Daily Morning Note – 24 June 2021

PHILLIP SUMMARY

Asian stocks looked set to dip Thursday after U.S. shares moved in narrow ranges as traders digested commentary from Federal Reserve officials and the outlook for stimulus. Treasuries retreated.

Equity futures fell in Japan and Australia and were little changed in Hong Kong. In the U.S., firms that benefit from economic reopening — such as retailers and financials — outperformed but overall the S&P 500 edged lower. A rally in Tesla Inc. helped the Nasdaq Composite eke out a record.

Dallas Fed President Robert Kaplan, who’s penciled in a rate hike next year, said the economy will likely meet the Fed’s threshold for tapering asset purchases sooner than people think. His Atlanta counterpart Raphael Bostic said the central bank could decide to slow such purchases in the next few months.

The dollar was little changed, while the yen slumped in part as the rebound from the pandemic dents the allure of haven currencies. The China open will be in the spotlight later after a report that the U.S. is poised to bar some solar products made in the Xinjiang region over alleged human rights abuses.


BREAKING NEWS

SG News

A sale and purchase agreement relating to the proposed acquisition of a property in Malaysia has lapsed, said Mapletree Logistics Trust (MLT) on Wednesday, adding that the Reit’s manager remains keen on the acquisition and will continue to work to get the necessary approvals. The proposed acquisition of Mapletree Logistics Hub – Tanjung Pelepas in Johor – is subject to, among other things, the vendor obtaining the written approvals of the Johor Port Authority and Pelabuhan Tanjung Pelepas, which is the sub-lessor of the property. “Given the impact of the Covid-19 situation in Malaysia, it has taken more time than expected for the written approvals to be obtained,” said MLT. “The manager remains keen on the proposed acquisition of the Malaysia property and will continue to work closely with the vendor as well as the Johor Port Authority and Pelabuhan Tanjung Pelepas to obtain the necessary approvals.”.

Canned-food brand Del Monte Pacific” on Wednesday posted net profit of US$14.5 million for the fourth fiscal quarter ended April, reversing from a net loss of US$12.4 million in the corresponding quarter last year. This pushed the company’s net profit for the full year up to US$63.3 million, turning around from a net loss of US$81.4 million in FY 2020. Earnings per share for the quarter stood at 0.49 US cent, compared to a loss per share of 0.89 US cent last year. Del Monte’s board of directors have approved a final dividend of 1.2 US cent per ordinary share for FY 2021, representing 37 per cent of the group’s net profit for the fiscal year.

DBS has completed Singapore’s first export financing transaction referencing the US dollar (USD) Secured Overnight Financing Rate (SOFR) with food and agri-business, Bunge, the bank announced on Wednesday. The transaction, worth US$25 million, was priced off SOFR averages and represents a significant milestone as the industry transitions away from the Ibor (Interbank Offered Rate). The bank said this would enable clients to transition their trade financing instruments away from the USD Libor (London Interbank Offered Rate), ahead of the December 2021 cessation guidance issued by the Federal Reserve Board, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation. DBS’s group head of institutional banking Tan Su Shan noted that the bank has been engaging institutional clients to shift them towards alternative Risk-Free Benchmark Rates (RFRs).

Investors in Singapore can access SPDR Gold Shares in local currency when the exchange-traded fund (ETF) starts trading in a secondary currency on June 30 under the stock code GSD. The fund, which is backed by physical gold and tracks the price of the yellow metal, first listed in Singapore in 2006 in US dollars under the stock code O87. It was the most traded ETF on the Singapore Exchange in 2020, with a trading volume of S$1.63 billion. The ETF has an expense ratio of 0.4 per cent per annum and allows investors to access the gold market in a more cost-efficient manner compared to getting physical bullion, State Street Global Advisors said in a press statement on Tuesday.

HG Exchange (HGX) has graduated from the Monetary Authority of Singapore (MAS) FinTech Regulatory Sandbox with a Recognised Market Operator (RMO) licence, it said in a press statement on Wednesday. With the RMO licence, HGX can now support the issuance and trading of both digital and non-digital capital market products. The member-driven private securities exchange entered MAS’s fintech regulatory sandbox in June last year to test a marketplace for private-company shares. It then began trading three months later.


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

TECHNICAL PULSE

UMS Holdings Ltd

Analyst: Chua Wei Ren

Recommended Action: Technical BUY

UMS Holdings LTD (SGX: 558) bullish upside is still going strong despite prices had a sudden bearish correction which cause a stop out based on the report on 27th April 2021. Despite that, technical indicate that the bullish upside is set to continue

JAPFA Ltd

Analyst: Chua Wei Ren

Recommended Action: Technical BUY

JAPFA LTD (SGX: UD2) has embarked on a long corrective phase after failed attempts to rally higher based on past two reports dated March 31st and 2nd Feb 2021. Based on the wave theory, Japfa is on a triple three corrective wave

URaffles Medical Group Ltd

Analyst: Chua Wei Ren

Recommended Action: Technical BUY

Raffles Medical Group LTD (SGX: BSL) bullish upside has been going strong although in May it had a dipped, the bullish momentum rebounded strongly at support zone 2 at $0.996-$1.102. Technical further indicate a strong continuation to the upside:

>> Read more technical reports

RESEARCH REPORTS

Phillip Model Bond Portfolio – Ceasing coverage

Credit Analyst: Timothy Ang

– Our Phillip model bond portfolio has returned 4.72% since our last update in October 2020, outperforming the benchmark index by 3.9% within the 8-month period and by 6.1% on an annual basis.

– We are ceasing coverage of our model bond portfolio to reallocate our research resources.

>> Read more research reports

HK Reports – Read up on our Hong Kong reports here

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Date: 22 June 2021

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