Daily Morning Note – 9 June 2022

Singapore shares lost ground on Thursday (Jun 9), in line with most markets in the region, with risk sentiment hit over fresh lockdowns in parts of Shanghai and inflation concerns. The benchmark Straits Times Index (STI) fell 0.5 per cent or 16.18 points to close at 3,209.62. Elsewhere, major indices in Shanghai, Malaysia, Australia and Hong Kong also closed lower, falling between 0.7 and 1.4 per cent. On the local bourse, shares of Hongkong Land led declines on the STI, tumbling 5.5 per cent to US$5.01. The local banks were also among the decliners. UOB fell 1.2 per cent, OCBC lost 1.1 per cent while DBS retreated 0.5 per cent. Meanwhile, DFI Retail Group was the top index gainer after climbing 2.5 per cent to US$2.91. Jardine Cycle & Carriage continued its stellar run in 2022, climbing 2.4 per cent to close at S$31.80, taking its gains for the year to date to 54.4 per cent. Shares of Sembcorp Marine were the most actively traded by volume. The counter rose 0.8 per cent to S$0.12, after 224.7 million shares worth S$26.9 million were traded.

Wall Street’s main indexes opened lower on Thursday (Jun 9) as rising bond yields pressured technology and growth stocks, while concerns around surging inflation and the path for interest rate hikes sapped risk appetite. The Dow Jones Industrial Average fell 82.28 points, or 0.25 per cent, at the open to 32,828.62. The S&P 500 opened lower by 14.12 points, or 0.34 per cent, at 4,101.65, while the Nasdaq Composite dropped 69.80 points, or 0.58 per cent, to 12,016.47 at the opening bell.

SG

Changi Airport Group narrowed its losses to S$838 million for the year ended Mar 31, 2022, down from S$954 million in the previous year, on the back of a rebound in air travel as restrictions ease. Full-year passenger traffic stood at 5.2 million in FY2021/22, at about 8 per cent of pre-Covid-19 levels, the group said in an exchange filing on Thursday (Jun 9). Passenger numbers in March 2022 went up to 1.14 million, or 20 per cent of pre-Covid levels – its highest since the start of the pandemic. The group registered its first net loss in FY2020/21, when passenger arrivals fell 98 per cent from the previous year to just 1.1 million. Revenue for FY2021/22 rose 35 per cent year on year to S$944 million, but the group remained in the red, taking into account its deconsolidation losses, write-down of investments in Russia, as well as depreciation and amortisation charges. The group said the challenging business and economic environment in Brazil made it untenable for it to operate the Tom Jobim Airport in Rio de Janeiro, under the terms of an existing concession agreement. The group deconsolidated Concessionária Aeroporto Rio de Janeiro as a subsidiary and recognised it as an equity-accounted investee. It therefore registered a deconsolidation loss of S$128 million.

Singapore on Thursday (Jun 9) launched a governance framework for sovereign green bond issuances under the Significant Infrastructure Government Loan Act 2021 (Singa). Called the Singapore Green Bond Framework, it establishes guidelines for green bonds issued by the public sector. In a speech at the Singapore Sustainable Investing and Financing Conference on Thursday, Second Minister for Finance and National Development Indranee Rajah noted that the framework is aligned with internationally recognised market principles, standards and best practices. Under the framework, proceeds from green bonds issued should be used to finance expenditures in support of the Singapore Green Plan 2030. This includes expenditures on renewable energy; energy efficiency; green building; clean transportation; sustainable water and wastewater management; pollution prevention, control and circular economy; climate change adaptation; and biodiversity conservation and sustainable management of natural resources and land use.

The Lian Beng Group is buying a freehold industrial building now held by Food Empire Holdings for $49.25 million. The 11-storey building, at 31 Harrison Road, has a gross floor area of 4,890.24 sqm and is now fully tenanted. With the sale, Food Empire, which has seen the value of this asset appreciate over the years, will book a gain of around $20.54 million. Food Empire will see its NTA per share increase from 40.46 cents to 43.12 cents upon completion of the deal. It calls the sale part of its efforts to rationalise its businesses and that it deems the ownership of this property non-core. As for Lian Beng, the acquisition is line with one of its core business activities in property investments. Lian Beng shares closed on 9 June at 52 cents, down 1.9% for the day.

US

Tesla was proceeding with an online hiring event in China on Thursday (Jun 9) and added two dozen new job postings for the country, a week after Elon Musk threatened job cuts at the electric car maker and said the company was “overstaffed” in some areas. Tesla plans to hold the event online starting from 7 pm Shanghai time (11 am GMT) and will recruit staff for “smart manufacturing” roles, according to an online post. Tesla has 224 current openings in China for managers and engineers under that category, according to a separate post on its WeChat account, 24 of which were newly posted on Jun 9. Among the posted positions are managers and engineers to supervise the operation of its 6,000-ton die casting machines known as Giga Press, one of the worlds biggest. Tesla regularly holds such hiring events online in China, with the latest one held in May for summer interns. Tesla’s China revenue more than doubled in 2021 from a year ago, contributing to a quarter of the total income for the US automaker.

Microsoft is partnering with Samsung Electronics to allow gaming fans to play Xbox games directly on smart TVs without a console. Starting Jun 30, hundreds of cloud-enabled games attached to the Xbox Game Pass Ultimate subscription, which costs US$14.99 a month without promotional pricing, will be available through Samsung’s Gaming Hub, similar to using any other streaming app on a TV. Later this year, Game Pass Ultimate subscribers will be able to play some of the games they already own using the cloud and without a download, even if the games aren’t currently in the Game Pass library. That expands the cloud-gaming features, which let users play on various devices and are presently only available for Game Pass titles.

United Hampshire US Real Estate Investment Trust (UHReit) is acquiring a grocery-anchored freehold shopping centre for US$85.7 million in Pennsylvania, expanding its footprint in the affluent Eastern seaboard. The purchase price for Upland Square in Pottsdown, Pennsylvania is 0.3 per cent below the independent valuation of US$86 million, the Reit’s manager said on Thursday (Jun 9). Upland Square has a net lettable area of about 400,674 square feet, with a 100 per cent committed occupancy rate and a long-forward committed weighted average lease expiry of 6.3 years. Anchor tenants include Giant by Ahold Delhaize, a leading supermarket operator in mid-Atlantic US, and popular national off-price retailers such as TJ Maxx, Ross, and Burlington. There are 35 tenants in all. The acquisition is expected to increase UHReit’s pro forma distribution per unit by 2.13 per cent, to 6.23 US cents, the manager said. Committed occupancy of UHReit portfolio will increase to 96.6 per cent with this acquisition – the highest occupancy achieved since its initial public offering. UHReit, which made its debut on the Singapore Exchange on Mar 12, 2020, is the first Reit with US exposure here.

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

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