Daily Morning Note – 3 August 2021

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Wall Street stocks finished mostly lower on Monday after global growth worries eroded gains made earlier in the session. The yield on the 10-year US Treasury note, a proxy for medium-term growth expectations, sank below 1.2 per cent in a sign of jitters over the economy’s recovery. The drop followed last week’s US data that showed strong second-quarter growth, but at a level below analyst’s expectations. Data released Monday from the Institute for Supply Management also showed manufacturing industry growth below market expectations due to ongoing supply shortages and bottlenecks.


SG News

Credit Bureau Asia has signed a memorandum of understanding to enter Vietnam in partnership with Hanoi-headquartered financial data provider FiinGroup, the company announced in a Monday bourse filing. Under the agreement, both companies will form a joint venture in Vietnam to provide analytics and data solutions to financial institutions, credit granting agencies, payment services agencies and other data companies. The partnership will also support the data analytics capabilities Buy Now, Pay Later players and mass market services such as telcos.

Ascendas Real Estate Investment Trust (Ascendas Reit) has bumped up its distribution per unit (DPU) to 7.66 Singapore cents for the first-half ended June 30, up 5.4 per cent from 7.27 cents a year ago. Distributable income rose 18.2 per cent to S$311.0 million, which the manager attributed mainly to contributions from its newly acquired properties. However, the biggest revelation of the day came as the manager hinted at potential redevelopment plans for the TÜV SÜD PSB Building at Singapore Science Park 1.

Wilmar International on Monday said its 50 per cent owned Indian joint venture (JV) Adani Wilmar has filed a draft red herring prospectus for its initial public offering (IPO) on the Bombay Stock Exchange and the National Stock Exchange of India. Adani Wilmar, which is in the business of offering essential kitchen commodities to Indian consumers, intends to raise up to 45 billion rupees (S$818 million) in a fresh issue. There will not be any secondary offering, it said. With this listing, the company hopes to “further the growth” of its operations by increasing its market visibility and awareness among current and potential customers, it noted in a statement.

The S$3.4 billion deal announced by two of Singapore’s most established companies, Keppel Corp and Singapore Press Holdings (SPH), would allow the former to grow its asset base and earnings. Meanwhile, SPH shareholders would also have an incentive to vote through the proposed restructuring of its media business. The proposed scheme of arrangement – contingent on SPH first obtaining shareholder approval to transfer its media assets to a company limited by guarantee (CLG) – would result in SPH delisting and becoming a wholly-owned subsidiary of Keppel.

The Purchasing Managers’ Index (PMI) reading picked up to 51.0 points for the month, from 50.8 in June, the Singapore Institute of Purchasing and Materials Management (SIPMM) announced on Monday. This is the highest overall score since December 2018. Meanwhile, the PMI for Singapore’s linchpin electronics industry rose by 0.2 point to 50.8, for its 12th straight month of growth. Readings above 50 indicate an expansion, while those below 50 represent a contraction.

Great Eastern Holdings on Monday posted a net profit of S$232.3 million for the second quarter ended June 30, 2021, 22 per cent lower than the S$297.5 million a year ago. The insurance arm of OCBC attributed this to financial market conditions that were not as favourable for the quarter, which resulted in lower mark-to-market gains. Operating profit for Q2 fell to S$148 million, down 20 per cent from S$185.1 million a year ago. Meanwhile, non-operating profit eased to S$34.9 million, down 2 per cent from S$35.6 million.

US News

Sanofi has offered to buy US biotech company Translate Bio, two sources familiar with the situation said on Monday, as the French drugmaker bets on next-generation mRNA technology after setbacks in the Covid-19 vaccine race. Shares in the New York-listed biotech company soared more than 70 per cent to above US$50 in extended trading, building on the big gains in the stock as investors have piled in to the sector amid a rush to develop vaccines and treatments to tame the pandemic which has killed 4.3 million and roiled the global economy.

McDonald’s Corp on Monday confirmed that all its customers and staff will need to start wearing masks again inside its US restaurants in areas with high or substantial transmission, regardless of whether they are vaccinated or not. The resurgence of Covid-19 cases in the United States due to the Delta variant and the new guidance from the US Centres for Disease Control and Prevention (CDC) that requires fully vaccinated individuals to wear masks have led companies to change their plans on vaccinations and masking.

Pfizer and Moderna have raised the prices of their Covid-19 vaccines in their latest European Union (EU) supply contracts, the Financial Times reported on Sunday. The new price for the Pfizer shot was 19.50 euros (S$31.34)against 15.50 euros previously, the newspaper said, citing portions of the contracts seen. The price of a Moderna vaccine was US$25.50 a dose, the contracts show, up from about 19 euros in the first procurement deal but lower than the previously agreed US$28.50 because the order had grown, the report said, citing one official close to the matter.

Oil prices fell more than 3 per cent on Monday after weak economic data from China and the United States, the world’s top oil consumers, and higher crude output from Opec producers stoked fears of weakness in oil demand and oversupply. Brent crude oil futures settled down US$2.52, or 3.3 per cent, at US$72.89 a barrel, while US West Texas Intermediate (WTI) crude ended US$2.69, or 3.6 per cent, lower at US$71.26.

US Treasury Secretary Janet Yellen on Monday called on Congress to take steps to address the federal government’s borrowing limit which was hit on Sunday. Congress suspended the debt limit in 2019, but the two-year suspension lapsed on July 31, forcing Treasury to begun taking “extraordinary measures” to remain under the ceiling and continue funding government operations. But private economists estimate those steps will only buy the government a few weeks after which debt repayments would be at risk unless the debt limit is increased or suspended.

US manufacturing expanded at a softer – yet still solid – pace in July as producers grappled with persistent bottlenecks and input shortages. The Institute for Supply Management’s gauge of factory activity eased for a second month to 59.5 from June’s 60.6, according to data released Monday. Readings above 50 indicate expansion. The median projection in a Bloomberg survey of economists called for a July reading of 61.

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


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