monday, are set to surpass $5.6 billion, representing 8.7% growth year over year, according to an index tracked by Adobe Analytics, which looks at more than 1 trillion visits to U.S. retail sites and over 100 million items across 18 product categories. Monday’s spending also surpassed the $5.1 billion that consumers spent online over Thanksgiving Day last year, Adobe said.

The slump for bitcoin intensified on Tuesday as the leading cryptocurrency fell below the key $30,000 level and turned negative for 2021. At its low of the day, Bitcoin fell more than 11% to about $28,911, below the $29,026 level where it ended 2020, according to Coin Metrics.The cryptocurrency was last down more than 9% to $29,410.30, according to Coin Metrics. Technical analysts had been watching the $30,000 level as a key support level on the charts after the cryptocurrency had fallen to near that low during its May crash. The analysts, who study charts to make buying and selling decisions, believe the next level to watch for support could now be as low as $20,000.

U.S.-headquartered semiconductor manufacturer GlobalFoundries announced Tuesday that it will build a new fabrication plant in Singapore to meet the unprecedented global demand for chips. The new facility will be developed in partnership with the Singapore Economic Development Board and with co-investments from committed customers, GlobalFoundries said. More than $4 billion will be invested into the development, according to the company. “Our new facility in Singapore will support fast-growing end-markets in the automotive, 5G mobility and secure device segments with long-term customer agreements already in place,” GlobalFoundries CEO Tom Caulfield said in a statement. A global shortage of semiconductor microchips is causing havoc, delaying car production and affecting operations at some of the largest consumer electronics manufacturers.

Sales of existing homes dropped for the fourth straight month due to a very low supply of homes on the market. Existing home sales fell 0.9% in May from the previous month to a seasonally adjusted annualized rate of 5.8 million units, according to the National Association of Realtors. That is the fourth straight month of declines. The 5.8 million rate is modestly above pre-pandemic levels. Sales were 44.6% higher from the same period a year ago, but that comparison is skewed massively given that the housing market basically shut down for about two months at the start of the pandemic. The market then rebounded dramatically last summer and remained strong for all of last year.

French media group Vivendi has won the backing of shareholders for its proposed spin-off of crown jewel Universal Music Group. During a shareholder meeting Tuesday, investors overwhelmingly backed the proposal — which would see the world’s largest music label complete its listing on the Euronext Amsterdam in late September. The proposal involves distribution of 60% of UMG’s share capital to shareholders through the public listing in Amsterdam. The crucial vote came after billionaire investor Bill Ackman’s SPAC Pershing Square Tontine Holdings signed a deal to buy 10% of UMG for around $4 billion. The deal, announced over the weekend, gave UMG an enterprise value of 35 billion euros ($41.55 billion) for 100% of its share capital. A consortium led by Chinese titan Tencent Holdings already owns a 20% equity stake in the group. UMG accounts for around three-quarters of Vivendi’s profits.

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

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