Singapore stocks extended losses on Tuesday (May 24), in line with a regional retreat. The Straits Times Index (STI) fell 0.58 per cent or 18.61 points to 3,195.04 at the closing bell. The majority of index constituents ended in the red, with DFI Retail Group at the bottom of the table. The pan-Asian retailer tumbled 2.55 per cent or US$0.07 to end at US$2.68. Jardine Matheson was the top gainer, climbing 1.58 per cent or US$0.87 to S$55.84. Most other indices in Asia also fell. Hong Kong’s Hang Seng Index closed 1.75 per cent lower, South Korea’s benchmark Kospi slumped 1.57 per cent, Japan’s Nikkei index ended down 0.94 per cent, while Kuala Lumpur Composite Index fell 0.73 per cent. Jakarta Composite Index bucked the trend, climbing 1.07 per cent.
The Nasdaq suffered another ugly round of selling on Tuesday as a briefly upbeat market ran into a wall of weak earnings and economic data. The momentum from Monday’s sunny session ended with a thud as two of the three major indices ended back in the red after investment banks UBS Group and JPMorgan Chase cut their China economic growth forecasts. Sentiment was further dented by data showing new US home sales plunging in April to their lowest level in two years. The tech-rich Nasdaq Composite Index tumbled 2.4 per cent to 11,264.45. The broad-based S&P 500 also fell, losing 0.8 per cent to 3,941.48, while the Dow Jones Industrial Average climbed 0.2 per cent to 31,928.62
The Singapore economy expanded by 3.7 per cent year on year in the first quarter of 2022, with uplift from the manufacturing, finance and insurance, and professional services. Still, the external demand outlook “has weakened compared to 3 months ago”, the Ministry of Trade and Industry (MTI) said in a statement on Wednesday morning (May 25). The MTI has kept its full-year growth forecast of between 3 per cent and 5 per cent, but added that the print is “likely to come in at the lower half of the forecast range”. The ongoing Russian war in Ukraine and potential escalation of the conflict were identified as key downside risks for the economy, alongside deteriorations in the Covid-19 pandemic, as well as the possibility of faster-than-expected monetary policy tightening in advanced economies. As such, the ministry flagged a softer outlook for some outward-oriented sectors, such as the chemicals cluster, wholesale trade, and water transport, amid risks such as an economic slowdown in China and prolonged supply disruptions and port congestions worldwide. The latest growth in gross domestic product (GDP) growth – while easing from 6.1 per cent in the final 3 months of 2021 – is higher than earlier official flash estimates of 3.4 per cent, as manufacturing, construction and services all outperformed advance data.
Keppel Offshore & Marine’s (O&M) wholly-owned subsidiaries have signed contracts for the bareboat charter of 2 KFELS B Class rigs. In a press statement on Tuesday (May 24), Keppel Corp said the jackup rigs will be chartered to “an established drilling company” in the Middle East for deployment in the fourth quarter of 2022 for 3 years, with options for a year’s extension. Including the options for extension and modification works to prepare the rigs for on-site preparations, total revenue for the charters is expected to be up to S$120 million. The 2 rigs to be used for these charters will be from previously-terminated newbuild rig contracts with certain customers of Keppel O&M. The rigs and their bareboat charter agreements are part of the O&M unit’s legacy rigs. These latest contracts follow on the heels of another 2 bareboat charters by Keppel O&M announced by the group earlier in May.
City Developments Limited (CDL) on Tuesday (May 24) posted a 41 per cent year-on-year drop in homes sold for the 3 months ended Mar 31, the first full quarter since cooling measures were implemented in December last year. The mainboard-listed property developer and its joint-venture associates sold 188 units with a total sales value of S$477.9 million for Q1, versus 319 units with a total sales value of S$513.6 million a year ago, CDL said in a business update for its first quarter. While the cooling measures have impacted transaction volumes momentarily, the group foresees the property market to “remain resilient and housing prices to hold firm due to moderate supply and strong underlying fundamentals“. CDL’s latest launch, Piccadilly Grand, a joint venture with MCL Land, saw strong take-up when it was marketed in May. Some 315 units or 77 per cent of the Farrer Park project’s 405 apartments were sold on launch weekend at an average of S$2,150 per square foot.
US new home sales plunged 16.6 per cent in April, even as prices continued to climb, according to government data released on Tuesday (May 24). Sales of new single-family homes fell to an annual rate of 591,000, seasonally adjusted, with declines seen nationwide, the Commerce Department reported. The result was far worse than analysts had projected, and compounded by the downward revision to the sales figures for March. Last month’s sales pace was a 26.9 per cent drop compared to April 2021, the report said. However, even amid the rise in borrowing costs that is cooling demand from homebuyers, prices continued to rise in April, reaching a median of US$450,600 from US$435,000 in the prior month. Home sales have been booming throughout the Covid-19 pandemic helped by the popularity of working from home and increased household savings, which prompted many families to move out of congested urban areas and purchase larger houses.
Snap cut its revenue and profit forecasts below the low end of its previous guidance, sending shares plunging as much as 31 per cent and pushing other social media stocks down. The company will also slow hiring, filling 500 roles before the end of the year, chief executive officer Evan Spiegel said in a note to staff. Snap benefited from a surge in usage of its Snapchat app during the pandemic when people were looking for entertainment and connection from their homes. Now, as people return to offices and schools, the company is reeling from the same combination of economic pressures that are also facing its competitors. “The macroeconomic environment has deteriorated further and faster than anticipated,” Snap said in a filing. “As a result, we believe it is likely that we will report revenue and adjusted Ebitda below the low end of our Q2 2022 guidance range.” The company’s second-quarter forecast, for 20 to 25 per cent year-over-year revenue growth, was already below analysts’ estimates. The warning immediately hit other companies reliant on advertising, including Meta Platforms, Twitter, Alphabet and Pinterest.
Tesla shares struggled Tuesday (May 24) as the electric-vehicle maker’s production woes in China refuse to go away, leading another analyst to slash his 12-month price target on the once high-flying stock. “With about 13,000 units of production per week and higher than average margins, any production loss at Shanghai is bound to have a significant impact on margins and earnings,” said Daiwa analyst Jairam Nathan, who cut his price target to US$800 from US$1,150. Until recently, Tesla was considered the ultimate growth stock, rising 50 per cent last year and closing at US$1,145 on Apr 4, when CEO Elon Musk announced his 9.2 per cent stake in Twitter. Since then, Musk has been engaged in a highly public attempt to buy the social media platform. And Tesla’s stock has been in a freefall, sinking to US$620.57 at its lowest on Tuesday and wiping out almost half its market capitalisation after touching a record high in November. Since Musk revealed his Twitter stake, Tesla shares have plunged 42 per cent compared with a 13 per cent decline in the S&P 500 Index and a 26 per cent drop in the S&P 500 consumer discretionary sector. It’s the seventh-worst performing stock in the S&P 500 over that time and the third-biggest drag in terms of index points.
Source: SGX Masnet, The Business Times, Bloomberg, Channel NewsAsia, Reuters, CNBC, PSR
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