Daily Morning Note – 27 August 2021

Dear valued client,

Asian stocks are set for a cautious start Friday as traders weigh hawkish Federal Reserve comments ahead of the Jackson Hole symposium and geopolitical tension following blasts in Afghanistan.

Futures were steady for Japan and Hong Kong but lower for Australia. U.S. contracts inched higher. The S&P 500 fell from a record overnight, in part as some Fed officials said the time to start tapering stimulus is near. Meanwhile, President Joe Biden vowed retaliation for deadly blasts outside Kabul airport that stoked tension as the U.S. evacuates the area. The dollar held a climb.

Treasury yields edged higher. Traders are awaiting Chair Jerome Powell’s speech at the symposium for clues on how the Fed might pare bond purchases. A flood of Treasury options set to expire Friday raise the prospect for volatility in the wake of his remarks.


SG News

Property developer GuocoLand has posted a 48 per cent year-on-year increase in net profit to S$169.1 million for the full year ended June, despite a 9 per cent fall in revenue. Revenue stood for FY21 at S$843.7 million, down from S$934.8 million a year ago, going by the interim financial statements released by the mainboard-listed company on Thursday. This was partly due to lower progressive recognition of sales year on year from its Singapore residential projects, as sales and construction of its Martin Modern project in River Valley reached its tail end and other projects were still in early stages of construction, GuocoLand said.

Property and retail player Wing Tai Holdings has reported a net profit of S$43.6 million for the full year ended June 30, a 173 per cent jump compared with its previous financial year. This came despite a net loss of S$13.2 million for the first six months of 2021. For the same half-year period in 2020, net loss amounted to S$16.8 million, according to the mainboard-listed company’s full-year financial statement released on Thursday. Its revenue for the full year rose 24 per cent to S$461.4 million, with H1 reporting a 16 per cent increase in revenue to S$218 million. Wing Tai said the increase in revenue is mainly due to higher contribution from its development properties.

Malaysian glovemaker Top Glove Corp plans to renew its lapsed application to list in Hong Kong and pursue a dual primary listing, a stock market filing showed on Thursday. Its plans were delayed, sources told Reuters in June, as Top Glove sought to resolve a US import ban on its products because of forced labour practices that had spooked investors and bankers. Top Glove said it has resolved any forced labour issues in its operations and said in June that it has been waiting for US customs authorities to verify remedial action taken on workers’ recruitment fees. The world’s largest glovemaker’s stock market filing on Thursday said it “intends to renew the HKEX listing application as soon as practicable”.

Hospital operator IHH Healthcare Berhad has posted a net profit of RM858.9 million (S$276.9 million) for the first half of 2021, swinging from a loss of RM440.4 million for the corresponding period last year. For its second quarter ended June 30, net profit stood at RM483.3 million, compared with a loss of RM120.6 million in the year-ago quarter. IHH’s revenue for H1 rose 34 per cent to RM8.2 billion from the low base of FY2020, when lockdowns across the region hit its performance, the mainboard-listed company said. For Q2 alone, its revenue was RM4.27 million, compared with RM2.57 million in Q2 last year.

Property developer Oxley Holdings has posted a net profit of S$49.5 million for the full year ended June 30, reversing from a loss of S$275.1 million in the previous year. The company’s revenue jumped 58 per cent to S$781.9 million in the first six months of 2021, bringing full-year revenue to S$1.4 billion – a 33 per cent increase compared with the preceding financial year, according to Oxley’s interim financial statements. This was mainly due to higher revenue from its projects in Cambodia, Singapore and Ireland, which partially offset lower revenue from its project in the United Kingdom, the mainboard-listed company said. Earnings per share stood at 0.31 cent, compared with a loss per share of 6.71 cents in FY2020.

Listed companies in Singapore could be required to make mandatory climate-related disclosures and provide details on their board diversity policy in the coming years, with changes to listing rules proposed by Singapore Exchange Regulation (SGX RegCo). Issuers would also need to subject their sustainability reports to assurance in future, and all directors could also be required to attend a one-time training on sustainability. These were among proposals set out in two consultation papers on Thursday as SGX RegCo looks to enhance its sustainability reporting regime amid a growing focus on environmental, social and governance (ESG) factors worldwide.

US News

Google parent Alphabet is edging toward a major milestone, looking to join the $2 trillion market cap club alongside Apple and Microsoft. The stock also hit a record high on Thursday for a fourth day in a row. But, after it surged more than 60% this year, Miller Tabak chief market strategist Matt Maley has a warning. “It is getting very overbought,” he told CNBC’s “Trading Nation” on Thursday. “Even the best companies, their stocks get ahead of themselves on a short-term basis.” Alphabet is by far the best performer among the high-growth FAANG stocks in 2021, nearly doubling the gains of the second-best performer, Facebook. “The weekly RSI is now pushing 85. That’s the most overbought it has ever been. And not only that, if you look at its 200-week moving average, it’s at almost a 98% premium to its 200-week moving average. The next closest is 76%, so it is very, very extended here on a short-term basis,” said Maley.

Salesforce shares rose as much as 3% in extended trading on Wednesday after the enterprise software maker reported fiscal second-quarter earnings and forward guidance that exceeded analysts’ estimates. Revenue increased 23% year over year in the quarter, which ended July 31, the company said in a statement. In the prior quarter revenue grew 23%. Salesforce’s Platform and Other unit, which includes the MuleSoft integration software and Tableau data-analytics software, delivered $1.88 billion in revenue, which was up 24%. The Service Cloud segment posted $1.60 billion in revenue, representing about 23% growth. Salesforce’s core Sales Cloud product, which salespeople use to stay on top of business opportunities, had $1.48 billion in revenue, up 15%.

Ulta Beauty shares rose more than 5% in extended trading on Wednesday after the company reported fiscal second-quarter sales jumped more than 60% as shoppers rushed in to restock their makeup bags. Ulta raised its full-year outlook after seeing the return of customer demand for beauty products at a faster pace than expected. “This performance reflects the recovery of the beauty category, investments and choices we’ve made over the last year to adapt to the market disruption and strengthen our leadership position, and the ongoing efforts of our associates to deliver great experiences for our guests,” said CEO Dave Kimbell.

Microsoft has hired Amazon cloud executive Charlie Bell as a corporate vice president, CNBC has confirmed. The move represents a victory for Microsoft, whose Azure cloud business is trying to take share from market-leading Amazon Web Services. Bell was considered a candidate to become head of AWS once Amazon chose Andy Jassy, the AWS CEO, to lead all of Amazon. Bell belonged to Amazon’s S-team of top leaders, and his responsibilities as a senior vice president included pricing, software development service operations and financial results, CNBC reported earlier this month as Bell left Amazon.

Peloton said Thursday its fiscal fourth-quarter loss widened as the pace of revenue growth slowed dramatically and costs associated with a treadmill recall mounted. Shares were down about 6% in extended trading on the news, after initially falling as much as 15%. Peloton warned that its earnings will be hurt in the near term because it’s slashing the price of its original Bike machine by about 20%. It’s also beginning to shift its business mix back toward treadmill sales, which are less profitable than those of its cycles.

Ford Motor is once again cutting production of its highly profitable F-150 pickup truck and two other vehicles next week due to the ongoing global shortage of semiconductor chips. The automaker on Thursday confirmed its Oakville Assembly Plant in Canada and Kansas City Assembly Plant in Missouri will be down the week of Aug. 30. Oakville builds the Ford Edge and Lincoln Nautilus crossovers. Kansas City assembles the F-150. Ford also will cut two of three shifts next week at its Dearborn Truck Plant in Michigan, which produces the F-150.

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

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