Daily Morning Note – 8 June 2022
Local shares climbed on Tuesday (Jun 7) amid mixed trading across regional markets. The benchmark Straits Times Index (STI) was in negative territory for most of the session, but climbed higher in the final hour of trading to close at 3,231.54, up 0.2 per cent or 4.91 points. Jardine Cycle & Carriage (JCNC) was the top STI gainer for the day, rising 3.1 per cent to close at S$30.80. For the year-to-date, JCNC has also been the top index performer, climbing 49.5 per cent since end-2021. Meanwhile, shares of Sats ended at the bottom of the index performance table on Tuesday, slipping 1.2 per cent to S$4.04. Shares of Yangzijiang Financial Holdings were among the most actively traded. The counter fell 2.8 per cent to S$0.525, after 72.7 million shares worth S$38.2 million were traded.
WALL Street’s main indexes opened lower on Tuesday, after Target Corp’s quarterly margin forecast cut raised worries about slowing demand in an inflationary environment and dragged down retail shares. The Dow Jones Industrial Average fell 132.75 points or 0.40 per cent, at the open to 32,783.03. The S&P 500 opened lower by 24.96 points or 0.61 per cent at 4,096.47, while the Nasdaq Composite dropped 135.56 points or 1.12 per cent to 11,925.81 at the opening bell
SG
PSC Corporation, the recently-renamed Hanwell Holdings, plans to spend $95.1 million to acquire new frozen food manufacturing business with operations in Taiwan, China and Singapore so as to speed up its growth in a related industry. Under terms of the deal, PSC, which makes and distributes consumer staples, will pay using US$2.1 million, to the vendors. The targets have a book value of $66.720 million. The target companies are Dean Fa Food Co. (Taiwan) and Novel Food Manufacturing Co (Singapore), making brands such as the Qianye brand tofu that’s sold not only within China but also exported to US, Australia, Singapore and Korea. The issue price of the new shares is a premium of some 5.53% over the volume-weighted average price of 39.8 cents on June 3.
Raffles Education is trying to raise gross proceeds of more than $44 million via convertible bonds to pay off debt and use the remainder for working capital. First, it plans to raise nearly $26.2 million via a renounceable underwritten right issue of a convertible bonds priced at 85 cents each. The rights issue bonds are to be offered to entitled shareholders on basis of 19 rights issue bonds for each 1,000 shares they hold. The convertible bonds will mature in five years and will pay a coupon of 6% a year. The initial conversion price has been set at 6.5 cents. Chew Hua Seng, the company’s chairman, CEO and controlling shareholder, now holds 462.9 million shares, equivalent to 33.58% of the company. He will take up his full allotment and “may at his discretion” take up additional rights issue bonds.
US
The US Treasury stepped up its financial sanctions on Russia, restricting investors from buying the country’s debt in the secondary market, bringing trading activity almost to a halt on Tuesday (Jun 7) as investors scrambled to understand the new sanctions. The new guidance means US firms can hold or sell Russian debt, but can’t buy it, according to a spokesperson for Treasury’s Office of Foreign Assets Control (OFAC). The guidance applies to both corporate and sovereign debt as well as equities, the person said. OFAC’s update on its website late on Monday said US market participants are prohibited from purchasing both new and existing debt and equity securities issued by a Russian Federation entity. But investors can still sell such assets, or facilitate their sale, to non-US residents and may continue to hold them, according to the statement. The additional sanctions caught investors by surprise on Tuesday, prompting many to contact lawyers to determine what the new rules entail, according to people familiar with the matter.
The US dollar rose to a 2-week high as rising US Treasury yields supported the greenback, pushing the Japanese yen to its lowest level against the US dollar in 2 decades. The yen dropped to a 20-year low of 133 per US dollar, levels that had previously been highlighted as intervention territory, a day after central bank governor Haruhiko Kuroda reiterated an unwavering commitment to “powerful” monetary stimulus. The yen is sensitive to interest rate differentials between Japanese debt and US bonds. Benchmark 10-year Treasury yields had climbed as high as 3.064 per cent in Tokyo trading for the first time in almost 4 weeks, before slipping back to 3.0251 per cent. Spreads between 10-year US and Japanese debt held at 277 bps, not far from a 3-1/2 year high of 292 bps hit last month.
Waymo Via, the self-driving trucking unit of Alphabet, and Uber Technology‘s Freight business on Tuesday (Jun 7) said they signed a long-term strategic partnership that would allow future customers to deploy autonomous trucks more efficiently. The companies did not share a timeline for when their partnership could be used by paying customers, and Waymo and Uber Freight declined to disclose financial details of the agreement. Under the partnership, future Waymo customers can use Uber Freight to more efficiently plan their automated and human-driven trucking fleets. Uber Freight’s software acts as a middle man connecting truckers with shippers to reduce shipping costs and expensive empty cargo miles. Uber last year made a stronger push into the trucking market by buying logistics company Transplace for US$2.25 billion.
Amazon is shuttering its gig economy delivery service in Germany. The company’s Flex programme, which began in the US in 2015 before expanding to Germany 2 years later, pays drivers to ferry packages in their own vehicles from Amazon warehouses to customers’ homes. Amazon declined to say why it decided to halt the service in Germany, its second largest market after the US. But in recent years, the company has built a more formal delivery network, relying on small startups beholden to Amazon, which the company calls Delivery Service Partners or DSPs. Amazon is offering some Flex drivers a one-time payment equal to 4 weeks’ pay, according to communications reviewed by Bloomberg. The notices also encourage them to join one of hundreds of German DSPs. That network is capable of absorbing “the very small portion of deliveries that Amazon Flex has been making” while meeting delivery pledges, the company said on Tuesday (Jun 7).
Source: SGX Masnet, The Business Times, Bloomberg, Channel NewsAsia, Reuters, CNBC, PSR
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