DAILY MORNING NOTE | 28 September 2023

Trade of the Day

Singapore Telecommunications Ltd (SGX: Z74)

Analyst: Zane Aw

(Current Price: S$2.40) – TECHNICAL BUY
Buy price: S$2.40 Stop loss: S$2.35 (-2.08%) Take profit: S$2.55 (+6.25%)

Singapore shares ended lower on Wednesday (Sep 27), bucking most regional markets. It declined 0.5 per cent or 15.04 points to 3,200.03. Across the broader market, losers narrowly beat gainers 258 to 255, with 1.3 billion securities worth S$876.9 million changing hands. Key regional indices were mostly in the black. Hong Kong’s Hang Seng Index rose 0.8 per cent, South Korea’s Kospi Composite Index edged up 0.1 per cent, while the Nikkei 225 climbed 0.2 per cent. The FTSE Bursa Malaysia KLCI fell 0.4 per cent.

Wall Street stocks were mixed at the end of a choppy session on Wednesday as markets weighed higher oil prices and volatility in Treasury bond yields. US oil prices closed at their highest level in more than a year, adding to worries about persistent inflation that could lead the Federal Reserve to keep interest rates higher for longer. The Dow Jones Industrial Average fell 0.2 per cent to 33,550.27. The broad-based S&P 500 was flat at 4,274.51, while the tech-rich Nasdaq Composite Index gained 0.3 per cent to 13,092.85. Stocks had initially advanced on a pullback in yields, but the 10-year US Treasury note reversed course, pushing closer to five per cent.

SG

Genting Singapore’s wholly-owned subsidiary Resorts World Sentosa (RWS) was fined a total of S$95,000 between April 2022 and March 2023 for breaches of anti-money laundering (AML) rules. According to the Gambling Regulatory Authority’s (GRA) annual report published online on Tuesday (Sep 26), RWS was fined for two breaches of the Casino Control (Prevention of Money Laundering and Terrorism Financing) Regulations during the past financial year ended March 2023. The breaches relate to the casino operator’s failure to perform customer due diligence (CDD) measures and enhanced CDD measures.

The voluntary unconditional general offer by Milkyway Chemical for LHN Logistics closed on Wednesday (Sep 27) with 99.14 per cent valid acceptances, setting the stage for the company to be delisted. The offer had previously been declared unconditional on Aug 21, with the offeror also crossing the 90 per cent threshold for acceptances, allowing it to exercise its right of compulsory acquisition. The offeror said it intends to compulsorily acquire all the remaining shares of shareholders who have not accepted the offer, and will proceed to delist the company from the Catalist board thereafter.

Troubled Real Estate Investment Trust (Reit) EC World Reit will defer its first half FY2023 distribution to unitholders to an unspecified future date, citing “insufficient funds”. The distribution was originally due on Sep 28. Its manager said on Wednesday (Sep 27) that the trust’s sponsor and its subsidiaries had not been able to pay the overdue rent owed to ECW Group, which comprises EC World Reit and its subsidiaries. “Additionally, as at the date of this announcement, the sponsor has been unable to provide a committed repayment plan in respect of the outstanding rent receivables which is satisfactory to the ECW Group,” it added. As such, EC World Reit will defer the distribution payment to a date when the Reit has sufficient free cash for the distribution, said the manager.

US

US mortgage rates jumped last week to the highest level since 2000, taking a toll on already depressed home-purchase applications. The contract rate on a 30-year fixed mortgage rose 10 basis points to 7.41 per cent in the week ended Sep 22, according to Mortgage Bankers Association data out on Wednesday (Sep 27). As a result, the index of home-purchase applications fell to 144.8, one of the lowest readings in decades. The latest pickup in borrowing costs is making the housing market – already one of the least affordable on record – even worse. Despite elevated financing costs, home prices continue to rise amid the limited supply of homes for sale. Part of the reason for that lean inventory is because many homeowners don’t want to move in the current high-rate environment. Moving would cause them to lose the lower mortgage rate they locked in years prior.

Apple was ordered on Wednesday to face a private antitrust lawsuit by payment card issuers accusing the company of thwarting competition for its Apple Pay mobile wallet. US District Judge Jeffrey White said the plaintiffs could try to prove that Apple violated the federal Sherman antitrust law by enforcing a 100 per cent monopoly over the domestic market for tap-and-pay wallets for iPhones, iPads and Apple Watches. The Oakland, California-based judge also dismissed a “tying” claim, which accused Apple of requiring purchasers of iOS devices to buy Apple Pay or forego purchases of competing wallets. Apple, based in Cupertino, California, did not immediately respond to requests for comment.

Micron Technology fell in late trading after predicting a steeper loss than anticipated in the current quarter, indicating that an industry slump is still weighing on the largest US maker of memory chips. The company projected a fiscal first-quarter loss of as much as US$1.14 a share, excluding some items. Analysts had estimated a 96 US cent loss. On the bright side, revenue is expected to start recovering in the period. Micron predicted sales of US$4.2 billion to US$4.6 billion, compared with an estimate of US$4.21 billion. For Micron and its competitors, Samsung Electronics and SK Hynix, 2023 has been a brutal year. Customers in their main markets – personal computers and smartphones – have slashed orders as they cope with lacklustre demand and stockpiles of excess parts. Wednesday’s (Sep 27) report suggests that investor optimism about a rebound in profitability may be premature.

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

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