Daily Morning Note – 24 September 2021
Asianequity gauges rallied on Thursday with Hong Kong, back from the holiday, posting the biggest 1.2 percent gain, after the US central bank – true to expectations – left monetary policy unchanged, kicking the can (on a tapering decision) down the road to November. Key gauges in the region except for South Korea grabbed the chance to cheer the no-surprise signals from the US Federal Reserve. After a two-day Federal Open Market Committee (FOMC) meeting, chairman Jerome Powell delivered the expected advance notice that tapering bond-buying “may soon be warranted” (likely in November). The Fed also prepared the ground that it plans to announce as early as November that it will start pulling back the extraordinary measures that were put in place to support the world’s largest economy amid growing optimism of recovery.
Structural steel fabricator TTJ Holdings returned to the black as it posted a net profit of S$1.6 million for the half-year ended July 31, from a loss of S$14.1 million in the same period a year ago. Revenue in the same period grew by 48 percent to S$52.3 million, up from S$35.3 million the year before. This was due largely to growth in revenue from its structural steel operations, which increased to S$51.9 million from S$34.2 million a year earlier. Earnings per share for the second half of the financial year stood at S$0.0050, reversing a loss per share of S$0.0358 a year ago.
GS Holdings announced on Thursday that its indirect wholly-owned subsidiary, Hao Kou Wei Food Group, has signed a franchise agreement to expand its Rasa Chicken by Sing Swee Kee brand of halal chicken rice to Qatar. The franchise agreement was signed with Singapore food and beverage (F&B) entrepreneurs Tan Yan Shan and Lim Yee Min, both of whom have had experience managing and operating F&B brands and concepts in Qatar.
Singtel on Thursday said it intends to exercise its full rights entitlement for its direct 14 percent stake in regional associate Bharti Airtel, to buy into the latter’s 21,000 crore rupees (S$3.8 billion) rights issue at 535 rupees per share. This translates to a total consideration of up to 29.4 billion rupees or US$405 million over a period of up to three years, said the telco in a regulatory filing, adding that the move signals Singtel’s confidence in India as well as in Airtel’s growth prospects. Airtel’s upcoming rights issue is subject to regulatory approval and is slated to take place from Oct 5 to Oct 21 this year. Its board had earlier approved the fundraising exercise on Aug 29.
Frasers Property AHL, a subsidiary of Frasers Property’s Australia unit, has issued S$200 million worth of sustainability notes due October 2028. Priced on Sept 16 at a coupon rate of 3 percent per annum, the Series 001 notes were issued Thursday under Frasers Property AHL’s A$2 billion (S$1.96 billion) multicurrency debt issuance programme established in February 2020. They are expected to list on the Singapore Exchange with effect from 9am on Sept
US stocks opened higher on Thursday as investors largely brushed off concerns over the Federal Reserve’s plans for tapering, while forecast raises from Accenture and Salesforce added to the positive mood. The Dow Jones Industrial Average rose 37.98 points, or 0.11 percent, at the open to 34,296.30. The S&P 500 opened higher by 11.11 points, or 0.25 percent, at 4,406.75. The Nasdaq Composite gained 63.16 points, or 0.42 percent, to 14,960.00 at the opening bell.
Nike cut its sales forecast on Thursday, pointing to myriad supply chain problems that are delaying deliveries of athletic gear and crimping sales. The sports giant is dealing with a doubling of shipping times from its Asian manufacturing centers to North America, as well as closures of major factories in Vietnam and Indonesia due to local government restrictions because of Covid-19, chief financial officer Matt Friend said on a conference call with analysts.
McDonald’s Corp said on Thursday it would restart share buybacks and also increased its quarterly dividend by 7 percent, as the world’s largest fast-food chain recovers from the impact of the Covid-19 pandemic. McDonald’s had suspended its US$15 billion buyback programme early last year as the burger chain looked to conserve cash in order to navigate through the Covid-19 health crisis that had forced many of its restaurants to close their doors to diners.
The number of Americans filing new claims for jobless benefits unexpectedly rose last week amid a surge in California, but the labour market continues to steadily recover. Initial claims for state unemployment benefits increased 16,000 to a seasonally adjusted 351,000 for the week ended Sept 18, the Labor Department said on Thursday. Economists polled by Reuters had forecast 320,000 applications for the latest week. There was a 24,221 jump in unadjusted claims in California.
The leader of the Democratic-controlled US House of Representatives vowed on Thursday to avert a looming government shutdown as federal funds run out, despite a pledge by opposition Republicans to block the move. Lawmakers have until September 30 to green-light a package to fund the government ahead of the stoppage, which typically leads to hundreds of thousands of workers being sent home while parks, museums and other federal properties and services are closed.
A US judge has ordered Facebook to release posts the social network removed over their role in inciting government-backed violence against the Rohingya people in Myanmar. In his ruling on Wednesday, Washington DC district court Judge Zia Faruqui criticised the company for refusing to provide the records to countries pursuing a case against Myanmar in the International Court of Justice.
Source: SGX Masnet, The Business Times, Bloomberg, Channel NewsAsia, Reuters, CNBC, PSR
Technical Analysis: S&P 500, Gold and Dollar Index
With taper expected, bonds calm and equities weak
Analyst: Chua Wei Ren
– The sell-off in the U.S equities has recovered slightly with the S&P 500 closing at 4,395.63. Dow Jones managed to edge 200 points extra above 34,000. Closing at 34,258.33.
– Dollar index return to test the upper 93.50 psychological resistance level. Gold’s upside remains sluggish and has been in a long corrective range after falling off from 2,050 per ounce since August last year.
– The Federal Reserve kept the benchmark rate at near-zero at 0.25% and despite a slower growth outlook, the Federal Reserve has again hinted a high probability of tapering in the “near-term”, which is likely to be in November or December.
– Dot-plot chart suggests that a possible rate hike may happen in 2022 September despite a slower economic growth outlook.
HK Reports – Read up on our Hong Kong reports here
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Date: 20 September 2021
Updates summarised in 3 minutes
Phillip Research in 3 minutes: #29 Keppel Corporation; Initiation
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