Daily Morning Note – 26 January 2022

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PHILLIP SUMMARY

U.S. equity futures wavered and Asian stocks looked set for a muted open after another volatile Wall Street session ahead of a Federal Reserve policy decision that’s expected to signal a March interest-rate liftoff.

U.S. contracts initially dropped early in Asia Wednesday before paring losses. Futures were steady for Japan and higher for Hong Kong. The S&P 500 erased a near-3% intraday slide Tuesday but subsequently fell again to close at the lowest since October, while the technology-heavy Nasdaq 100 underperformed.

Microsoft Corp. stoked worries about the tech outlook. The firm’s shares and the Invesco QQQ Trust Series 1 — an ETF that tracks the Nasdaq 100 — slid in extended trading after Microsoft reported slowing cloud-services revenue.

The benchmark U.S. 10-year Treasury yield was little changed ahead of the Fed, while the dollar was mixed against major peers. Crude oil held a rally, in part on the risk that a Russia-Ukraine conflict could disrupt supplies.

Stocks to watch: Frasers Centrepoint Trust


BREAKING NEWS

SG

The manager of Frasers Centrepoint Trust on Tuesday (Jan 25) reported that committed occupancy for the retail portfolio was stable at 97.2 per cent in Q1 FY2022 ended December, on the back of new retail concepts and brands introduced to refresh shopper experience and ensure sustainable trading. In a business update after market close, FCT’s manager said the trust showed a “resilient performance” despite the continuing impact from the Covid-19 pandemic. There was also still healthy demand for retail spaces within FCT’s well-located and dominant suburban retail malls in Q1. The manager attributed a 20.1 percentage point decline in occupancy in Central Plaza from end-September to end-December last year primarily to the exit of an anchor tenant. The trust is exploring opportunities for the reconfiguration of anchor space. Meanwhile, proactive leasing management at Century Square, Changi City Point and White Sands is focused partly on tenant re-mixing and space re-sizing, said the manager.

Starhill Global Reit on Tuesday (Jan 25) posted a distribution per unit (DPU) of S$0.0178 for the first half of the fiscal year FY2021/22 ended Dec 31, 2021, up 2.3 per cent from a DPU of S$0.0174 in the corresponding year-ago period. This excludes the release of S$3.1 million or S$0.0014 per unit from the Reit’s FY19/20 deferred distributable income for the H1 FY20/21 distribution. Including the effects of the deferred amount, DPU was down 5.3 per cent from S$0.0188 on a year-on-year basis. Unitholders can expect to receive their H1 FY21/22 DPU on Mar 23, with the record date on Feb 4.

Mapletree Industrial Trust’s (MIT) third-quarter distribution per unit (DPU) rose from 3.28 Singapore cents a year ago to 3.49 cents on an enlarged unit base, which resulted from the equity fundraising exercise in Q1. Income distributable to unitholders grew 10.4 per cent to S$89.5 million for the 3 months to Dec 31, following a boost in revenue from assets in the US. Net property income climbed 24.1 per cent to S$122.7 million as gross revenue rose 31.3 per cent to S$162.4 million. The increase was largely due to revenue contribution from 29 data centres in the US acquired for US$1.32 billion in July 2021, and a data centre in Richmond, Virginia acquired in Q4 FY2021.

UOB has injected 2 billion yuan (S$424.8 million) in its subsidiary in China, which will be channelled into regional opportunities, sustainability and financial solutions such as hedging services. UOB China has maintained a compound annual revenue growth of 13 per cent since it was incorporated in 2008, UOB said in a statement. Net profit before tax hit a record high last year and more than doubled from 2018. Tapping on the demand for Chinese companies to expand to Asean and vice versa, UOB China plans to establish and expand client relations in sectors that are strong drivers of China’s economy. It will also strengthen its strategic partnership with Hengfeng Bank by tapping crossborder business opportunities.

US

The dollar rose to a two-week peak on Tuesday, as tensions between Russia and the West over Ukraine drew investors to safe-haven currencies while awaiting the outcome of this week’s US Federal Reserve policy meeting. Russia said it was watching with great concern after the United States put 8,500 troops on alert to deploy to Europe in the event of an escalation in the Ukraine crisis. “Much greater exposure of European economies to the crisis does not make the euro a particularly attractive vehicle to ride out the current storm,” ING analysts said. The euro was down 0.4 per cent at US$1.1281 by 11.21 am (7.21 pm Singapore time) for its weakest level since Jan 5. The dollar index rose 0.3 per cent to a two-week high of 96.19.

The International Monetary Fund (IMF) lowered its economic forecasts for the United States, China and the global economy on Tuesday (Jan 25), and said uncertainty about the pandemic, inflation, supply disruptions and US monetary tightening posed further risks. “We project global growth this year at 4.4 per cent, 0.5 percentage point lower than previously forecast, mainly because of downgrades for the United States and China,” Gita Gopinath, the IMF’s No 2 official, wrote in a blog on the latest update of the World Economic Outlook. The IMF said the rapid spread of the Omicron variant had led to renewed mobility restrictions in many countries and increased labour shortages, while supply disruptions were fuelling inflation.

Robinhood Markets Inc on Tuesday highlighted steps it had taken over the past year to avoid imposing trading restrictions and said it was in a “strong position” to support customers through unlikely market events. The online trading platform, which helped pioneer commission-free trading, said in a blog post its net capital position was US$2.7 billion, more than twenty-five times what is currently required by the US Securities and Exchange Commission (SEC). Robinhood, in January 2021, had enacted temporary limits on GameStop and other so-called “meme stocks” amid a social media-fueled rally.

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

Lian Beng Group Ltd – Property development supports bottom line

Recommendation: N.A.; Last Done: S$0.51

TP: N.A.; Analyst: Vivian Ye
– Higher construction revenue with resumption of activities but weighed down by higher costs.

– Bottom line is still supported mostly by property development sector.

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