Daily Morning Note – 30 September 2021
PHILLIP SUMMARY
Asian stocks looked set for a muted open after U.S. equities pared most of their gains as a rally in technology shares petered out. The dollar strengthened. Futures pointed to modest gains in Japan where the ruling party’s new leader who is set to become the next prime minister is seen by investors as maintaining stability. Contracts edged higher in Australia and dipped in Hong Kong. U.S. futures edged higher. The Nasdaq 100 notched its third straight day of losses after earlier climbing about 1%. Dip buyers helped push the S&P 500 higher. The dollar rose to the highest since November as investors opted for safe havens. The deadline for the U.S. government to keep running and avoid a default is looming amid wrangling in Washington. Treasury yields were little changed near the highest since June. Federal Reserve Chair Jerome Powell voiced cautious optimism that supply-chain disruptions lifting inflation would ultimately prove temporary.
BREAKING NEWS
SG
The International Finance Corporation (IFC), the World Bank Group’s private-sector investment arm, and mainboard-listed Sembcorp Industries announced that the conglomerate had successfully launched a S$675 million sustainability-linked bond (SLB) on Wednesday. The ten-and-a-half-year Singapore dollar bonds were issued with a coupon rate of 2.66 per cent under the group’s S$3 billion Multicurrency Debt Issuance Programme. DBS and UOB are the joint lead managers and bookrunners for the bond.
A subsidiary of Hatten Land has signed a definitive agreement with Singapore’s Frontier Digital Asset Management to share proceeds from jointly operating at least 1,000 cryptocurrency mining rigs at the group’s properties in Malaysia. In a bourse filing on Wednesday, the property developer said the rigs, which will be built in phases from Q4 2021, would repurpose Hatten Land’s existing retail mall infrastructure in Melaka for digital activities such as crypto mining and e-commerce.
Oceanus Group has exited the Singapore Exchange’s (SGX) watch list since being put on it nearly six years ago on Dec 14, 2015. In a press statement on Wednesday, the seafood supplier said it had demonstrated profitability since the second quarter of 2020. It hit a record turnover and net profit in H1 2021. Total revenue, which stood at S$52.5 million, was 6.5 times the S$8 million recorded the year before.
Australian gas pipeline operator APA Group is extending a conditional deadline in its takeover offer for AusNet Services, pending the outcome of its application to the government’s Takeovers Panel to scrap exclusivity arrangements between AusNet and its potential buyer, Canada’s Brookfield Asset Management. Among other conditions set out in its offer for the energy company, APA said its original Sept 28 deadline for AusNet to grant it due diligence access will be extended for so long as its panel application remains under review.
Singapore office rents have turned a corner and look set to bottom out in Q3 2021, according to Knight Frank’s quarterly office market bulletin. The real estate consultancy firm reported that prime-grade office rents in the Raffles Place/Marina Bay precinct grew for the first time since Q4 2019, with rents rising by 0.2 per cent quarter on quarter (qoq) to S$9.98 per square foot per month.
US
Resolving “tension” between high inflation and still-elevated unemployment is the most urgent issue facing the Federal Reserve right now, Fed Chair Jerome Powell said on Wednesday, acknowledging the central bank’s two goals are in potential conflict. “This is not the situation that we have faced for a very long time and it is one in which there is a tension between our two objectives…Inflation is high and well above target and yet there appears to be slack in the labour market,” Mr Powell said at a European Central Bank forum, an apparent reference to the 1970s bout of US “stagflation” that combined high unemployment and fast-rising prices. The United States is more than 5 million jobs short of where it was before the pandemic.
Walmart said on Wednesday it was planning to hire about 150,000 new US store workers, most of them permanent and full-time, in preparation for the busy holiday season. The US retailer also said it would offer extra hours to many of its store workers during the period, days after rival Target Corp also said it would provide more work hours for its retail employees.
Two US senators said on Tuesday a Facebook Inc whistleblower will testify at a Senate hearing next week about what one of them called the social media company’s “toxic effects” on young users. “This whistleblower’s testimony will be critical to understanding what Facebook knew about its platforms’ toxic effects on young users, when they knew it, and what they did about it,” Democratic Senator Richard Blumenthal, head of a subcommittee of the Senate commerce panel, said in a statement announcing the Oct 5 hearing.
Rolls-Royce on Wednesday announced its first fully electric car, the “Spectre”, will be available in late 2023, the luxury BMW group brand adding that all its vehicles will be electric by 2030. “This is not a prototype. It’s the real thing, it will be tested in plain sight and our clients will take first deliveries of the car in the fourth quarter of 2023,” said CEO Torsten Mueller-Otvoes.
Boeing Co’s 737 MAX test flight for China’s aviation regulator last month was successful and the planemaker hopes a two-year grounding will be lifted this year, the head of Boeing’s China business said on Wednesday.
Source: SGX Masnet, The Business Times, Bloomberg, Channel NewsAsia, Reuters, CNBC, PSR
Singapore REITs Monthly – One step forward, one step back
Recommendation: OVERWEIGHT (Maintained), Analyst: Natalie Ong
– FTSE S-REIT Index continues to lag the STI and FTSE Real Estate developer index, dipping 0.5ppts in September. All sub-sectors were in the red, except Diversified (+1.0ppt) with Hospitality (-5.7ppts) weighing down the index.
– Dividend yield spread of 267bps is -1.1SD of 10-year average. Near-term interest rates still below 5- and 10-year historical levels, supportive of acquisitions.
– Remain OVERWEIGHT with preference on retail and industrial sectors. Catalysts expected from pick-up in the economy. SREITS under our coverage to deliver FY21e DPU yields of 3.9-8.1%. Top picks are Ascott Residence Trust (ART SP, ACCUMULATE, TP S$1.17) and Frasers Centrepoint Trust (FCT SP, BUY, TP: S$2.87).
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