Daily Morning Note – 28 May 2020

PHILLIP SUMMARY

Asian stocks looked set for a mixed session as investors weighed continued gains in U.S. shares with an increase in Sino-American tensions over Hong Kong. Treasury yields dipped. Futures pointed higher in Japan and Australia, and retreated in Hong Kong. The Trump administration said it could no longer certify Hong Kong’s political autonomy from China, a move that could have far-reaching consequences on its special trading status with the U.S. Still, the S&P 500 climbed to an 12-week high, holding above technical levels considered key by chart watchers. The Nasdaq turned positive late in the session after Micron Technologies forecast earnings that were ahead of estimates, lifting chipmakers.

The dollar ticked higher. Elsewhere, the Stoxx Europe 600 Index ended higher and Italy’s government bonds rose after details emerged of Europe’s 750 billion euro ($823 billion) fiscal stimulus package. The euro gained. Oil slumped toward $32 a barrel in New York.

BREAKING NEWS

Singapore’s services sector saw receipts fall 1.1 per cent year on year in the first quarter of 2020, in a reversal from the previous quarter’s 4.5 per cent growth, according to a Department of Statistics release on Wednesday. Amid the Covid-19 outbreak, the greatest decline was for recreation and personal services. But the quarterly index excludes wholesale and retail trade, as well as accommodation and food services – sectors that have been severely hit by the pandemic and accompanying control measures.

Mainboard-listed Chip Eng Seng announced late on Wednesday the termination of a contract-of-sale relating to the proposed acquisition of a childcare business in the Australian state of Victoria, as well as the commencement legal proceedings for a refund of the deposit.

UnUsUaL Limited, the events-production unit of mm2 Asia, posted a net profit of S$6.3 million for the financial year (FY) ended March 31, down 52 per cent from a year ago on the back of the Covid-19 outbreak, during which concerts and events in its fourth quarter have been postponed. Revenue still grew 9 per cent to S$61.9 million for the FY, mainly attributable to higher sales contribution from the promotion segment.

Millennium & Copthorne (M&C) Hotels has reduced its global headcount by 8 per cent and furloughed another 30 per cent of staff in its owned-and-managed hotel portfolio, as the Covid-19 pandemic and governmental restriction measures introduced across most jurisdictions have hit its business. Excluding franchise hotels, M&C’s global staff had been around 8,000 before the reductions. Additionally, senior management and executives in M&C have, since April 1, accepted salary cuts reduction of up to 30 per cent, depending on their seniority. About half of M&C’s global hotel portfolio (excluding hotels operated under the M&C franchise model) have been closed to date

The stock price of the Singapore Exchange (SGX) plunged on Wednesday after it announced that it would discontinue its MSCI equity index futures and options contracts, save for those under MSCI Singapore, when their licence agreements expire in February next year. SGX fell 11.8 per cent or S$1.17 to S$8.73 as at 3.40pm on Wednesday, after 10.7 million shares changed hands.

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

TECHNICAL PULSE

Yangzijiang Shipbuilding Holdings Ltd

Recommended Action: Technical BUY

Yangzijiang Shipbuilding (SGX: BS6) bearish impulse last August 2020 has set up the stock into a regular corrective flat.

>> Read more technical reports

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Date: 26 May 2020

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