DAILY MORNING NOTE | 29 September 2023

Singapore shares ended higher on Thursday (Sep 28), amid mixed trading in the region. It rose 0.2 per cent or 6.96 points to 3,206.99. Across the broader market, losers outnumbered gainers 293 to 281, after 1.3 billion securities worth S$920 million changed hands. Regional indices were largely in the red on Thursday. The Hang Seng Index fell 1.4 per cent, the Nikkei 225 lost 1.5 per cent, and the FTSE Bursa Malaysia KLCI Index declined 0.4 per cent. Meanwhile, the IDX Composite rose 0.2 per cent. South Korean markets are closed for Mid-Autumn Festival on Thursday and Friday.

Wall Street stocks advanced on Thursday as Treasury yields eased, bringing some relief to investors amid interest rate concerns. The Dow Jones Industrial Average rose 0.4 per cent to close at 33,666.34. The broad-based S&P 500 picked up by 0.6 per cent to 4,299.70, while the tech-rich Nasdaq Composite Index gained 0.8 per cent to 13,201.28. The bounce came as the yield on the 10-year US Treasury note retreated from an earlier jump — a key move as the figure is commonly used as a benchmark for other interest rates.

SG

City Developments Limited (CDL) has purchased 35 billion yen (S$321.9 million) worth of interest in a portfolio of 25 residential assets in Tokyo from affiliates of US real estate investment manager BGO, or BentallGreenOak. It marks the developer’s foray into Tokyo’s rental housing sector, as well as its largest private rented sector (PRS) transaction in Japan to date. The 25 freehold residential properties comprise a total of 836 units, of which four are for retail use. The assets have an average age of less than two years, and are located across the 23 city wards that make up Tokyo. Three of the properties are in ultra-prime residential areas within Tokyo’s central five wards, said CDL on Thursday (Sep 28). The group added that the portfolio of 25 assets has an average committed occupancy rate of around 97 per cent, and a stable rental income.

Singapore’s latest six-month Treasury bill (T-bill) offered a cut-off yield of 4.07 per cent, in the auction that closed on Thursday (Sep 28). This is a jump from the cut-off yield of 3.7 per cent for the previous six-month tenor, and the first time that yields have crossed the 4 per cent mark since January. Demand for the T-bills was down in the latest auction, with a total of S$9.3 billion in applications for the S$5.3 billion on offer, representing a bid-to-cover ratio of 1.76, auction data on the Monetary Authority of Singapore’s (MAS) website indicated. In comparison, the last auction had a bid-to-cover ratio of 2.03, with S$11.2 billion in total applications against a total of S$5.5 billion allotted.

Two companies have lodged their preliminary offer documents for Catalist listings in a sign that more activity could be returning to the local initial public offerings (IPO) market. Art outsourcing and game development company Winking Studios, and human resource service provider Sheffield Green made their respective lodgements to the Singapore Exchange’s (SGX) Catalodge portal on Thursday (Sep 28). If the two companies proceed with their listing plans, they would take the number of IPOs on the Singapore market this year to five, following the earlier Catalist listings of Ever Glory United, Pasture Holdings and YKGI.

US

Fortnite maker Epic Games is laying off about 900 employees, or 16 per cent of its staff, Bloomberg News reported on Thursday (Sep 28). The videogame industry is struggling with a slowdown in spending as inflation-weary gamers become more selective in picking popular titles. The job cuts were announced in a memo to staff, the report said, citing people familiar with the matter. Legacy videogame publishers have also been fighting for top spots with new entrants like Warner Bros Discovery, whose Harry Potter-based game Hogwarts Legacy was a major hit. Epic has been in a legal battle with Apple since 2020, when the gaming firm alleged that Apple’s practice of charging up to 30 per cent commissions on in-app payments on iPhones and other devices violated US antitrust rules.

A gauge of pending US previously owned home sales fell in August to the lowest level since April 2020, evidence of a resale market throttled by higher mortgage rates. The National Association of Realtors’ (NAR) index of contract signings tumbled 7.1 per cent to 71.8 from July, the group reported on Thursday (Sep 28). The decline was larger than all estimates in a Bloomberg survey of economists. Compared with a year earlier, pending home sales were down nearly 19 per cent on an unadjusted basis. Mortgage rates, which surged to an almost 23-year high last week, continue to thwart demand. That, combined with still-high prices and limited inventory, is contributing to one of the most unaffordable housing markets ever.

Gamestop on Thursday (Sep 28) named billionaire Ryan Cohen as its CEO and chairman, tightening the activist investor’s grip on the ailing videogame retailer that he intends to turn around. The brick-and-mortar retailer that once attracted gamers has struggled in the age of online downloads, drawing it to the heart of a clash in 2021 between hedge funds betting on its demise and retail traders pumping up its price. At the peak of that meme stock rally, Cohen, GameStop’s largest investor, joined the board to aid a pivot to e-commerce. His shot to fame was building up an online pet products retailer Chewy into a powerhouse that he sold for US$3.5 billion in 2017. Cohen became executive chairman at Gamestop in June after former CEO Matt Furlong was ousted.

Nike topped Wall Street estimates for first-quarter profit on Thursday (Sep 28) as higher prices of its sneakers and apparel helped offset a hit from waning demand and persistent cost pressures. The company’s shares were up about 2 per cent in extended trading. Nike’s inventories also fell 10 per cent, indicating the company has been successful in reducing excess product stocks ahead of the holiday season, quelling some investor concerns that it would be forced to offer steep discounts. The company’s strong brand would help it maintain its premium pricing even in a more promotional environment, analysts have said, adding that as competition in sportswear heats up, its leading position and innovative products would also help Nike outpace other brands.

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

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