DAILY MORNING NOTE | 6 February 2024

Trades Initiated in the past week

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Singapore shares ended Monday (Feb 5) in the red, after United States Federal Reserve chair Jerome Powell said the Federal Open Market Committee is unlikely to make a rate cut in March. Across the broader market, losers outnumbered gainers 351 to 241, as 1.9 billion securities worth S$1.3 billion changed hands. The top gainer was Hong Kong-based conglomerate Jardine Matheson Holdings which rose 2.3 per cent or US$0.92 to US$41.68. Real estate investment trust Mapletree Pan Asia Commercial Trust was at the bottom of the index, after it lost 5.5 per cent or S$0.08 to end at S$1.38. Local banking stocks ended lower on Monday. DBS declined 1.1 per cent or S$0.37 to S$31.85, while OCBC fell 1.5 per cent or S$0.19 to S$12.81. UOB contracted 0.8 per cent or S$0.23 to S$28.39.

Wall Street stocks ended on Monday markedly lower, as Treasury yields picked up on concerns over the timing of interest rate cuts this year. The Dow Jones Industrial Average fell 0.7 per cent to 38,380.12 while the broad-based S&P 500 retreated 0.3 per cent to 4,942.81. The tech-heavy Nasdaq Composite Index crept down 0.2 per cent to 15,597.68.

Top gainers & losers

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Events Of The Week

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SG

Mainboard-listed Noel Gifts International reported a net loss of S$1.2 million for the first half ended Dec 31, 2023, as its losses widened 53.9 per cent year on year from S$0.6 million. In a bourse filing on Monday (Feb 5), the gifts marketing and property investment company attributed its losses to lower sales from its gifts division in the period and “ever-changing consumer demand”. Revenue for the six months dropped 16.4 per cent to S$6.2 million, down from S$7.4 million in the previous corresponding period. Gross profit fell by 14.5 per cent to S$3.1 million, from S$3.6 million. However, the company also said it expects FY2024 to be profitable as a result of the collective sale of units it owns at 50 Playfair Road.

Multi-Industry food company said that it expects a “significant improvement” in its net profit for the second half of its 2023 financial year ending on Dec 31, compared to the same period the previous year. Its full-year result is also expected to see the same improvement, based on a review of its latest financial performance. In a profit guidance update released on the Singapore Exchange on Monday (Feb 5), QAF said that this was mainly due to better business performance and improved foreign exchange movements. This is despite the company’s non-cash impairment of S$9.2 million on the group’s investment in joint venture Gardenia Bakeries (KL), as well as exceptional items relating to insurance claims arising from flooding at its Malaysian bakery factory. It had previously stated after the release of its results for H1 FY2023 that the operating performance for the rest of the financial year would be satisfactory. Its final set of results is set to be released later this month.

Catalist-listed MeGroup has been appointed as a dealer of MG cars in Malaysia, as it winds up its Hyundai dealership. This dealership marks the group’s entry into the electric vehicle (EV) market. MN Automart, a subsidiary of MeGroup’s Malaysian-based unit Menang Nusantara Holdings, will open the dealership in Setia Alam in the state of Selangor, it announced on Monday (Feb 5). The outlet, which will occupy a two-storey semi-detached factory lot at Bandar Bukit Raja, is slated to begin operations on Feb 28. It will provide new car sales, service and spare parts. The initial term for the dealership will be 36 months, with an option to renew for a further 24 months.


US

Estee Lauder plans to cut 3 to 5 per cent of its global workforce as the cosmetics giant expands an effort to shore up margins squeezed by Chinese customers cutting back on higher-priced luxury products, sending its shares up as much as 19 per cent. A boom following the lifting of pandemic curbs in China never materialised and recent results have indicated mixed luxury demand. While companies like LVMH and Richemont have posted strong sales growth, others like Burberry have flagged a sluggish rebound. Organic net sales in the Asia-Pacific region fell 7 per cent during the reported quarter, Estee said, while overall margins dipped 60 basis points. Estee expects incremental operating profit between US$1.1 billion and US$1.4 billion from the efforts in fiscal years 2025 and 2026, up from US$800 million to US$1 billion it had estimated earlier. The company said it may record between US$500 million and US$700 million in charges before taxes.

The US dollar rose to its highest in almost three months against other major currencies on Monday (Feb 5) as traders clawed back bets for aggressive rate cuts by the Federal Reserve this year. The Fed repricing has followed Friday’s blockbuster US jobs report that far exceeded market expectations and sent US bond yields soaring, boosting the country’s currency. Treasury yields rose further on Monday after Fed chair Jerome Powell said over the weekend that the central bank could “give it some time” before cutting interest rates. The US dollar index, which tracks the greenback against six other major currencies, rose to 104.3, its highest since Nov 17, It was last up 0.21 per cent at 104.27. The two-year Treasury yield was last up six basis points at 4.433 per cent, after jumping 18 bps on Friday.

Snap said on Monday (Feb 5) it would cut around 528 employees, or 10 per cent of its global workforce, a sign that the spate of layoffs seen in 2023 could persist as firms grapple with economic uncertainty. The Snapchat parent expects pre-tax charges in the range of US$55 million to US$75 million, primarily consisting of severance and related costs, and other charges, of which US$45 million to US$55 million are expected to be future cash expenditures. The majority of these costs are expected to be incurred during the first quarter of 2024. Snap joins several other tech and media firms such as Amazon and Alphabet that announced layoffs in January.

Microsoft said on Monday (Feb 5) it is teaming up with media platform Semafor and other news organisations to help journalists work with generative AI in content production. Through these collaborations, Microsoft will help the organisations to identify and refine the procedures and policies to use artificial intelligence (AI) responsibly in newsgathering and business practices, the tech giant said in a blog post. Semafor said it is launching a breaking news feed called “Signals”, which journalists can use with the help of tools from OpenAI and Microsoft to provide readers with analysis and insights on breaking news stories. The deal, financial details of which were not disclosed, comes at a time when Microsoft, along with ChatGPT maker OpenAI, faces a lawsuit brought by the New York Times over unauthorised use of its published content to train artificial intelligence technologies. OpenAI and Microsoft have said that using copyrighted works to train AI products amounts to “fair use,” a legal doctrine governing the unlicenced use of copyrighted material.

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


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