DAILY MORNING NOTE | 31 March 2023

Singapore shares on Thursday fell 0.2 per cent. Jardine Cycle & Carriage was the biggest gainer, adding 2.2 per cent or S$0.67 to S$30.66. Another top gainer was Global Palm Resources, which jumped 89.9 per cent or S$0.116 to S$0.245. The trio of lenders were among the decliners on Thursday. OCBC saw the biggest fall – sliding 1.1 per cent or S$0.14 to S$12.39. UOB lost 0.4 per cent or S$0.11 to S$29.84, while DBS shed 0.3 per cent or S$0.09 to S$33.50.

Wall Street stocks climbed on Thursday (Mar 30) as markets calmed after recent banking sector turmoil. The Dow Jones Industrial Average rose 0.4 per cent to 32,859.03, while the broad-based S&P 500 picked up by 0.6 per cent to 4,050.83. The tech-heavy Nasdaq Composite Index jumped 0.7 per cent to 12,013.47. Meanwhile, weekly jobless claims figures released Thursday edged slightly higher, fuelling hopes that the Federal Reserve could soon ease on interest rate hikes if the labor market cools further.

SG

Singapore’s latest six-month Treasury bill (T-bill) closed its auction with a cut-off yield of 3.85 per cent on Thursday (Mar 30). The latest tranche of T-bills were around 2.2 times subscribed for the S$4.3 billion allotment. The total value of applications in this auction was S$9.6 billion, down from S$12.7 billion in the previous six-month T-bill auction, even as the cut-off yield rose.

Singapore’s GIC will jointly acquire Works Human Intelligence, a human-resources software provider in Japan, for US$2.6 billion. Sovereign wealth fund GIC will acquire about half of Works Human’s shares, with the rest held by Works Human executives and a new fund to be established by Bain Capital. This suggests GIC will be teaming up with Bain and Works Human’s management.

The manager of Mapletree Logistics Trust (MLT) on Thursday (Mar 30) said it is in the process of buying eight logistics properties in Japan, Australia and South Korea for a total acquisition price of S$913.6 million. Including acquisition-related expenses, the total acquisition cost is estimated to be approximately S$946.8 million.

Singtel is in talks to integrate its Indonesian partner Telkom’s fixed broadband business into the Singapore firm’s regional associate Telkomsel. It believes the potential integration represents a “rare opportunity for Telkomsel to enter Indonesia’s high-growth fixed broadband market with an industry leader (Telkom) that has some 70 per cent share of (the) market”. It, however, emphasised that negotiations are still ongoing, and there is no certainty of a transaction.

Sembcorp Marine (Sembmarine) called for a trading halt with immediate effect on Thursday (Mar 30) less than half an hour after the midday break. The trading halt comes a day after Sembmarine released a Mar 29 statement that preliminary administrative proceedings against its wholly-owned subsidiary, Estaleiro Jurong Aracruz (EJA), were related to past conduct linked to Brazil’s anti-graft probe known as Operation Car Wash. It has since requested to resume trading at 3.15 pm on the same day.

Sembcorp Marine (Sembmarine) and its consortium partner GE Renewable Energy’s Grid Solutions have jointly secured a framework cooperation agreement (FCA) from Dutch transmission system operator TenneT. The FCA covers a period of five years with the option to extend for another three years. It comprises three contracts to supply high voltage direct current (HDVC) electrical transmission systems for three mega offshore wind farm projects. Each of the contracts is valued at about two billion euros (S$2.9 billion), said Sembmarine on Thursday (Mar 30). Completion of the platforms is expected to take place sometime from Q4 2029 to 2031.

A district court in Indonesia has ruled that a 1.72 trillion rupiah (S$152 million) lawsuit against Kepland Investama – a wholly-owned subsidiary of Keppel Land – was inadmissible. The civil action was over ownership rights for land plots in Jakarta, where the International Financial Centre Jakarta Tower 2 building complex is situated. The claimant had alleged that he was the legal owner of the land plots. His claim was based on a “girik” – a document which is not considered proof of land ownership under Indonesian agrarian law.

Sabana Industrial REIT has entered into agreements with Keppel Energy-as-a-Service (EaaS), a wholly owned subsidiary of Keppel Infrastructure, to implement electric vehicle (EV) charging and solar photovoltaic cells (PVs) in the REIT’s properties. Under the initial phase, four Volt EV charging stations will be installed at the REIT’s property at 151 Lorong Chuan, also known as New Tech Park. The charging stations are targeted for completion within 1H2023. Keppel EaaS will also install solar PVs across four of Sabana REIT’s properties.

MindChamps Preschool has entered into a joint venture (JV) with US MF25, and will use the group’s wholly-owned subsidiary, MindChamps International Preschool Franchising, as the master franchisee for the US. The JV company will become a 50-50 JV between MindChamps International Preschool and US MF25, and have a paid-up capital of US$3.5 million. The joint venture is not expected to have any material impact on the net tangible asset or earnings per share of the group for the financial year ending Dec 31, 2023.

A subsidiary of Rex International Holding Limited, Lime Petroleum AS, has been approved for oil and gas exploration in Norway by the Norwegian Ministry of Petroleum and Energy, following the completion of the application process that started in April 2022. Lime is a 91.65% subsidiary of Rex that deals with oil and gas exploration both from Norway and internationally.

US

Jobless claims for the week ended March 25 totaled 198,000, up 7,000 from the previous period and a bit higher than the 195,000 estimate. Though the number was slightly higher than expectations, the total indicates that companies are slow to lay off workers despite expectations that the unemployment rate will rise through the year. According to estimates last week, central bankers expect the unemployment rate to rise to 4.5% this year, from its current 3.6% level. Doing so would require the loss of more than 540,000 jobs, according to an Atlanta Fed calculator.

The Federal Deposit Insurance Corporation (FDIC) hired real estate advisory firm Newmark Group to sell about US$60 billion of Signature Bank loans, after the bank’s collapse into receivership. The sales of the pools of loans will likely take place over the next 90 days, according to people familiar with the matter.

Chinese regulators held a meeting with banks to gauge interest in taking over failed Silicon Valley Bank’s stake in a local joint venture in a bid to safeguard the banking system from the US lender’s collapse. The China Banking and Insurance Regulatory Commission convened a meeting this week to discuss the disposal of SVB’s 50 per cent holding in SPD Silicon Valley Bank, people familiar with the matter said. Shanghai Pudong Development Bank is the Chinese partner in the joint venture. Some Chinese banks have already indicated interest, while it was unclear if the regulator prefers a foreign buyer.

Virgin Orbit is ceasing operations “for the foreseeable future” after failing to secure a funding lifeline, CEO Dan Hart told employees during an all-hands meeting Thursday afternoon. The company will eliminate all but 100 positions, amounting to about 90% of the workforce, which will affect every team and department.

Nikola plans to raise $100 million, which comes in two parts. First, the company said it will offer up to $100 million worth of stock to the public via a traditional secondary offering. Secondly, Nikola said it has entered into a forward stock purchase agreement with an unnamed investor. If the public offering raises less than $100 million, that investor has agreed to buy the remainder at the public offering price. Either way, Nikola will raise $100 million before fees, money that it plans to use for working capital and other general purposes.

Netflix is working to bring its nascent video-game service to television sets for the first time, moving beyond smartphones and tablets in a sign of its growing ambitions. Code hidden within Netflix’s app includes references to games played on TVs. The code also mentions using phones as video-game controllers. The findings in Netflix’s app code don’t guarantee that the company will follow through with the TV idea, but it does indicate what the company has been testing internally.

Tesla said on Wednesday (Mar 29) a US$7,500 tax credit in place since January will be reduced for its Model 3 rear-wheel drive by Mar 31, subject to guidance due this week from the US Treasury Department on the sources of battery components. The Treasury Department is due to issue guidance on sourcing of electric vehicle (EV) batteries by Friday that will impact the credit available for some EVs. A US official told Reuters that the Treasury Department’s guidance on the EV tax credit due March 31 would result in fewer vehicles getting full or partial credits.

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

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