Daily Morning Note – 7 November 2018
WEEKLY MARKET OUTLOOK WEBINAR
Register HERE for MONDAY’s 11.15am webinar.
Archived webinars available.
YOUR PHILLIP SUMMARY
U.S. stocks finished higher on Tuesday ahead of midterm election results. The S&P 500 ended higher by 0.6% while the Dow Jones Industrial Average added around 0.7%. The Nasdaq Composite was up by more than 0.6.
Investors are closely watching the midterm results, with most anticipating a split Congress with Democrats taking control of the House, and Republicans retaining a Senate majority. That could set up investors for a legislative impasse in Washington, usually seen as a positive by Wall Street.
The 10-year Treasury note yield rose to 3.214%, its highest since Oct. 10. The 2-year note yield gained 2.932%, its highest levels since June 2008. The 30-year bond yield meanwhile, slipped to 3.426%, off its highest levels in more than four years.
Oil declined Tuesday, sending benchmark U.S. crude futures down for a seventh consecutive session, which is the longest losing streak in nearly 20 months. The losses came a day after the Trump administration granted waivers to allow eight nations to continue buying Iranian crude despite U.S.-driven economic sanctions against the Islamic Republic.
Dasin Retail Trust – Stable portfolio
Recommendation: ACCUMULATE, Last Done Price: S$0.86
Target Price: S$0.95, Analyst: Tara Wong
– NPI and DPU in line with our expectations. Revenue remains flat YoY due to
decrease in event space revenue from Ocean Metro Mall and effect of straightlining
– Robust occupancy despite ongoing AEI and continued positive rental reversions.
– Higher cost of funds with 30bps increase in offshore debt.
– Maintain ACCUMULATE with lower TP of S$0.95 (prev S$0.97).
EC World REIT – The landlord in ecommerce
Recommendation: Accumulate (Maintained), Last Close Price: S$1.05
Target Price: S$1.13, Analyst: Paul Chew
– 3Q18 revenue met expectations but earnings disappointed
– Revenue rose from the record expansion of new stores but same-store sales
has surprisingly turned very sluggish
– Gross margins remain strong but net profit was hurt by a surge in staff costs
– Our FY18e net profit has been lowered by 7% to incorporate a higher operating
cost assumption. We keep our target price unchanged at S$1.13. We believe
this is a near-term dip in margins with a strong recovery expected in FY19.
Oil prices drop over 1% on Iran sanctions waivers. Oil prices fell on Tuesday, with US crude futures hitting an eight-month low, a day after Washington granted sanction waivers to top buyers of Iranian oil and as Iran said it has so far been able to sell as much oil as it needs to. Brent crude futures fell US$1.04 to settle at US$72.13 a barrel, down 1.42 per cent. The global benchmark hit a session low of US$71.18 a barrel, the lowest price since Aug 16. US West Texas Intermediate (WTI) crude futures fell 89 cents, or 1.41 per cent, to settle at US$62.21 a barrel. The session low was US$61.31 a barrel, the weakest price since March 16.
Hyundai raises Southeast Asia bet with second investment in Grab. Hyundai Motor Co
has raised its stakes in growing Southeast Asian markets with a US$250 million
investment in Singapore’s Grab, its second in the ride-hailing firm, as it chases rivals in
the race for new-age transportation.
MassMutual’s VC arm sets up MASSMUTUAL Ventures (MMV), the venture capital arm of the Massachusetts Mutual Life Insurance Company (MassMutual), has established a US$50 million Singapore-based fund for investments in South-east Asia. MMV SEA is targeting Series A and Series B round investments in digital health, fintech, insurtech and enterprise software. It will invest in 10 to 15 startups over the next three years.
US$50m fund in Singapore.
CapitaLand records 2b yuan sales during China’s high season for new home purchases. In total, these four launches sold 1,506 units with a total value of about two billion yuan (S$396.7 million) – marking CapitaLand’s highest home sales value in China over a 30-day period this year. Parc Botanica in Chengdu sold out all 388 units for 332 million yuan; The Lakeside in Wuhan sold about 90 per cent of its 372 units for 322 million yuan; La Botanica in Xian sold 97 per cent of 535 units for 585 million yuan; and The Metropolis in Kunshan sold over 90 per cent of 324 units for 758 million yuan.
BHG Retail Reit to pay 328.3m yuan for China shopping centre, subject to unitholders’ vote. The Reit will pay 328.3 million yuan (S$65.2 million) for Hefei Changjiangxilu Mall, to be funded through borrowings, with the manager noting that the proposed acquisition is expected to raise distribution per unit (DPU) for the enlarged portfolio. According to pro forma financial effects provided for illustration, the acquisition could have nudged DPU up from 2.74 Singapore cents to 2.75 cents for the first half of 2018.
UOB opens new China HQ in Shanghai. UOB Plaza is the first Grade-A office building owned by a foreign bank in the Lujiazui Financial District, the bank said on Tuesday. The district is China’s largest financial hub driving Shanghai’s development as an international financial centre, it noted.
Source: SGX Masnet, Bloomberg, Reuters, The Business Times, Channel NewsAsia, Phillip Securities Research
Clients of Phillip Securities can keep updated with Country Strategy and Singapore Sector Reports by logging into: www.poems.com.sg > STOCKS > Research
|The information contained in this email and/or its attachment(s) is provided to you for information only and is not intended to or nor will it create/induce the creation of any binding legal relations. The information or opinions provided in this email do not constitute an investment advice, an offer or solicitation to subscribe for, purchase or sell the e investment product(s) mentioned herein. It does not have any regard to your specific investment objectives, financial situation and any of your particular needs. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of this information. Investments are subject to investment risks including possible loss of the principal amount invested. The value of the product and the income from them may fall as well as rise. You may wish to seek advice from an independent financial adviser before making a commitment to purchase or investing in the investment product(s) mentioned herein. In the event that you choose not to do so, you should consider whether the investment product(s) mentioned herein is suitable for you. PhillipCapital and any of its members will not, in any event, be liable to you for any direct/indirect or any other damages of any kind arising from or in connection with your reliance on any information in and/or materials attached to this email. The information and/or materials provided “as is” without warranty of any kind, either express or implied. In particular, no warranty regarding accuracy or fitness for a purpose is given in connection with such information and materials.|
|This e-mail and its attachment(s) may contain privileged or confidential information, which is intended only for the use of the recipient(s) named above. If you have received this message in error, please notify the sender immediately and delete all copies of it. If you are not the intended recipient, you must not read, use, copy, store, disseminate and/or disclose to any person this email and any of its attachment(s). PhillipCapital and its members will not accept legal responsibility for the contents of this message. Thank you for your cooperation.|