Daily Morning Note – 24 Aug 2020
Stock futures climbed slightly higher in overnight trading on Sunday as Wall Street tries to build on a record-setting week.
Futures on the Dow Jones Industrial Average rose about 70 points, indicating a 60-point gain at Monday’s open. The S&P 500 futures and the Nasdaq 100 futures gained 0.1% each.
An unstoppable rally in major technology shares last week pushed the S&P 500 to levels above its previous record set before the pandemic. The broad equity benchmark posted its fourth straight positive week and closed at a fresh record on Friday.
Apple jumped more than 8% last week ahead of its 4-for-1 stock split, bringing its 2020 gains to nearly 70%.
TikTok said on Saturday it plans to file a lawsuit on Monday against President Donald Trump’s executive order prohibiting transactions with the popular short video app and its Chinese parent ByteDance, confirming an earlier Reuters report. Reuters exclusively reported on Friday that TikTok would challenge Trump’s executive order as early as Monday.
Apple on Saturday reversed course on a decision to force popular blogging platform WordPress to add in-app purchases to its app, a move that could help lessen tensions between Apple and developers amid a public battle with Epic Games.
China has approved a wealth management joint venture between US asset manager BlackRock, Singapore state investor Temasek Holdings and China Construction Bank (CCB), as China gradually opens up its financial sector to international firms.
ETFs backed by physical gold and silver accumulated more than US$50 billion of bullion this year. ETFs now hold more gold than every central bank with the exception of the Federal Reserve.
Oil producers on Saturday shut 13 per cent of crude oil production ahead of tropical storms Laura and Marco that are forecast to grind up the Gulf of Mexico in coming days, US government data showed.
Swee Hong has received the notification of delisting, after failing to meet the required financial criteria and market capitalisation to be removed from the watch list.
Source: SGX Masnet, The Business Times, Bloomberg, Channel NewsAsia, Reuters, PSR
Technical Analysis: Singapore Stocks – Further downside attributed to weak demand momentum
Analyst: Chua Wei Ren
– Singapore’s stock market return to the downside on Friday despite an upside last week.
– Technical suggest that the STI will continue weaken further below 2,500 points.
– Despite a fresh $8 Billion support measures, the market did not receive well and it continue the direction of the bearish trend. Geopolitical issue such as the trade war continues to pose a threat to the region.
– Wilmar, Mapletree Industrial, Sheng Siong and SATS all have updated outlook after fresh technicals pointing out to a renewed technical action ahead.
Technical Pulse: Home Depot Inc
Analyst: Chua Wei Ren
Recommendation: Technical BUY
Home Depot Inc (US: HD) spectacular rise has strengthened the bullish case for a wave ((3)) extension. Based on recent price action, Home Depot is eyeing a new high.
Singapore REITs Monthly – Calmer waters
Recommendation: OVERWEIGHT (Maintained), Analyst: Natalie Ong
– FTSE S-REIT Index down 7.1% YTD, outperforming the STI (-18.9% YTD). Strongest gains MoM were from the industrial subsector (+3.1%) and weakest performance at the hospitality subsector (-6.9%).
– Sector yield spread of 456bps over the benchmark 10-year SGS (10YSGS) yield was at the +0.3 standard deviation (SD) level.
– Remain OVERWEIGHT on SREITs sector. Sub-sector preference: Office and Industrial.
Singapore Banking Monthly – First steps to recovery
Recommendation: Neutral (Maintained), Analyst: Tay Wee Kuang
– Banks announced record-low NIMs in 2Q20 as deposits inflow and lag deposit pricing weigh in. NIM expected to recover slightly in subsequent quarters.
– Loans growth turn negative for the first time since 2016 to decline 0.98% YoY, as business loans grow at slowest pace in 4 years (+0.55% YoY).
– Dividend cap from MAS see banks’ dividend yields fall to 3 – 4%. Savings by banks will reduce impact on CET-1 ratios by 0.2 – 0.4%.
– Maintain the Singapore Banking Sector at NEUTRAL. Reserves built up by banks in 2Q20 is well within guidance of credit cost over the next two years. Recovery in business will benefit non-interest incomes as banks are likely to be past troughs in income levels.
Dasin Retail Trust – Recovery to lend support to leasing
Recommendation: ACCUMULATE (Maintained), Last Done: S$0.82
Target Price: S$0.91, Analyst: Natalie Ong
– 1H20 NPI and DPU beat our estimates, coming in 5.2% and 9.2% above our estimates, due to the higher NPI margins of and post-AEI rental income of Xiaolan Metro Mall.
– Turnover rent recovered to 90.4% of 4Q19’s average, lends confidence for the remaining 13.5% in expiring leases (by GRI).
– Maintain ACCUMULATE with an unchanged TP of S$0.91.
SG Bonds Weekly – Week 35
Credit Analyst: Timothy Ang
– Asia bond markets retreated slightly last week with USD investment grade bond index spreads widening 2.1bps or 1.29% WoW.
– This week, markets are awaiting the Kansas Fed Annual Policy Symposium at Jackson Hole on 27-28 August as Fed Chairman Jerome Powell will speak on the Fed’s policy framework review.
– Fixed-for-life perpetual bonds new issuance saw high demand. The bond structure could help ease current investor adversity to perpetual bond non-call risk.
HK Reports – Read up on our Hong Kong reports here
Webinar Of The Week
Date: 17 August 2020
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