Daily Morning Note – 27 January 2022
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Asian stocks face a choppy open Thursday after Federal Reserve Chair Jerome Powell signaled a March interest-rate liftoff and left open the possibility of hikes at each policy meeting. Treasuries slid, the dollar jumped and U.S. shares were mixed.
Australian equities climbed, while futures for Japan slipped and Hong Kong’s were steady. U.S. contracts pushed higher. The S&P 500 on Wednesday wiped out a gain of over 2% to close down and the technology-heavy Nasdaq 100 erased almost all of a 3.5% rise.
Treasuries tumbled, particularly shorter maturities, and the gap between five- and 30-year yields was around the narrowest since early 2019. Global bonds now face losses, with the New Zealand 10-year yield hitting the highest since 2018. The dollar rallied. The yen and commodity-linked currencies were lower.
Powell reinforced the Fed’s determination to quell the highest inflation in a generation amid a robust economic recovery from the pandemic. The central bank also said it expects the process of balance-sheet reduction will commence after it has begun raising borrowing costs.
Stocks to watch: Mapletree Commercial Trust
Mapletree Commercial Trust (MCT), the target of a proposed merger with Mapletree North Asia Commercial Trust, on Wednesday (Jan 26) posted net property income of S$291.3 million for the nine months to Dec 31, 2021, 5.6 per cent higher than a year ago. The manager attributed it to lower rental rebates and higher compensation received from lease pre-terminations. Gross revenue was up 7.2 per cent to S$374 million, driven by contributions from VivoCity, while property operating expenses increased by 13.6 per cent to S$82.7 million. The committed occupancy of MCT’s portfolio was 96.3 per cent as at Dec 31, the manager said in a business update. All of MCT’s properties are in Singapore. Strong spending during the festive season and relaxation of Covid-19 measures drove the improvement of tenant sales at VivoCity in Q3 by 3.7 per cent year on year, reaching almost 90 per cent of pre-pandemic levels.
The public offer tranche of Novo Tellus Alpha Acquisition (NTAA) was 7.6 times subscribed at the close of its initial public offering (IPO), it said on Wednesday (Jan 26). The international placement tranche of 9.5 million units was about 3.1 times subscribed. Overall, the offering was 3.4 times subscribed. Units are expected to start trading on the Singapore Exchange mainboard at 9 am on Thursday. NTAA, Singapore’s third listed special purpose acquisition company (SPAC), had offered 30 million units at S$5 apiece.
Oil exploration and production company Rex International on Wednesday (Jan 26) said it has received in-principle approval from the Singapore Exchange Securities Trading (SGX-ST) to transfer its listing from the Catalist board to the mainboard. The company will be seeking the approval of shareholders at an extraordinary general meeting (EGM) to be convened. The transfer is also dependent on the company’s compliance with applicable listing requirements. A circular containing the details of the proposed transfer and the notice of EGM will be despatched to shareholders in due course, said the company.
Office-focused Keppel Pacific Oak US Reit (KORE) on Wednesday (Jan 26) posted a higher H2 distribution per unit (DPU) of 3.18 US cents, compared with 3.13 US cents a year ago, after contributions from acquired properties as well as positive rental reversions and annual rental escalations across the portfolio. The DPU includes the advanced distribution of 0.64 US cent for the July 1 to Aug 5, 2021 period, which was paid out on Sep 28, 2021. Distributable income for the 6 months ended Dec 31, 2021 rose 10 per cent to US$32.5 million. The increase was partly driven by the acquisitions of Bridge Crossing in Nashville, Tennessee, and 105 Edgeview in Denver, Colorado, which were completed last August. Net property income rose 2.4 per cent to US$42.1 million, while gross revenue climbed 5.5 per cent to US$72.9 million.
Ascendas India Trust on Wednesday posted a distribution per unit (DPU) of S$0.036 for the second half of the fiscal year 2021 ended December, down 14 per cent from a DPU of S$0.0419 in the corresponding year-ago period. This brought the trust’s DPU for the full FY2021 to S$0.078, some 11 per cent lower than DPU of S$0.0883 in FY2020. Unitholders can expect to receive their H2 DPUs on Feb 25, with the record date set at 5 pm on Feb 17. Income to be distributed for H2 slipped 14 per cent to S$41.6 million from S$48.2 million in the year-ago period.
The Building and Construction Authority (BCA) has projected the total value of construction contracts awarded in 2022 to be between S$27 billion and S$32 billion, it said on Wednesday (Jan 26). In his presentation on Singapore construction prospects, group director of BCA’s strategic planning and transformation office Teo Jing Siong said the construction sector’s prospects are “bright” and that average annual demand from 2023 to 2026 should be between S$25 billion and S$32 billion. He noted that this projection does not include the expansion of the integrated resorts, which would cost roughly S$5 billion to S$7 billion, as well as the development of Changi Airport Terminal 5.
The US Federal Reserve will end its bond-buying stimulus program in early March, when it is expected to begin to raise interest rates to combat inflation. Fed Chair Jerome Powell in an unusually blunt comment said officials are prepared to raise rates in March, after data showed consumer prices rose seven percent in 2021, the highest in 40 years. Economists expect three or four rate hikes in 2022.
The US merchandise-trade deficit unexpectedly widened in December to a fresh record as imports continued to rise, outpacing shipments overseas. The gap increased to US$101 billion last month from a revised US$98 billion in November, according to Commerce Department data released on Wednesday. The figure exceeded all estimates in a Bloomberg survey of economists, and the data aren’t adjusted for inflation. The goods-trade shortfall reached new records in 2021, consistent with solid consumer demand and business investment. US importers are struggling to meet demand as inventories remain lean and supply chains are strained to move unprecedented amounts of cargo. That’s also making it difficult for exporters to ship goods out of the country.
Glencore’s Viterra unit agreed to buy the grains business of Gavilon Group from Marubeni, giving the world’s top commodity trader a bigger foothold in the US with key crop prices near multiyear highs. Viterra will pay US$1.13 billion plus working capital, it said in a statement. The company has been seeking to expand in the US for years – Glencore made an unsuccessful approach to rival Bunge in 2017 – and new chief executive officer Gary Nagle said in December the company was looking for ways to unlock more value from its agriculture business. Viterra will acquire a significant agriculture footprint in the world’s largest grain shipper, after largely being concentrated in countries like Canada and Australia.
The controversial cryptocurrency project that Mark Zuckerberg once defended in front of Congress is unravelling after regulatory pressure. The Diem Association, a cryptocurrency initiative once known as Libra backed by Meta Platforms, is weighing a sale of its assets as a way to return capital to its investor members, according to people familiar with the matter. Diem is in discussions with investment bankers about how best to sell its intellectual property and find a new home for the engineers who developed the technology, cashing out whatever value remains in its once-ambitious Diem coin venture, said the people, asking not to be identified because the discussions aren’t public.
Cybercriminals laundered US$8.6 billion in cryptocurrencies last year, up 30 per cent from 2020, according to a report from blockchain analysis firm Chainalysis released on Wednesday. Overall, cybercriminals have laundered more than US$33 billion worth of crypto since 2017, Chainalysis estimated, with most of the total over time moving to centralised exchanges. The firm said the sharp rise in money laundering activity in 2021 was not surprising, given the significant growth of both legitimate and illegal crypto activity last year.
Source: SGX Masnet, The Business Times, Bloomberg, Channel NewsAsia, Reuters, CNBC, PSR
Technical Pulse: CNOOC Ltd.
Recommended: Technical BUY; Analyst; Chua Wei Ren
CNOOC LTD (HKEX: 883) Upside is set to continue based on technical
Buy stop: 9.52 Stop loss: 8.90 Take profit 1: 10.20 Take profit: 11.50
Technical Pulse: Xinyi Solar Holdings Ltd
Recommended: Technical BUY; Analyst; Chua Wei Ren
Xinyi Solar (HKEX: 968) It has potentially bottomed as recent technicals indicate that a bullish upside is coming
Buy spot: 13.16 Stop loss: 11.64 Take profit 1: 15.35 Take profit 2: 17.20
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