Daily Morning Note – 8 September 2021
Dear valued client,
Asian stocks look set for a cautious start Wednesday after a dip in U.S. shares on concern that the delta coronavirus variant is slowing the economic recovery from the pandemic.
Futures for Japan were steady, Australian contracts slipped and those for Hong Kong rose. U.S. futures fluctuated after the S&P 500 fell and the Nasdaq 100 climbed to a record as investors sought more defensive areas of the market. Chinese technology equities listed in the U.S. jumped on bets that the worst of Beijing’s regulatory crackdown has passed.
A selloff across bond markets intensified in part due to a flood of debt sales. German 10-year yields surged and U.S. 10-year Treasuries slid. Strategists are now evaluating how long a recent bout of yield-curve steepening might last. The dollar rallied to around the highest levels this month.
Crude oil and aluminum were among the commodities that retreated on the stronger greenback. Bitcoin plunged amid El Salvador’s rocky implementation of a law that makes the cryptocurrency legal tender.
BREAKING NEWS
SG News
Keppel Corporation announced on Tuesday the pricing of S$400 million in aggregate principal amount of 2.90 per cent subordinated perpetual securities. The securities will be issued in the denomination of S$250,000, with no fixed redemption date and will confer a right to receive distribution payments. The distribution rate will be 2.9 per cent per annum from Sept 16, 2021 to Sept 16, 2026, which is the first reset date. From the first reset date and every five years after that, the relevant reset distribution rate will be the reference rate with respect to the reset date, plus the initial spread of 2.097 per cent and the step-up margin at 1 per cent per annum. The distribution will be payable semi-annually in arrear and will be cumulative.
Integrated technology solutions company Frencken Group announced on Tuesday that it is acquiring Singapore-incorporated Avimac for a cash consideration of S$14 million. This is aimed at expanding the business and will be carried out via Frencken’s wholly-owned subsidiary ETLA Limited. Avimac supplies high precision machining parts to a variety of industries with a specialisation in the aerospace and semiconductor sectors. It was started in 2018 by Joe Lau, a veteran in the precision engineering industry and the founder of JEP Precision Engineering. Avimac was a supplier to ETLA prior to the acquisition, supporting the group’s needs in various manufacturing programmes.
The Monetary Authority of Singapore (MAS) announced on Tuesday (Sept 7) the formation of a new sustainability group to steer sustainability efforts across the organisation and help build deeper capabilities. The sustainability group will coordinate MAS’ green finance and sustainability agenda, aimed at strengthening the financial sector’s resilience against environmental risks and developing a vibrant green finance ecosystem to support Asia’s transition to a low-carbon future. It will also identify strategic green finance collaborations with regional and international counterparts and reduce MAS’ own carbon and environmental footprint. Heading the group as chief sustainability officer will be Dr Darian McBain, to be effective from Oct 1.
Investment manager Tikehau Capital SCA is planning to raise as much as S$300 million by listing a special purpose acquisition company (SPAC) in Singapore, according to people familiar with the matter, joining firms jostling to take advantage of the city-state’s new listing framework. The European alternative asset manager is in the advanced stages of its preparations and is in the running to be among the first in Singapore to file for an initial public offering (IPO) of a blank-cheque firm, the people said, asking not to be identified as the information is private. Tikehau is seeking to raise between S$250 million and S$300 million in the IPO, the people said.
US News
Expanded unemployment benefits that have kept millions of Americans afloat during the pandemic expired on Monday, setting up the abrupt cutoff of assistance to 7.5 million people as the delta variant rattles the pandemic recovery. The end of the aid came without objection from President Joe Biden or his top economic advisers, who have become caught in a political fight over the benefits and are now banking on other federal help and a pickup this fall in hiring to keep vulnerable families from foreclosure and food lines. The US$1.9 trillion economic aid package Mr Biden signed in March included extended and expanded benefits for unemployed workers, including a weekly US$300 federal supplement to state jobless payments, additional weeks of assistance for the long-term unemployed and the extension of a special programme to provide benefits to so-called gig workers who traditionally do not qualify for unemployment benefits. Monday’s expiration means that 7.5 million people will lose their benefits entirely and another 3 million will lose the weekly US$300 supplement.
The >strong>US dollar rose for a second consecutive day on Tuesday, moving away from a near one-month low hit last week, as firming US Treasury yields prompted investors to cut short dollar positions against the euro before a central bank meeting this week. The greenback plunged to its lowest levels since early August on Sept 3 after a surprisingly soft US payrolls report prompted analysts to raise bets that the Federal Reserve will not unwind its stimulus plans in the coming months. But the dollar scored some cautious gains against rivals in the past two sessions as rising US yields undercut bearish sentiment. Against a basket of its rivals, the greenback rose 0.1 per cent to 92.25. On Sept 3, it hit its lowest since Aug 4.
El Salvador on Tuesday becomes the first country in the world to accept Bitcoin as legal tender, despite widespread domestic scepticism and international warnings of risks for consumers. President Nayib Bukele’s government claims the move will give many Salvadorans access to bank services for the first time and save some US$400 million in fees on remittances sent home from abroad every year. “Tomorrow, for the first time in history, all the eyes of the world will be on El Salvador. #Bitcoin did this,” Mr Bukele said on Twitter Monday. He started the ball rolling on Monday evening by announcing El Salvador had bought its first 400 Bitcoins, in two tranches of 200, and promised more were coming. The 400 Bitcoins were trading at around US$21 million, the cryptocurrency exchange app Gemini showed. Recent opinion polls showed a majority of El Salvador’s 6.5 million people reject the idea and will continue using the US dollar, the country’s legal currency for the last 20 years.
Source: SGX Masnet, The Business Times, Bloomberg, Channel NewsAsia, Reuters, CNBC, PSR
TECHNICAL PULSE
Postal Savings Bank of Ching Co Ltd
Analyst: Chua Wei Ren
Recommended Action: Technical BUY
PSBC (HKEX: 1658) intra-day wave count indicate that the intermediate phase of the 5-wave impulse has been completed, together with the double three corrective waves labelled WXY. Furthermore, price action also suggests further upside
Buy stop: 5.80 Stop loss: 5.25 Take profit 1: 6.30 Take profit 2: 6.90
>> Read more technical reports
HK Reports – Read up on our Hong Kong reports here
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