Daily Morning Note – 24 May 2021
Stocks in Asia are set to start the week mixed amid volatile trading in high-risk assets such as Bitcoin and ongoing concerns about the outlook for inflation. Currencies were steady in early trading. On Friday, the S&P 500 closed little changed after erasing earlier gains, while the tech-heavy Nasdaq 100 finished lower. Futures edged higher in Japan and were modestly lower in Australia and Hong Kong. U.S. futures opened little changed and oil edged higher.
Asia Pacific News
The veteran JPMorgan Chase & Co banker who’s taking the helm at Hong Kong’s exchange has been put on cleanup duty. Chairman Laura Cha has handed Nicolas Aguzin, who takes charge on Monday, the task of reviewing the exchange’s practices after a bribery scandal and censure from the regulator, according to people familiar with the matter.
The liquidators of failed oil trader Hin Leong Trading (HLT) have scored a win in their bid to recoup mega bucks from scandal-hit businessman Lim Oon Kuin and his children. The Singapore High Court last Friday issued an oral judgment in favour of the liquidators’ application for a Mareva injunction to freeze as much as US$3.5 billion of the Lim family’s assets worldwide. These include properties in Singapore and Australia, shares, insurance policies and club memberships, The Business Times understands.
There were 25 new coronavirus cases as at noon on Sunday (May 23), including 21 in the community and one in a workers’ dormitory. The Ministry of Health (MOH), in its afternoon update, said three of the new local patients are unlinked. Of the other 19 linked local cases, 12 were already in quarantine when they tested positive.
Singapore will review how it can further support companies after a new wave of Covid-19 infections prompted authorities to increase restrictions that curbed business activity and the movement of people. While some firms have not been required to cease operations under the new rules, they have been impacted by the decline in foot traffic and the scaling back of activity levels, Finance Minister Lawrence Wong said in a Facebook post Saturday.
Asian tech shares haven’t been immune from the global selloff in speculative assets, but investors are sifting through the ashes and some see buying opportunities. The world’s riskiest assets have experienced a turbulent month amid concern about speculative froth and rich valuations. Everything from cryptocurrencies to high-profile innovation funds have been hit. And in Asia, Taiwanese shares, Japanese startups and Chinese internet stocks were among the highest profile casualties.
The Dow rose while the Nasdaq declined Friday as Wall Street closed out a volatile week on a mixed note marked by positive global growth expectations and continued inflation fears. After three straight declines, major indices won strong gains on Thursday, but markets failed to extend the rally in Friday’s muted session.
Bitcoin’s extreme volatility carried into the weekend as the world’s largest cryptocurrency continued to whipsaw investors with double-digit percentage moves. Bitcoin traded at US$33,052, down 13 per cent, as of 3.45pm in New York, holding below its 200-day moving average; other cryptocurrencies, including Ethereum and Dogecoin, also slumped, according to CoinGecko.com.
The U.S dollar rose against a basket of currencies on Friday, boosted by encouraging US manufacturing data, but remained on track for a weekly loss as traders’ concerns about taper talk in US Federal Reserve minutes moderated. The dollar has given back much of the advance it made after a mention in minutes from the Fed’s April monetary policy meeting of possible future discussions on paring back stimulus, raised hopes that US interest rate raises might come earlier than previously thought.
Virgin Galactic took a step closer to completing development of its space tourism system on Saturday, successfully flying its first spaceflight in more than two years. The company’s spacecraft, named VSS Unity, was carried up to an altitude of about 44,000 feet by a carrier aircraft called VMS Eve. The aircraft then released the spacecraft, which fired its rocket engine and accelerated to more than three times the speed of sound.
Source: SGX Masnet, The Business Times, Bloomberg, Channel NewsAsia, Reuters, PSR
Koufu Group – Speed bump on road to recovery
Recommendation: Neutral (Downgrade), Last Done: S$0.63
Target price: S$0.64, Analyst: Terence Chua
– Jobs Support Scheme (JSS) grants to be enhanced to 50% from 10%.
– Footfalls at food courts dropped following Singapore’s move into Phase 2 (Heightened Alert).
– Commencement of integrated facility operations delayed to 3Q21.
– Downgrade from ACCUMULATE to NEUTRAL with a lower target price of S$0.64 from S$0.68. Still based on 18.5x FY21e, the average of its peers. We cut revenue for FY21e/FY22e by 1.8%/1.9% and PATMI by 6.1%/8.0% as the consumption recovery is taking longer to pan out.
SG Bonds Weekly – Week 21
Credit Analyst: Timothy Ang
– Lat week, 10yr treasury yields spiked to a high of 1.68% before settling down at 1.63%.
– New issue activity in Asia was heavily subdued, with the number of deals printed down 67% WoW.
– China Local Government Financing Vehicles (LGFV) issuers were active last week with US$780mn issuance volume.
HK Reports – Read up on our Hong Kong reports here
Webinar Of The Week
Date: 17 May 2021
Updates summarised in 3 minutes
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