DAILY MORNING NOTE | 5 October 2023

Singapore stocks extended losses on Wednesday (Oct 4), tracking a slide in US indices. It declined 1.4 per cent or 44.96 points to 3,147.39. Across the broader market, there were more than twice as many losers as there were gainers – 421 to 208, as 1.5 billion shares worth S$1.3 billion changed hands. Japan’s Nikkei 225 dropped 2.3 per cent, while Hong Kong’s Hang Seng Index slid 0.8 per cent. The FTSE Bursa Malaysia KLCI closed down 0.3 per cent.

Wall Street stocks ended the day higher on Wednesday (Oct 4), as Treasury yields pulled back on the heels of a weak private hiring report. The US private sector added just 89,000 jobs in September according to payroll firm ADP, and the hiring slowdown could ease pressure on policymakers to raise interest rates further. The Dow Jones Industrial Average closed up 0.4 per cent at 33,129.55. The broad-based S&P 500 rose 0.8 per cent to 4,263.73, while the tech-rich Nasdaq Composite Index surged by 1.4 per cent to 13,236.01.

SG

Certificate of entitlement (COE) prices broke new ground with the price for Open category COEs exceeding S$150,000 for the first time and the premium for Category B reaching another record high. Category E, the Open category, which can be used to register any type of motor vehicle except motorcycles, increased by 5.1 per cent or S$7,360 to S$152,000. This is the first time the price of any COE has reached the S$150,000 mark, and exceeds the previous record of S$144,640 which was set in September’s second round of bidding. Prices for Category B rose 3.6 per cent or S$5,113 to S$146,002. This is also a new high, exceeding the previous record of S$140,889 set in September’s second round of bidding. Category B is the category for cars with engines of more than 1,600 cc in capacity or with more than 97 kilowatts (kW), or for electric vehicles (EVs) with more than 110 kW.

Wong Kar King, managing director and controlling shareholder of Advanced Holdings, voted against a capital reduction and cash distribution plan, as he was mulling a potential investment. The proposed investment came about after the company’s board put forward the proposal and before the EGM was held on Sept 29. Under the plan, each Advanced Holdings shareholder would receive a cash distribution of 23.2 cents, in a bid by the company to reduce its capital and account for the accumulated losses of more than $15 million as at Dec 31 2022 over the years. Under this plan, Wong would personally receive $9.6 million, based on his stake of more than 41.4 million shares. However, the proposal did not go through, with 81.01% of the shares voting against, outnumbering the 18.99% shares in favour.

Switzerland-based energy trader MET Group has set up an office in Singapore to focus on liquefied natural gas (LNG) trading, as well as asset investments in what will be its first office in Asia, the company said on Wednesday (Oct 4). MET’s Singapore subsidiary will be 10 per cent owned by Keppel. The two companies also have a joint venture to explore renewable energy opportunities in Europe. “Keppel and MET will seek to broaden this cooperation in Asia as well,” MET said. The company’s activities include wholesale and retail distribution of gas and power generation in European countries including France, Germany, Italy and Spain. It imported more than 30 terawatt-hours (TWh) – or around 2.3 million tonnes – of LNG in 2022. Its total traded volume of natural gas amounted to 109 billion cubic metres (bcm) last year, while total traded electricity was 67 TWh.

US

Oil prices settled down more than US$5 on Wednesday (Oct 4) as fuel demand destruction and a bleaker macroeconomic picture took centre stage in the day’s trade. Brent crude oil futures settled down 5.11, or 5.6 per cent, to US$85.81 a barrel while US West Texas Intermediate crude (WTI) fell US$5.01, or 5.6 per cent, to US$84.22. At their session lows, both benchmarks were down by more than US$5, and heating oil and petrol futures also fell by more than 5 per cent. Crude oil prices have fallen by about US$10 since last week’s settlement.

Google is looking to challenge Apple head-on with new Pixel phones that are more iPhone-like than ever before. This year’s Pixel 8 and 8 Pro are closer in price to Apple’s counterparts, have similar flat-edged screens, and can make payments with face identification. Alphabet’s Google introduced its new lineup on Wednesday (Oct 4) – including fresh smartphones, watches and earbuds – and raised the starting price of its phones by US$100 each. The Pixel 8 Pro matches the iPhone 15 Pro at US$999, while the Pixel 8 costs the same as the iPhone 14 at US$699. The new prices reflect the upgraded displays and cameras used in the latest devices, which are still “punching above our weight class,” according to Google product manager Patrick Hennessey, suggesting that consumers are getting more for their money.

Treasury yields inched down from multiyear highs on Wednesday after new jobs data showed tentative signs of a weakening labor market. The yield on the 10-year Treasury note dropped nearly 7 basis points to 4.735% on the back of the data release. Earlier, yields rose as high as 4.884% after crossing the 4.8% mark on Tuesday — levels last seen in 2007. Payroll processing firm ADP said job growth totaled just 89,000 in September, sharply below the 160,000 estimate from economists polled by Dow Jones. The 30-year Treasury bond yield slid 7 basis points to 4.867%, after briefly trading above 5% earlier in the session, also at levels last seen in 2007. The 2-year Treasury note yield was last down 9 basis points at 5.054%. Yields and prices have an inverse relationship, so that when prices rise, yields fall.

General Motors is setting up a US$6 billion line of credit to shore up liquidity, a move indicating the carmaker is preparing for a strike at US plants that may drag on with costs already reaching US$200 million. The Detroit-based company’s move to bolster its financial position was announced in a securities filing early Wednesday (Oct 4). GM wants the 364-day revolving credit line, which will mature on Oct 1 next year, to maintain operational flexibility, a company spokesperson said. As of June 30, GM’s total automotive liquidity stood at US$38.9 billion, so it’s not at risk of running out of money anytime soon. But the new credit line is a sign GM may be buckling in for a prolonged work stoppage by the United Auto Workers.

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

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