DAILY MORNING NOTE | 6 September 2023

SINGAPORE stocks opened weaker on Tuesday (Sep 5) as index counters started the morning mostly in negative territory. Singapore stock headed down 0.3 per cent or 9.18 points to 3,229.79 as at 9.02 am. Across the broader market, gainers and losers were almost evenly matched at 53 to 55, after 39.6 million securities worth S$33.3 million changed hands.

The Dow Jones Industrial Average finished 0.6 per cent lower at 34,641.97.The broad-based S&P 500 shed 0.4 per cent to 4,496.83, while the tech-rich Nasdaq Composite Index dipped 0.1 per cent to 14,020.95. The rise in Treasury yields came despite comments from Federal Reserve governor Christopher Waller suggesting the US central bank would keep interest rates steady later this month.

SG

Sats on Tuesday (Sep 5) announced that it has appointed Pier Sigismondi as an independent non-executive director and a member of the company’s board Risk and Safety committee, with immediate effect. Sigismondi, 57, is currently the executive chairman of Sustenir Group, an urban farming startup backed by state investor Temasek. He began this role in August 2020.

Mtrustee Berhad, the trustee of CapitaLand Malaysia Trust (CLMT), has entered into an agreement to sell the 3 Damansara Office Tower property to Lagenda Harta for a total price of RM52 million (S$15.2 million). Lagenda Harta is a unit of Lagenda Properties Berhad.

Property developer GSH Corporation on Tuesday (Sep 5) announced that the sale of nine strata office units in Raffles Place for a total consideration of S$38.8 million has been terminated. In a bourse filing, GSH’s solicitors said they received a notice from the purchaser’s solicitors stating that the purchaser would not be able to complete the transaction. The purchaser was not named in the company’s announcement of the deal on Jul 12.

GX Bank Berhad (GXBank) on Tuesday (Sep 5) announced that it is the first of the five digital bank licence applicants to obtain approval to commence operations in Malaysia. GXBank is a subsidiary of GXS Bank – the digital bank joint venture between Grab and Singapore Telecommunications (Singtel), as well as a consortium of Malaysian investors including Kuok Group.

Singapore sovereign wealth fund GIC is considering the sale of a top-grade Tokyo skyscraper and has approached potential buyers about the property, according to people with knowledge of the matter. The tower, 43-story Shiodome City Center in one of Tokyo’s central business districts, may fetch a price of at least US$2 billion, two of the people said. Any deal of that size would make it one of the most expensive office building transactions ever in Japan.

US

Fitch Ratings’ downgrade of US sovereign credit from AAA to AA+ highlights a latent principal-agent problem in modern financial markets: Investors have outsourced much of their risk management to the rating agencies.

SoftBank Group’s Arm is seeking a valuation of more than US$52 billion in its initial public offering, the chip designer said on Tuesday (Sep 5) as it begins marketing for the biggest US stock market flotation of the year. SoftBank is offering 95.5 million American depository shares of the UK-based company for US$47 to US$51 apiece and is looking to raise up to US$4.87 billion at the top of the range, Arm said in a regulatory filing.

Qualcomm on Tuesday (Sep 5) said it will supply chips to power in-car infotainment systems to luxury automakers Mercedes and BMW. The US chip designer had announced in late 2022 its “pipeline” in the automotive business was US$30 billion, thanks to its Snapdragon Digital Chassis product used by car makers and their suppliers for assisted and autonomous driving technology, as well as in-car infotainment and cloud connectivity.

TikTok has hired British cybersecurity firm NCC to audit its data controls and protections, and provide independent verification, as part of the social media company’s data security regime, nicknamed “Project Clover”.

Microsoft is expanding its partnership with Abu Dhabi’s G42, with plans to develop artificial intelligence technology across sectors and offer cloud infrastructure in the United Arab Emirates.The move will give the UAE public sector and some other industries access to cloud and AI features on Microsoft’s Azure, and help them comply with local privacy and regulatory requirements, the companies said.

Huawei Technologies’ breakthrough in making an advanced chip underscores China’s determination and capacity for fighting back against US sanctions, but the efforts are likely very costly and could prompt Washington to tighten curbs.

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

RESEARCH REPORTS

Food Empire Holdings Ltd – Entrenching a consumer brand in Vietnam

Recommendation: Not rated; Last close: S$1.02; Analyst Paul Chew

– Food Empire Vietnam Factory Visit: Built up a 14% market share in an approx. US$400mn instant coffee market in Vietnam. The market share of its Maccoffee brand was built in around a decade since the introduction of the flagship Café Pho in 2013.

– We believe in Food Empire’s key 3-in-1 brand, Café Pho. The competitive advantage is the brand image as best tasting coffee served with ice (70% of coffee consumption is with ice) and deep penetration into the street shops (or general trade) distribution network.

– The growth will stem from three key drivers: 1) Organic growth in the instant coffee category of 3-5% p.a., in line with GDP and new coffee consumers; 2) Market share gains from expanding geographically and capturing more new instant coffee consumers; 3) New products (or extensions) for local and even export markets. Consumer sentiment is currently soft due to a weak macro environment. As a result, consumers are more promotion sensitive, less willing to try new things and there is a decline in pantry hoarding.

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