Daily Morning Note – 26 June 2020

PHILLIP SUMMARY

Asian stocks looked poised for gains after a late rally on Wall Street, as investors weighed the prospects for additional stimulus against the spike in U.S. virus cases.

Futures in Japan and Australia pointed higher. S&P 500 contracts opened flat after a rally in the final hour of a choppy session left the index up about 1%. Treasuries and the dollar ended Thursday flat. Banks surged after regulators eased rules that will free up capital, though they slid after hours as the Federal Reserve told the biggest lenders they can’t increase dividends or buybacks for now. Investors also grappled with a mixed batch of economic data, with initial jobless claims topping estimates at almost 1.5 million.

BREAKING NEWS

Mainboard-Listed Spindex Industries announced on Thursday that it has entered into a 50-50 joint venture (JV) agreement with Acuger Precision Corporation to expand operations in Vietnam. “The board is of the view that the JV will enable the group to expand its manufacturing capacity in Vietnam, leverage its existing supply chain network and customer base in Vietnam, and broaden the asset and earning base of the group,” said the precision manufacturing company.

Great Eastern will make a US$70 million investment in Axiata Digital’s financial-services business to “participate in Axiata’s growing fintech expansion plans in the region”, said Great Eastern’s group chief executive Khor Hock Seng on Thursday. The investment will be made via a newly created holding company Boost Holdings, which will be wholly-owned by Axiata Digital, the digital arm of Axiata Group. With the investment, Great Eastern will have a 21.875 per cent in Boost; Axiata Digital Services will hold the remaining stake.

Food and beverage operator TSH Corporation said in a regulatory update on Thursday that it has reopened two out of five of its bars for dine-in services, and is expecting to report a financial loss for HY2020. It said that, as of Thursday, it does not foresee any material impairment to its receivables and inventories arising from Covid-19. Barring unforeseen circumstances, the expected losses for HY2020 and the decrease in cash and bank balances are not expected to affect the ability of the group to continue as a going concern and its ability to fulfill its obligations, said the company.

Agri-Food player Japfa said on Thursday that while its supply chain has not been significantly impacted by Covid-19, demand may be hit on the back of weaker economy and reduced purchasing power. This is largely attributed to the fall in demand for poultry in Indonesia, said Japfa at its annual general meeting presentation. But the stronger demand for dairy in China and pork in Vietnam are likely to offset the weaker performance in Indonesia in the second quarter of 2020, it said.

Capitaland Mall Trust (CMT) said on Thursday that it maintains a “cautious outlook” in the near-term, amid the fluid, evolving situation of the Covid-19 pandemic. This comes as consumer sentiment has been dented following the Ministry of Trade & Industry’s downgrade of Singapore’s 2020 gross domestic product growth forecast to between -7.0 per cent and -4.0 per cent.

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

TECHNICAL PULSE

Hi-P International Ltd

Recommended Action: Technical BUY

Hi-P International (SGX: H17) has been rising steadily and based on the technicals, the stock is poised to test higher levels.

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