Daily Morning Note – 7 Sep 2020


US stocks ended lower again Friday, with tech shares tumbling in a continued selloff ahead of the holiday weekend, shrugging off data showing US unemployment falling more than expected in August. At the closing bell, Dow Jones Industrial Average shed 0.6 per cent to finish the week at 28,133.31, while the broad-based S&P 500 dropped 0.8 per cent to 3,426.96, both recouping from the day’s low point.

The tech-rich Nasdaq Composite Index fell 1.3 per cent to end at 11,313.13, adding to the losses from Thursday’s 5.0 per cent rout. Markets are closed Monday for Labour Day.


Ryanair has raised 400 million euros (S$646 million) from shareholders to strengthen its balance sheet as it eyes potential market opportunities in the wake of the Covid-19 pandemic, Europe’s largest low-cost carrier said on Friday. The move adds to a large cash pile at an airline that has been less badly affected by the pandemic than many of its rivals owing to its relatively low level of debt and lack of exposure to the badly hit long-haul and business-class markets.

Volkswagen’s Traton plans to make a fresh push to acquire Navistar International after talks were put on hold amid the coronavirus pandemic, according to people familiar with the matter. Volkswagen’s heavy-truck business is seeking to restart negotiations this month to win over Navistar’s management and the main shareholders, including billionaire investor Carl Icahn, said the people, asking not to be identified because deliberations are private.

ASIAN stocks struggled on Friday, after US equities tumbled by the most in almost three months, as nervous investors took profit on tech stocks amid concerns over their lofty valuations. In New York, the S&P 500 broke a 10-day winning streak and fell 3.5 per cent on Thursday.

CapitaLand Mall Trust (CMT) and CapitaLand Commercial Trust (CCT) on Friday announced deal sweeteners for their proposed merger, such as higher accretion to their respective distribution per unit (DPU), and the decision of CMT’s manager to completely waive the acquisition fee of S$111.2 million.

Frasers Centrepoint Trust’s (FCT) proposed acquisition of the rest of AsiaRetail Fund (ARF) will boost the real estate investment trust (Reit)’s suburban portfolio even as suburban malls are expected to recover more strongly from the negative impact of Covid-19 than their centrally located peers.

GIC has joined a consortium of institutional investors, led by Hillhouse Capital Group, to invest around US$418 million through a private placement in Nasdaq-listed I-Mab, a clinical stage biopharmaceutical company.

Telcos StarHub and M1 have been slapped with fines totalling S$610,000 for Internet service disruptions during the “circuit breaker” period in Singapore, when a majority of people were working and studying from home. StarHub received a penalty of S$210,000 while M1 was fined S$400,000 for contravening the Code of Practice for Telecommunication Service Resilience 2016, said the Infocomm Media Development Authority (IMDA) on Sunday.

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


Technical Analysis: Singapore Stocks – 2,500 remain supported but many attempts at this level weakens the support.

Analyst: Chua Wei Ren

– Singapore’s stock market briefly made an attempt to rebound after the STI open below 2,500.

– However, the Straits Times Index fails to close above the Thursday low despite a bullish candle spotted. As such, the STI’s bullish sentiment may not be that strong.

– 2573.51-2,600 resistance zone remain the key level to determine STI’s make or break direction.

Technical Analysis: U.S Market – Still in a bullish trend

Analyst: Chua Wei Ren

– The U.S markets suffered heavy selling last Thursday. It continued into the first half of the trading session on Friday.

– The sell-down is in reaction to the technology stocks as it has gotten way overheated.

– Based on the technical, the market is still well within the bullish trend. Except for Dow Jones Industrial average which has failed to clear above the March 2020 high.

– On the S&P 500, we maintain our 3700 target. We expect Nasdaq to resume its upward move to test the immediate resistance of 12,500

>> Read more technical reports


Singapore Banking Monthly – Long and gradual recovery ahead

Recommendation: NEUTRAL (Maintained); Analyst: Tay Wee Kuang

– Current levels of 3M-SIBOR and 3M-SOR at 0.41% and 0.21% remain at stabilised levels throughout 3Q20.

– Singapore saw a second consecutive month of negative loans growth (-0.3% YoY). Business loans rebound to grow 1.48% but weak consumer loans (-3.13%) continue to weigh on loans outlook.

– Credit rating agency Fitch contemplates ‘AA-’ rating of three local banks on poorer operating environment. However, Fitch’s outlook guidance is in line with outlook provided by the banks in 1Q20.

– FTSE Taiwan Index Futures launched in July is the sixth most traded equity index futures contract on SGX in August.

Maintain the Singapore Banking Sector at NEUTRAL. Resumption of business activities will lift non-interest income despite likelihood of prolonged low interest rates putting a drag on interest income.

Frasers Centrepoint Trust – Doubling the suburban portfolio

Recommendation: ACCUMULATE (Maintained), Last Done: S$2.64

Target Price: S$2.79, Analyst: Natalie Ong

– Proposed acquisition of remaining 63.1% stake in ARF and divestment of Bedok Point to lift FY22e-24e DPU by 2.9% to 3.7%.

– The transaction will further entrench FCT in the resilient suburban retail sector and strengthen FCT’s portfolio by reducing asset concentration risk.

– Maintain ACCUMULATE with a higher TP of $2.79 (prev. $2.69). We previously forecasted c.20% of FY20 distributable earning to be retained in FY20 and disbursed in FY21. Given the sustained recovery, we opine that the FCT will be able to disburse all of FY20’s distributable earnings – as such FY21e DPU was lowered by 1.4% while FY20e DPU was raised by 12.3%. FY22e to FY24e DPU was increased by 2.9% to 3.7% due to the accretive acquisition of the remaining 63.1% stake in ARF and subsequent divestment of Bedok Point.

Micro-Mechanics (Holdings) Ltd – A new growth driver emerges

Recommendation: BUY (Upgraded), Last Done: S$2.20

Target Price: S$2.50, Analyst: Paul Chew

– 4Q20 earnings met our expectations. PATMI jumped 48% YoY in 4Q20 to S$3.9mn.

– Gross margins have recovered to their highest levels in seven quarters. We believe higher prices was a reason for the improvement.

– We are upgrading MMH to BUY. We are expecting record earnings for MMH. Firstly, the existing backend business is enjoying a recovery in sales and gross margins; Secondly, after several years of development, we believe the US operation has secured a significant breakthrough in new front-end projects and customers. It will be a new growth segment for MMH. Our target price is revised upward from S$1.60 to S$2.50, or 18x PE FY21e. FY21e earnings has been raised by 25%.

Mapletree Logistics Trust – Unphased by the pandemic (Credit View)

Credit Analyst: Timothy Ang

– Revenues rose 10.5% YoY to S$132.4mn, EBIT grew 17.6% YoY to S$96.3mn on higher margins of 72.7%, up 4.4%.

– Gearing (D/A) including perpetuals remained stable, up 0.3% to 42.9% despite net debt issuance. Borrowing cost rose 6.5% QoQ on higher borrowings for acquisitions.

– Occupancies remained healthy at 97.2% from 98.0% previous quarter, and rental reversions was positive 1.9%, vs 2.0% previous quarter.

– We are Overweight on the MLTSP 4.18% Perp Corp (SGD) with a yield to call of 3.15% and yield to worst of 3.08%, and Neutral on the MLTSP 3.65% Perp Corp (SGD) with YTC of 3.31% and YTW of 2.76%.

>> Read more research reports

HK Reports – Read up on our Hong Kong reports here


Webinar Of The Week

Market Outlook: (PSR) CMT/CCT, Prime US REIT, SATS, Clearbridge, SG Banking, SG Bonds, Technicals and more

Date: 31 August 2020

For more on Market Outlook

Phillip Research in 3 minutes: #25 – Prime US REIT; Initiation

For more videos on Phillip in 3 Mins

Read the research report(s), available through the link(s) above, for complete information including important disclosures Important Information

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 揳s 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.
Confidentiality Note
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.


Contact us to Open an Account

Need Assistance? Share your Details and we’ll get back to you


This material is provided by Phillip Capital Management (S) Ltd (“PCM”) for general information only and does not constitute a recommendation, an offer to sell, or a solicitation of any offer to invest in any of the exchange-traded fund (“ETF”) or the unit trust (“Products”) mentioned herein. It does not have any regard to your specific investment objectives, financial situation and any of your particular needs. You should read the Prospectus and the accompanying Product Highlights Sheet (“PHS”) for key features, key risks and other important information of the Products and obtain advice from a financial adviser (“FA“) pursuant to a separate engagement before making a commitment to invest in the Products. In the event that you choose not to obtain advice from a FA, you should assess whether the Products are suitable for you before proceeding to invest. A copy of the Prospectus and PHS are available from PCM, any of its Participating Dealers (“PDs“) for the ETF, or any of its authorised distributors for the unit trust managed by PCM.  

An ETF is not like a typical unit trust as the units of the ETF (the “Units“) are to be listed and traded like any share on the Singapore Exchange Securities Trading Limited (“SGX-ST”). Listing on the SGX-ST does not guarantee a liquid market for the Units which may be traded at prices above or below its NAV or may be suspended or delisted. Investors may buy or sell the Units on SGX-ST when it is listed. Investors cannot create or redeem Units directly with PCM and have no rights to request PCM to redeem or purchase their Units. Creation and redemption of Units are through PDs if investors are clients of the PDs, who have no obligation to agree to create or redeem Units on behalf of any investor and may impose terms and conditions in connection with such creation or redemption orders. Please refer to the Prospectus of the ETF for more details.  

Investments are subject to investment risks including the possible loss of the principal amount invested. The purchase of a unit in a fund is not the same as placing your money on deposit with a bank or deposit-taking company. There is no guarantee as to the amount of capital invested or return received. The value of the units and the income accruing to the units may fall or rise. Past performance is not necessarily indicative of the future or likely performance of the Products. There can be no assurance that investment objectives will be achieved.  

Where applicable, fund(s) may invest in financial derivatives and/or participate in securities lending and repurchase transactions for the purpose of hedging and/or efficient portfolio management, subject to the relevant regulatory requirements. PCM reserves the discretion to determine if currency exposure should be hedged actively, passively or not at all, in the best interest of the Products.  

The regular dividend distributions, out of either income and/or capital, are not guaranteed and subject to PCM’s discretion. Past payout yields and payments do not represent future payout yields and payments. Such dividend distributions will reduce the available capital for reinvestment and may result in an immediate decrease in the net asset value (“NAV”) of the Products. Please refer to <www.phillipfunds.com> for more information in relation to the dividend distributions.  

The information provided herein may be obtained or compiled from public and/or third party sources that PCM has no reason to believe are unreliable. Any opinion or view herein is an expression of belief of the individual author or the indicated source (as applicable) only. PCM makes no representation or warranty that such information is accurate, complete, verified or should be relied upon as such. The information does not constitute, and should not be used as a substitute for tax, legal or investment advice.  

The information herein are not for any person in any jurisdiction or country where such distribution or availability for use would contravene any applicable law or regulation or would subject PCM to any registration or licensing requirement in such jurisdiction or country. The Products is not offered to U.S. Persons. PhillipCapital Group of Companies, including PCM, their affiliates and/or their officers, directors and/or employees may own or have positions in the Products. Any member of the PhillipCapital Group of Companies may have acted upon or used the information, analyses and opinions herein before they have been published. 

This advertisement has not been reviewed by the Monetary Authority of Singapore.  


Phillip Capital Management (S) Ltd (Co. Reg. No. 199905233W)  
250 North Bridge Road #06-00, Raffles City Tower ,Singapore 179101 
Tel: (65) 6230 8133 Fax: (65) 65383066 www.phillipfunds.com