Stocks look set to be tested Monday by concerns about a global slowdown as cooling expectations for peak interest rates bolster bonds.

Futures were lower for Japan, Australia and Hong Kong, while US contracts fluctuated in early Asian trading after mixed earnings and retreating gauges of business activity left US shares in the red on Friday.

New Zealand debt jumped in the slipstream of a Treasuries rally. Investors have shifted to betting that ebbing economic growth will help to moderate high inflation and soften the cycle of monetary tightening currently underway.

Some of that view is evident in a recent drop in the dollar, which was mixed against major peers. Oil, meanwhile, hovered around $95 a barrel and Bitcoin held a little below $23,000.

Stocks to watch: Singapore Airlines

Top gainers & losers



Singapore Airlines has kicked off its financial year to March 2023 on a strong note, according to the group’s responses to questions from its shareholders ahead of its annual general meeting (AGM) scheduled for Tuesday (Jul 26). The airline group said it carried 5.1 million passengers during Q1 FY2023 – up 158.3 per cent quarter on quarter and more than 14 times as high as the same period of the prior year. The group’s passenger load factor came in at 79 per cent for the 3-month period – up 34.1 percentage points quarter on quarter and 64.2 percentage points higher year on year.

Fintech platform iFAST Corp on Saturday (Jul 23) reported a net loss of S$2.69 million for Q2 2022, reversing from a net profit of S$7.02 million a year ago. It was weighed down by a one-time impairment allowance following the restructuring of its India business. Total revenue was 5.8 per cent higher at S$53.91 million, and included an initial contribution of S$3.92 million from iFAST Global Bank in the United Kingdom.

The fast-paced sales at AMO Residence wrapped up the evening of July 23 with 98.1% of the 372 units in the project taken up. The average price of units sold is said to be about $2,100 psf, according to sources, which means AMO Residence has set a new benchmark for prices of projects in the Outside Central Region (OCR). “There is strong underlying demand as it is the first major private residential project in the mature housing estate of Ang Mo Kio in more than eight years,” says Anson Lim, UOL general manager (residential marketing) in a statement. AMO Residence is a joint development by UOL Group, Singapore Land Group and Kheng Leong Co. The 372-unit, 99-year leasehold condominium is located just off Ang Mo Kio Avenue 1, and is within a five-minute walk of the Mayflower MRT station, 1km range of two popular schools (CHIJ St Nicholas’ Girls School and Ai Tong School) and close to two parks, namely Bishan-Ang Mo Kio Park and Lower Peirce Reservoir Park.

Since its secondary Singapore listing on May 20, Nio has risen from US$16.90 to US$19.88 on Jul 21, generating an 18 per cent return, while ranking among Singapore’s 50 most traded stocks. Inside the 40 plus percentage swings the stock has seen in the space of just 2 months, there have been multiple technology, consumer, environmental, not to mention broader China growth factors at play. This has provided a platform for a lively share price, with the significant trader participation achieving accolades in tradability metrics. The first such highlight is the share of the participation. This is Nio’s second secondary listing, so to speak, with the preceding Hong Kong secondary listing open for trading for a decent portion of the Singapore trading day. Despite being the latest secondary venue, during the past 9 weeks, there have been multiple sessions when the Singapore listing has accounted for close to a third of the combined daily turnover of both secondary listings.

No charges have been brought against any of Sinjia Land’s board members and employees so far, including group chief executive officer Cheong Weixiong, the Catalist-listed company said in a statement on Friday (Jul 22). This comes after the backpacker hostel operator announced earlier this week that Cheong, who is also the company’s executive director, was interviewed by the Commercial Affairs Department (CAD) in connection to an offence under the Securities and Futures Act. Responding to queries from the Singapore Exchange (SGX), Sinjia Land said that it as far as it is aware, no other employees or board members have been asked to assist with the authorities’ investigations. No individuals were named in the letter dated Jul 19 from the CAD and the Monetary Authority of Singapore (MAS) either.


Gasoline prices may be easing but they’re not falling fast enough for President Joe Biden. “It’s happening. But it’s not happening fast enough,” the president said Friday (Jul 22) during a virtual meeting with his economic team. “We’ve made progress, but prices are still too high.” US average gasoline prices have declined for 38 days in a row this summer amid weaker demand during a summertime slowdown. A gallon of regular gasoline averaged US$4.41 as of Thursday, according to auto club AAA. That’s a far cry from prices that topped US$5 earlier this summer, but they still remain exceptionally high by historical standards and represent a very visible sign of inflation that could hurt Biden’s re-election bid in November, along with Democrat’s control of Congress.

Infosys raised its annual sales forecast on upbeat demand for its digital services, alleviating concerns that a slowing global economy will stifle technology spending. Revenue will grow 14-16 per cent in the fiscal year till March 2023, India’s No 2 software services exporter said in a statement on Sunday (Jul 24). That compares with 13-15 per cent it projected in April. Analysts predict growth of 17 per cent, the average of estimates compiled by Bloomberg. Infosys reported a 3.1 per cent increase in net profit to 53.6 billion rupees (S$931.3 million) for the first quarter to June, despite expenses such as wage costs. Analysts estimated 56.7 billion rupees.

The US dollar shrugged off early weakness to edge higher against a basket of currencies on Friday (Jul 22), after data showed US business activity shrank for the first time in nearly 2 years in July as a services slowdown outweighed manufacturing growth. S&P Global on Friday said its preliminary — or “flash” — US Composite PMI Output Index had tumbled far more than expected to 47.5 this month from a final reading of 52.3 in June. With a reading below 50 indicating business activity had contracted, it is a development likely to feed into a vocal debate over whether the US economy is back in — or near — a recession after rebounding sharply from the downturn in early 2020 at the start of the Covid-19 pandemic.

Verizon Communications shares plunged to their biggest drop in 14 years after the mobile-phone company cut its forecast for the second straight quarter, adding to concerns that consumers are pulling back on spending. The largest US wireless carrier is having difficulty keeping up with rivals on subscriber growth amid heavy phone discounts and decades-high inflation. Verizon said Friday (Jul 22) that it added only 12,000 monthly wireless phone subscribers in the second quarter, well below analysts’ predictions for 167,200 new phone customers. The shares fell 6.7 per cent in New York, their biggest one-day drop since 2008, when the US was in the throes of the Great Recession. The stock has fallen 14 per cent this year.

American Express’ quarterly card spending soared to a record as pandemic-weary travellers shrugged off rising airfare to throng airports, helping the company raise its annual revenue forecast and sending its shares 5 per cent higher. The credit card giant also trounced estimates for April-to-June profit and joined major US banks including JPMorgan Chase in highlighting the resilience of consumer spending in the face of an uncertain economic outlook. Chief executive Steve Squeri, however, said loss rates would rise slowly, though they would remain well below pre-pandemic levels this year. The company added US$410 million in provisions for credit losses, mirroring similar build-ups at major US banks, and said it expects to set aside more funds.

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


Sembcorp Industries – Conventional Energy to lift 1H22 profits

Recommendation: NEUTRAL (Downgraded), Last Done: S$3.04

Target price: S$2.96, Analyst: Terence Chua

• The average Uniform Singapore Energy Price (USEP) prices rose 239% YoY in 1H22 driven by the conflict in Ukraine. Spark spreads have increased as average USEP prices have moved ahead of high sulfur fuel oil (HSFO) in the last nine months. Tariffs for power in Tamil Nadu and Gujarat also rose ~88% YoY as higher temperatures in the country drove up power demand.

• Sembcorp Industries (SCI) gross renewables capacity in operation and under development globally now stands at 6.8GW in 1H22 from 6.1GW as at end-2021. This is ahead of our FY22e target of 7.3GW. Accordingly, we revise our FY22e capacity to 7.6GW on account of the Group’s aggressive buildup of its renewables portfolio.

• We downgrade to NEUTRAL from ACCUMULATE with higher target price of $2.96 (prev. $2.94). We raise FY22e PATMI by 6% as we bake in higher profits from Conventional Energy and Renewable Energy for FY22. Our target price is raised to $2.96, still based on 1.2x FY22e P/BV, the average of its peers. But we downgrade to Neutral after the recent run-up in its price.

Netflix Inc – Turning corner on negative growth

Recommendation: BUY (Maintained); TP: US$399.00, Last Close: US$216.44

Analyst: Jonathan Woo

• 2Q22 results in line with our expectations. 1H22 revenue/PATMI at 48/55% of our FY22e forecasts. Earnings beat by 7% due to unrealized gain from FX remeasurement of Euro Debt.

• Lower than expected subscriber loss for 2Q22 (-0.97mn actual vs -2.0mn expected) and guiding 3Q22e to turn around with 1.0mn subscriber additions.

• Guided to ~US$1bn in Free Cash Flow (FCF) for FY22e with stabilisation in content spend, even in the face of FX headwinds affecting revenue growth.

• We maintain a BUY recommendation with a lowered DCF target price of US$399.00 (prev. US$427) as we increase our WACC assumptions (WACC 12.2%, g 1%).

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