Daily Morning Note – 25 January 2022

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PHILLIP SUMMARY

Asian stocks looked set for a choppy start Tuesday after U.S. shares wiped out a 4% rout to close higher in a wild session roiled by concerns over Federal Reserve policy tightening and geopolitical tension.

Futures for Japan, Australia and Hong Kong pointed lower earlier. Dip buyers left the S&P 500 and Nasdaq 100 in the green amid high volumes, a breathtaking turnaround of a U.S. selloff that at one point rivaled any of the last two years.

Treasuries were mixed and the yield curve steepened. An auction of two-year notes attracted the strongest demand since February 2020. Oil slid in New York.

The prospect of a Fed interest-rate hiking cycle and balance-sheet reduction to tackle inflation is rattling markets. Escalating U.S.-Russia tension over Ukraine has also encouraged demand for havens. A gauge of the dollar rose.

Stocks to watch: Nordic Group


BREAKING NEWS

SG

Mainboard-listed Nordic Group on Monday (Jan 24) said that its offer for engineering specialist Starburst Holdings has turned unconditional. In a filing to the Singapore Exchange, Nordic said that the total shares owned, controlled or agreed to be acquired by its wholly-owned unit Nordic Flow Control – which made a voluntary conditional offer for Starburst last November – and its concert parties constituted about 69.7 per cent of the total issued shares of the company as at 6 pm on Monday. Phillip Securities, which is acting as the financial adviser to Nordic Flow Control, said the offeror has received valid acceptances of some 173.1 million shares, which represents approximately 69.7 per cent of the total number of issued shares of the company.

Parkway Life Reit reported a 2.1 per cent increase in its distribution per unit (DPU) to a record 14.08 Singapore cents for the financial year ended Dec 31, 2021 despite a small dip in gross revenue. For the fourth-quarter of FY2021, its DPU was unchanged at 3.57 Singapore cents, the manager of the real estate investment trust (Reit) said in an interim financial statement on Monday (Jan 24). Distributable income to unitholders stayed at S$21.6 million in Q4 but for FY2021, it rose to S$85.2 million.

Drama and film production company GHY Culture & Media said it has recently discovered cases of unauthorised use of the company’s name and logo. One of such uses includes a “G.H.Y Culture & Media” application platform that allegedly conducts fraudulent transactions to lure investors to invest in supposed drama and film productions. GHY’s board said the group is in no way connected to or affiliated with the parties on the other end of the use. The board also clarified that it does not endorse these uses, and makes no representations and warranties, nor bears any responsibility for any activities, actions or information in these uses.

Property developer Astaka Holdings has entered into a non-binding memorandum of understanding (MOU) through its subsidiary Astaka Padu with Malaysian company DMR Holdings for a potential collaboration to jointly undertake land development projects in Johor, Malaysia. These projects will cover 42 acres of land across various key cities in Johor, including Iskandar Puteri, Tampoi and Pengerang, and have a total gross development value of RM1 billion (S$320.8 million), the company said on Monday (Jan 24). The development projects are expected to be completed over the span of 5 years and consist of mixed commercial developments and a light industrial park development.

Real estate developer Yanlord Land Group on Monday (Jan 24) announced that it has sold all 514 apartment units during the inaugural launch of its Poetic Villa project in Shanghai. The group bagged pre-sales totalling some 3.2 billion yuan (S$679.7 million) from a total gross floor area of 46,726 sq m at an average selling price of 67,725 yuan per sq m. This brings Yanlord’s total contracted pre-sales from its recent 2 launches in Shanghai – namely Yanlord Arcadia and Poetic Villa – to about 7.2 billion yuan.

US

Peloton Interactive Inc has received a letter from an activist investor, demanding that it fire its chief executive officer and pursue a sale. Blackwells Capital, which has a stake of less than 5 per cent in the exercise-machine maker, has called for the departure of CEO and co-founder John Foley, and wants Peloton to explore a sale of the business. Peloton could be an attractive acquisition target for larger technology or fitness firms, according to an investor letter seen by Bloomberg. The shares rose about 3 per cent in US pre-market trading. Peloton’s shares have tumbled more than 80 per cent from their all-time high a year ago, as the gradual easing of pandemic-era restrictions fuelled concern that growth of the stay-home fitness company will slow.

Boeing Co is investing a further US$450 million in Wisk to support development of future pilotless flying taxis, the US aerospace giant said on Monday. California-based Wisk, owned by Boeing and Kitty Hawk – the air vehicle firm launched by Google co-founder Larry Page – is one of dozens of electric vertical takeoff and landing (eVTOL) makers, but differs in focusing its energy on autonomous flight. “Our view is that is the big strategic advantage of Wisk, going straight to a self-flying aircraft, building those principles in at every level of the design and development,” Boeing’s chief strategy officer Marc Allen told Reuters.

Shares of the blank-cheque acquisition firm that agreed to merge with former President Donald Trump’s social media venture have outperformed every other special purpose acquisition company (SPAC), despite the regulatory risks facing the deal and investors now snubbing the vast majority of such vehicles. Digital World Acquisition Corp, which inked a US$875 million deal in October to merge with Trump Media & Technology Group Corp (TMTG), currently ranks as the best performing SPAC stock, said SPAC Research. Digital World’s shares ended trading at US$73.12 on Friday, way above their US$10 initial public offering price. This infers a valuation on the combined entity of close to $13 billion, including debt.

The selloff in cryptocurrencies gained momentum on Monday (Jan 24), with Bitcoin tumbling to a 6-month low and other digital tokens seeing even bigger losses. Bitcoin sank as much as 6.6 per cent and fell below the US$34,000 mark, continuing a 6-day downturn. Ether retreated 7.6 per cent and touched US$2,201, also the lowest since July. Across the crypto spectrum, markets were in a sea of red with Solana’s SOL and Cardano’s ADA plummeting 19 per cent and 13 per cent, respectively, according to data compiled by CoinGecko.

Source: SGX Masnet, The Business Times, Bloomberg, Channel NewsAsia, Reuters, CNBC, PSR

Technical Pulse: Tesla Inc.

Recommended: Technical BUY; analyst: Chua Wei Ren

Tesla Inc (US: TSLA) has been stopped out based on our report dated 11th Jan 2022 but we also mentioned in that report that the stock will likely find its rebound at US$880-US$853 and it did rebound at the zone on Monday. Wave analysis also pointed out a return of the bullish sentiment

Buy spot: 930.00 Stop loss: 800.00 Take profit 1: 1150.50 Take profit 2: 1300.40

Technical Pulse: Wells Fargo & Co

Recommended: Technical BUY; Analyst: Chua Wei Ren

Wells Fargo (US: WFC) Technicals shows potential bullish continuation

Buy spot: 53.32 Stop loss: 50.00 Take profit 1: 59.00 Take profit 2: 67.40

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