Daily Morning Note – 24 May 2019
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YOUR PHILLIP SUMMARY
Narendra Modi strengthened his grip on power, pulling India further to the right. Asia equity futures are poised for a drop after U.S. stocks slid on trade concerns. And Donald Trump said Huawei could become part of a trade deal with China.
Asian equity futures suggest a selloff from the U.S. will continue. U.S. stocks tanked as trade concerns fueled the flight to safety. The Dow lost almost 300 points as Beijing continued to assail the Trump administration’s moves to curb Chinese companies. The dollar dropped against most G-10 peers, with the yen and Swiss franc benefiting the most.
TECHNICAL PULSE
Haw Par Corp Ltd
Current Sentiment: SLIGHTLY BEARISH CORRECTION
As mention last Thursday on the 16th of May, We expected Haw Par to retrace back to the demand zone at 14.00 region and market actually perform than expected despite a strong rejection at the resistance area. However, we believe that the market may be topping out soon as price has reach the Fibonacci extension of 118.0% but the market still has the possibilities to extend to 127.0. The derivation of 118% and 127% extension figures is base on the previous deep market retracement at 88.6% at price 12.99.
RESEARCH REPORT
Golden Energy and Resources Ltd – Mitigating an unfavourable ASP
Recommendation: ACCUMULATE, Last Closing Price: S$0.21
Target Price: S$0.24, Analyst: Chen Guangzhi
– Production volume on-track to meet FY19 target of 25mn tonnes.
– Cash profit slight above US$10/tonne in 1Q19.
– Coal price headwinds dim the outlook.
BREAKING NEWS
US considering duties on countries that undervalue currency: Commerce Department. The US Commerce Department said on Thursday it was proposing a new rule to impose anti-subsidy duties on products from countries that undervalue their currencies against the dollar, another move that could slap higher tariffs on Chinese products. The new rule also could put goods from other countries at risk of higher tariffs, including Japan, South Korea, India, Germany and Switzerland.
‘Good’ chance for China trade deal, could include Huawei: Trump. President Donald Trump said Thursday there is a “good” possibility that Washington and Beijing will strike a bargain ending their trade war, and it could include a settlement over blacklisted telecom firm Huawei. “If we made a deal, I can imagine Huawei being included in some form or some part of a trade deal,” Mr Trump told reporters during an announcement about increased aid to farmers hurt in the trade war with China.
US manufacturing activity growth near 10-year low – Markit. US manufacturing growth sputtered in May, measuring its weakest pace of activity in nearly a decade and new orders fell for the first time since August 2009 as the US-China trade war intensified, data from IHS Markit showed on Thursday. In its “flash” Purchasing Managers Index for May, Markit said its US Manufacturing PMI declined to 50.6 from a final reading of 52.6 in April, marking the lowest level since September 2009. Wall Street economists polled by Reuters had a consensus forecast of 52.5.
Oil plummets, on track for biggest weekly drop in 2019. Oil prices plunged on Thursday, losing about 5 per cent as trade tensions dampened the demand outlook, putting the crude benchmarks on course for their biggest daily and weekly falls in six months. Oil coursed downward with other global markets as concerns grew that the China-US trade conflict was fast turning into a technology cold war between the world’s two largest economies.
Sunpower bags 43.6m yuan contract from Chinese petrochemical firm. Environmental solutions firm Sunpower Group has secured a 43.6 million yuan (S$8.7 million) contract to provide high-efficiency heat exchangers to its repeat customer, Zhejiang Petrochemical Co, the mainboard-listed firm announced on Thursday.
CSC Holdings Q4 losses deepen to S$6.9m on cost overruns. Geotechnical engineering firm CSC Holdings sank further into the red, with losses deepening 20.6 per cent to S$6.9 million for the fourth quarter ended March, the company announced on Thursday. This was partly due to a provision for loss of S$1 million on a project with cost overruns arising from stricter regulatory requirements and unforeseen difficult ground conditions. Meanwhile, revenue for the quarter dipped 0.9 per cent year-on-year to S$74.7 million.
Source: SGX Masnet, The Business Times, Bloomberg, Channel NewsAsia, Reuters, PSR
Clients of Phillip Securities can keep updated with Country Strategy and Singapore Sector Reports by logging into: www.poems.com.sg > STOCKS > Research
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