Daily Morning Note – 6 April 2022
Stocks and bonds face pressure in Asia on Wednesday as investors digest the prospect of a swift reduction in the Federal Reserve’s debt holdings, part of stepped up monetary tightening to fight high inflation. Equity futures for Japan and Australia pointed lower after technology stocks led a drop in U.S. shares. U.S. contracts were little changed in early trading. Markets in Hong Kong and China will reopen after a holiday.
Treasuries slumped Tuesday, taking the 10-year yield to the highest level since 2019, after Fed Governor Lael Brainard called the task of curbing inflation pressures “paramount” and said the central bank may start reducing its balance sheet rapidly as soon as May. Oil dipped amid the stronger dollar, but worries remain that Russia’s growing isolation over the war in Ukraine will further disrupt flows of key commodities. The U.S. and allies are coordinating fresh sanctions on Russia, including a U.S. ban on investment in the country and a European Union ban on coal imports..
SG
Restaurant operator Jumbo Group announced on Tuesday (Apr 5) it has opened 2 new Kok Kee Wanton Noodle stalls in Singapore – bringing the total number of outlets to 8. Jumbo had acquired a 75 per cent stake in Kok Kee – known for its springy noodles in a special lard-based sauce – in December 2020. The newest stall – located in a food court at the Lazada One Building along Bras Basah Road – was officially opened on Tuesday, while another stall at a coffee shop at Bedok North Avenue 3 was opened on Mar 16.
The manager of United Hampshire US Real Estate Investment Trust (UHReit) announced Tuesday (Apr 5) that it has granted yet another extension of the due-diligence period for the proposed divestment of 2 self-storage properties. In a bourse filing, the real estate investment trust (Reit) manager said the purchaser will require more time as it is still carrying out its due diligence on the properties. This is the third extension granted, with the due diligence period now extended to Apr 11. Pursuant to the terms of the conditional purchase-and-sale agreement, purchaser Storage Post was entitled to carry out due diligence on the properties by Mar 21. The due diligence period was first pushed back to Mar 28, and later postponed again to Apr 4. During this period, the purchaser is entitled to terminate the agreement at any time and for any reason, or for no reason at all, and be refunded the deposit.
Property player Chip Eng Seng Corporation is planning to acquire a minority stake in a property located at 8 Shenton Way, also known as AXA Tower, for S$2.1 million. Its wholly-owned subsidiary CEL Shenton has entered into a share purchase agreement with the sellers to acquire 21 per cent of the issued share capital of PRE 13, which has an effective interest of 50 per cent of the property. The acquisition will see CEL Shenton holding an effective interest of 10.5 per cent in the property, Chip Eng Seng said on Tuesday (Apr 5). The property, which is a 50-storey landmark Grade A office development with a retail podium, has a total site area of 10,984 square metres (sq m), and a 99-year leasehold land tenure starting from Jul 19, 1982. Chip Eng Seng noted that the property is intended to be redeveloped into a mixed-use commercial and residential development comprising office, retail, hotel and resident components, subject to relevant approval, which includes approval for a fresh 99-year lease. If the redevelopment takes place, the property will have a maximum allowable gross floor area of 144,162 sq m and a gross plot ratio of 13.125.
First Reit’s trustee, Perpetual (Asia), has priced S$100 million of guaranteed healthcare social bonds due in 2027 at 3.25 per cent, the manager of the real estate investment trust (Reit) said on Friday (Apr 1). The 5-year guaranteed bonds are part of the Reit’s Social Finance Framework, which aims to issue bonds and loans that have specific social benefit outcomes and meet sustainability goals. They also represent Singapore’s first-ever healthcare social bond, the manager said. Victor Tan, chief executive of First Reit’s manager, said the bonds open up a new channel of financing and enhance the Reit’s presence in the regional capital markets.
US
The US trade deficit held close to a record in February as the merchandise shortfall shrank and the surplus in services declined, partly reflecting the impact of broadcast rights for the Olympics. The February gap in goods and services trade was little changed at US$89.2 billion after a record shortfall in January, Commerce Department data showed Tuesday. The median estimate in a Bloomberg survey of economists called for a US$88.5 billion February shortfall. The figures aren’t adjusted for prices. The value of imports rose 1.3 per cent in February to a record US$317.8 billion and exports climbed 1.8 per cent to US$228.6 billion.
Growth at US service providers picked up in March as employment and orders strengthened, indicating the economy is on solid footing despite high inflation. The Institute for Supply Management’s gauge of services increased to 58.3 last month from 56.5 in February, according to data released Tuesday. Readings above 50 signal expansion. The gain was the first in four months. The group’s index of new orders advanced for the first time since October, while a measure of employment jumped by the most since January 2021 as Covid-19 cases declined. A gauge of business activity – which parallels the ISM’s measure of factory production – also expanded at a faster pace.
Amazon on Tuesday (Apr 5) announced deals for scores of launches to deploy a “constellation” of satellites in low orbit around the Earth to provide Internet service to people below. Amazon said that its contracts with Arianespace, Blue Origin and United Launch Alliance (ULA) are the largest commercial procurement of launch vehicles in history. The overall cost and timing of launches booked to make Amazon’s Project Kuiper a reality were not disclosed. “We still have lots of work ahead, but the team has continued to hit milestone after milestone across every aspect of our satellite system,” Amazon senior vice president Dave Limp said in a statement.
Twitter said on Tuesday (Apr 5) it would name top shareholder and Tesla boss Elon Musk to its board, a day after the billionaire disclosed a 9.2 per cent stake in the social media company. Musk cannot become the owner of more than 14.9 per cent of Twitter’s common stock either as an individual shareholder or as a member of a group as long as he is the director of Twitter, the company said in a filing. “I’m excited to share that we’re appointing @elonmusk to our board,” Twitter chief executive officer Parag Agrawal said in a tweet.
The European Commission on Tuesday proposed banning Russian coal as part of a new round of sanctions against the Kremlin for its unprovoked invasion of Ukraine. “We will impose an import ban on coal from Russia, worth 4 billion euros ($4.39 billion) per year. This will cut another important revenue source for Russia,” European Commission President Ursula von der Leyen announced on Tuesday afternoon, confirming an earlier report from CNBC. It marks another significant escalation in punitive measures against the Kremlin. Imposing sanctions on the Russian energy sector has been a challenge for the bloc given the high level of dependency that some member states have on the country’s resources.
Source: SGX Masnet, The Business Times, Bloomberg, Channel NewsAsia, Reuters, CNBC, PSR
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Date: 4 April 2022
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