DAILY MORNING NOTE | 4 January 2023
Technical Pulse: Wilmar International Limited
Analyst: Zane Aw
Recommendation: Technical SELL
Sell stop: S$4.06 Stop loss: S$4.15 Take profit 1: S$3.85 Take profit 2: S$3.75
Wilmar International Limited (SGX: F34) Potential breakdown of a consolidaton triangle to retest the support zones at S$3.85-3.95 and S$3.63-3.75.
Singapore shares traded mixed on Tuesday (Jan 3), the first trading day of the year. The benchmark Straits Times Index (STI) fell by 0.2 per cent or 5.52 points to 3,245.80. Across the broader market, gainers beat losers 298 to 263 after one billion securities worth S$864.1 million changed hands. This comes as the Singapore economy expanded 3.8 per cent year on year in 2022, as indicated by the Ministry of Trade and Industry’s advance estimates. The strongest performer on the STI was Mapletree Industrial Trust – its units climbed 1.8 per cent or S$0.04 to close at S$2.26. At the bottom of the table was Yangzijiang Shipbuilding, which closed at S$1.28, down 5.9 per cent or S$0.08. The trio of banks also ended mixed on Tuesday. DBS fell 0.1 per cent or S$0.04 to close at S$33.88, while UOB closed flat at S$30.70 and OCBC rose 0.5 per cent or S$0.06 to close at S$12.24.
Wall Street stocks shed earlier gains to end lower on Tuesday, with investors still wary of a recession and further interest rate hikes to come. The Dow Jones Industrial Average ended flat at 33,136.37. The broad-based S&P 500 slumped 0.4 per cent to 3,824.14, while the tech-rich Nasdaq Composite Index dropped 0.8 per cent to 10,386.98. Among individual companies, Tesla fell 12.2 per cent on Tuesday after missing its delivery target, while Apple also dropped 3.7 per cent. For now, markets are awaiting minutes from the most recent Fed policymakers’ meeting – to be released on Wednesday – and key jobs data due on Friday.
Singapore’s economy expanded 3.8 per cent year on year in 2022, with growth in the services sector helping to offset sluggish performance in the manufacturing sector, according to advance estimates from the Ministry of Trade and Industry (MTI) on Tuesday (Jan 3). For the full year, manufacturing grew 2.6 per cent year on year, a far cry from the 13.2 per cent growth in 2021 when it helped to support the economy before border restrictions and other Covid-19 measures were lifted last year. Full-year growth for the construction sector came in at 6.5 per cent, moderating from the 20.1 per cent expansion in 2021, when the sector rebounded from a deep contraction in the first year of the pandemic. The services industry expanded 5 per cent year on year, slightly slower than the growth of 5.6 per cent in the previous year. MTI in November estimated the economy would grow by between 0.5 per cent and 2.5 per cent in 2023, a pace that it had said is “below trend”.
Private residential property prices inched up 0.2 per cent in the fourth quarter of 2022 after growing 3.8 per cent in the third quarter, finishing the year with a rise of 8.4 per cent, compared to the 10.6 per cent increase in 2021. Flash estimates released by the Urban Redevelopment Authority (URA) on Monday (Jan 3) shows sale transaction volume falling by about 36 per cent to 21,437 for the whole of 2022 from 33,557 in 2021. For the whole of 2022, prices in the CCR, RCR and OCR increased by 4.6 per cent, 9.2 per cent and 9.3 per cent, respectively. Low unsold inventory, healthy household balance sheets, and higher rents are some of the expected catalysts to support private home price increases in 2023.
The interest rates for the latest Singapore Savings Bond (SSB) have further slipped to 2.84 per cent for the first year and 2.97 per cent for the 10-year average, even as other short-term market investment products offer yields of around 4 per cent. The Monetary Authority of Singapore (MAS) website showed that the 10-year bond for retail investors opened on Tuesday (Jan 3) for issuance in February. The interest rates for the first two years of this tranche should have been much higher at 4 per cent and 3.15 per cent (instead of 2.84 per cent), if not for the government’s adjustments to provide stepped-up returns over the risk-free fixed income security’s 10-year tenor. S$700 million is on offer for this tranche, and applications close on Jan 26.
YKGI, the group which operates Yew Kee Duck Rice, bubble tea brand Chicha San Chen in Singapore, and six other F&B brands, is eyeing a Catalist listing. The initial public offering (IPO) will not have a public offer but will instead comprise only a placement tranche. The group is looking to raise capital for business expansion – which includes opening new outlets in Singapore and overseas, and bolstering its franchising and sub-franchising operations. YKGI posted an audited net profit of S$1 million, S$4.9 million and S$8.9 million for FY2019, FY2020 and FY2021, respectively. Revenue was S$26.8 million in H1 2022 and S$31.6 million, S$39 million, and S$56.1 million in FY2019, FY2020 and FY2021, respectively.
Hong Kong-headquartered Comba Telecom, a global solutions and services provider of wireless and information communications systems, will be listing its shares on the Mainboard of the Singapore Exchange (SGX) at 9am on Jan 4. The group received its eligibility-to-list (ETL) letter from the SGX-ST on Dec 29, 2022, for its secondary listing on the SGX. Shares of Comba Telecom on The Stock Exchange of Hong Kong (HKSE) closed 2.99% up at HK$1.38 (23.7 cents).
The manager of EC World REIT says that its lenders have extended the mandatory repayment deadline to Feb 28 from the original deadline of Dec 31, 2022 with two conditions. First, Forchn Holdings Group Co., Ltd., the sponsor, will have to place a margin deposit of RMB200 million ($38.9 million) in the onshore facility agent’s escrow account, which is said to have been paid on Dec 30, 2022. Next, the sponsor will have to pay $4.4 million to the lenders as partial repayment of the existing offshore bank loans by Jan 6. The money will be funded by the distributions made to Forchn Global by the REIT for the financial period from July 1, 2022, to Sept 30, 2022. The balance of the equity consideration (amounting to approximately RMB1.15 billion) will be payable to the vendor upon completion. The manager says there has been no indication that they would call for an event of default.
OUE Limited and OUE Commercial REIT Management, the manager of OUE Commercial REIT (OUE C-REIT), have announced the reopening of the 446-room Orchard Wing at Hilton Singapore Orchard following a 10-month renovation. The property is the Hilton brand’s flagship hotel in Singapore and its largest in the Asia-Pacific. The reopening marks the end of the final phase of the asset enhancement initiative announced in March 2020.
US construction spending unexpectedly rebounded in November, lifted by gains in nonresidential structures, but single-family homebuilding continued to be hammered by higher mortgage rates. The Commerce Department said on Tuesday (Jan 3) that construction spending climbed 0.2 per cent in November (8.5 per cent on a YoY basis) after falling 0.2 per cent in October. Spending on private construction projects advanced 0.3 per cent. Investment in private non-residential structures like gas and oil well drilling jumped 1.7 per cent, while outlays on residential construction fell 0.5 per cent. Spending on public construction projects dipped 0.1 per cent. Investment in state and local government construction projects declined 0.7 per cent, while federal government construction spending surged 7.2 per cent.
A selloff in Brent crude Tuesday led the global benchmark to its biggest daily decline since Sept. 23. Contracts for March delivery of Brent dove 4.4%, closing at $82.10 a barrel. Analysts credited the price drop to a strengthening dollar and concerns that businesses may not stock up fuel inventories in anticipation of a recession. U.S. crude futures settled 4.2% lower, at $76.93 a barrel, their largest daily decline since Nov. 17.
The front-month traded gold futures contract rose 1.1% to $1,839.70 a troy ounce Tuesday, settling at the highest value since June 2021. Prices were boosted by China’s plan to scrap quarantine requirements for international travelers, representing a shift toward opening the world’s largest commodity consumer – Chinese consumers are big buyers of physical gold. Another reason for higher gold prices: Yields on the 10-year Treasury note declined Tuesday morning. Higher yields make holding ultrasafe U.S. government bonds more attractive, while gold doesn’t pay anything.
Apple’s biggest production partner Foxconn has brought the world’s largest iPhone plant to about 90 per cent of anticipated peak capacity. Foxconn executive Vic Wang said the company’s Zhengzhou plant is now operating with roughly 200,000 staff, despite a Covid resurgence and recent staff upheaval. However, Apple shares fell 3.7% on Tuesday, closing with a market capitalization below $2 trillion for the first time since March 2021, meaning it has lost $996.5 billion in market value since its peak closing capitalization from a year ago.
Tesla shares finished Tuesday down 12% to $108.10, making them the biggest decliner on the S&P 500, after the company said it delivered fewer vehicles in 2022 than it initially targeted. Tesla delivered about 1.31 million vehicles last year, shy of the more than 1.4 million needed to reach its initial goal. The shares recorded their lowest close since August 2020.
Source: SGX Masnet, Bloomberg, Channel NewsAsia, Reuters, CNBC, WSJ, The Business Times, PSR
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