Daily Morning Note – 31 May 2022
Stocks and US futures trimmed their advance and European bonds tumbled after hotter-than-expected German inflation numbers added to pressure for action from central bank policymakers to tame rising prices.
European equities pared a fourth day of gains, still on course for the longest winning streak since March. Luxury stocks outperformed Monday as China’s reopening plans boosted sentiment. Shares in theater chain operator Cineworld Group Plc soared after the movie “Top Gun: Maverick” topped the Memorial Day weekend box office. Bitcoin posted its biggest gain in two weeks, rising above $31,000 for the first time since May 16.
Nasdaq 100 contracts and S&P 500 futures rose in a sign the bounce in US stocks may have further to run after Wall Street’s best week since November 2020. The S&P 500 wiped out its May losses and snapped a string of seven weekly declines as institutional investors rebalanced portfolios into the end of the month.
The dollar slipped for a third day versus major peers as havens lost their appeal amid the slightly improved mood. Cash Treasuries aren’t trading because of the Memorial Day holiday.
Stocks to watch: SATS
SG
More than a third of the blue-chip counters on the Straits Times Index (STI) have registered double-digit total returns in the year to date. Leading the constituent stocks is Sembcorp Industries, which has registered a total return – including reinvested dividends – of 44 per cent so far this year. Another 10 – Jardine Cycle & Carriage (Jardine C&C), Yangzijiang Shipbuilding, Keppel Corp, City Developments Limited (CDL), CapitaLand Investment (CLI), Singtel, SATS, ST Engineering, UOB and Singapore Airlines – logged total returns of between 10.2 and 42.7 per cent. Of the 30 STI constituent stocks, two-thirds have managed to generate positive total returns.
Food solutions and gateway services provider SATS on Monday (May 30) reported earnings of S$7.2 million for the second half of FY21-22 ended March, compared to a net loss of S$2 million in the corresponding period a year ago. Earnings per share rose to 0.6 Singapore cent for H2, compared to a loss per share of 0.2 cent in the year-ago period. H2 revenue was up 14.7 per cent to S$607.3 million, as travel continued to recover with the easing of border restrictions. Food solutions revenue increased by 10.8 per cent to S$330.6 million, while gateway services revenue grew 19.5 per cent to S$275.2 million. However, expenditure soared 29.8 per cent to S$653.9 million as the group ramped up operations to support the travel recovery.
The battle for property player Hwa Hong Corporation is an intergenerational dispute among the members of its controlling family, the Ong family. According to a report by Lianhe Zaobao, the disputes within the Ong family date back over a decade, with the current battle centred on former group managing director Ong Choo Eng’s privatisation offer for the property company. Hwa Hong founder Ong Chay Tong had 2 wives and 6 sons. His sons and their families are all shareholders of Hwa Hong, with their shareholdings as follows: Ong Mui Eng with an 8.4 per cent stake; Ong Kwee Eng with 5.5 per cent; Ong Choo Eng with 13.8 per cent; Steven Ong with 16.2 per cent, Ong Hian Eng with 4.6 per cent; and Ong Hoo Eng with 5.5 per cent.
Yangzijiang Financial (YZJFH), the Yangzijiang Shipbuilding spin-off, announced May 30 that it is upping its dividend payout policy. The board said it intends to increase the amount of dividends paid to shareholders – either as an annual dividend or interim dividend – to at least 40 per cent of the group’s net profit after tax, excluding non-recurring, one-off and exceptional items. This will be for the next 3 financial years up to FY2024. The announcement comes a week after the company on May 23 proposed a mandate to allow it to buy back up to 10 per cent of its own issued ordinary share capital.
Semiconductor manufacturer Micron Technology has appointed Singtel to deploy its 5G millimetre wave (mmWave) solutions with localised edge core at its 3D NAND flash memory fabrication plant in Singapore. This is the first time a company in Singapore is piloting 5G by deploying an mmWave campus solution with edge core on-premises for industry 4.0 manufacturing applications. “This industry-first deployment proves that 5G networks can be used for high-precision quality control and manufacturing operations which previously was not possible with the limitations of Wi-Fi,” said Bill Chang, Singtel’s chief executive officer of Group Enterprise. Singtel’s 5G mmWave network supports massive bandwidth of up to 2 Gbps with ultra-low latency.
US
The US dollar resumed its slide on Monday (May 30) as risk appetite across markets tentatively strengthened, supported by encouraging economic data and bets that the Federal Reserve will tighten policy at a slower pace. The dollar index – which tracks the greenback against six major rivals – is on track for its first monthly drop in 5, as the safe-haven currency loses steam after a breakneck start to the year. The dollar index is on track for a more-than 1.5 per cent drop in May – although it remains up about 6 per cent on the year. It was last down 0.2 per cent on the day at 101.510. Trade was likely to be light through Monday as US stock and bond markets close for the Memorial Day public holiday.
The US central bank needs to keep raising interest rates in big steps until inflation starts to come down, Federal Reserve governor Christopher Waller said Monday (May 30). The Fed early this month announced the biggest increase in the benchmark interest rate since 2000, following a smaller hike in March, as it aims to tamp down the highest inflation in more than 40 years. Waller said he supports more half-point rate hikes “for several meetings.” “I am not taking 50 basis-point hikes off the table until I see inflation coming down closer to our 2 per cent target,” he said in a speech prepared for delivery to a monetary policy conference at Goethe University.
Source: SGX Masnet, The Business Times, Bloomberg, Channel NewsAsia, Reuters, CNBC, PSR
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Date: 30 May 2022
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