Daily Morning Note – 9 September 2021
Dear valued client,
Asian stocks look set to slip Thursday after a dip in U.S. shares as investors continue to fret over a slowdown in the recovery from the pandemic. Treasuries and the dollar advanced.
Futures for Japan, Australia and Hong Kong all fell. U.S. contracts fluctuated after the S&P 500 retreated for a third day and the Nasdaq 100 had its biggest drop in two weeks. A U.S. central bank survey signalled a moderation in economic growth due to the delta virus strain.
Chinese stocks trading in the U.S. tumbled on renewed concerns about Beijing’s regulatory crackdown after officials summoned gaming companies.
Treasury yields declined, helped by strong demand for the monthly 10-year note auction. The dollar gained, weighing on gold. Oil advanced amid a slow return of U.S. production after Hurricane Ida.
The Monetary Authority of Singapore (MAS) will set out early next year its regulatory expectations on the disclosure standards that retail funds in Singapore with an ESG (environmental, social, and governance) investment objective must meet, said its managing director Ravi Menon. In a speech on Wednesday, Mr Menon said that with the enhanced disclosure in place, investors will be able to better understand the criteria that an ESG fund uses to select its investments. Investors will also obtain from a single offering document more information on the fund’s investment process, as well as the risks and limitations associated with the fund’s ESG strategy. They will receive periodic updates on whether the investment objective of an ESG fund has been met too.
Investment holding company Koon Holdings announced on Wednesday that it has received notification from the Australian Securities Exchange (ASX) that the company would be removed from the official list of the ASX, with effect from the commencement of trading on Monday, Sept 6, 2021. With the company no longer listed on its home exchange ASX, the secondary listing status of the company on the Singapore Exchange (SGX) would no longer be valid. The company has written to SGX to apply to be delisted. ASX had earlier rejected the company’s request to extend the long term suspend entity removal deadline for the company for three months until Nov 30, 2021. Following that, Koon Holdings had submitted a request on Aug 31, 2021 for ASX to reconsider its decision.
Property developer Fragrance Group announced on Wednesday that it has made an application to the Singapore Stock Exchange to delist the Catalist- listed company following the completion of its acquisition. In early July, Fragrance Group’s founder and chief executive Koh Wee Meng, through offeror JK Global Treasures, made a voluntary conditional cash offer for all the issued and paid-up ordinary shares of the group at 13.8 Singapore cents per share to take the company private. The offer price of 13.8 Singapore cents per share exceeded Fragrance’s last traded price on July 8 on the Singapore Exchange (SGX) of 11.8 cents, representing a 16.9 per cent premium. It also represents a premium of 19 per cent, 19 per cent, 20 per cent and 21.1 per cent respectively over the one-month, three-month, six-month and 12-month volume-weighted average price per share.
Singapore Exchange Regulation (SGX RegCo) has ordered Nutryfarm International, through a notice of compliance, to appoint a suitable independent reviewer to conduct an investigation over two key issues. The first is regarding a significant refundable deposit of HK$91.4 million (S$15.8 million) made in relation to the proposed acquisition of tech company First Linkage, and the second is the significant advances of 26.81 million yuan (S$5.58 million) made to Chengdu Meili Tianyuan Agriculture Co (MLTY), the associate of two of NutryFarm (Chengdu) Biomedicine’s (NFC) customers. The reviewer is expected to investigate the facts and circumstances surrounding the proposed acquisition of First Linkage, including an assessment into the payment of the refundable deposit by LottVision Internet Management (Nutryfarm’s wholly owned subsidiary) amounting to HK$91.4 million to Wang Xiaoxin, as well as the recovery of the refundable deposit from Mr Wang. Mr Wang is the sole shareholder of First Linkage.
Components manufacturer Miyoshi Limited announced that it has received a notice from a customer that it will delist its registered activity with the Philippines Economic Zone effective from Nov 30, 2021. The reason of the discontinuing project is mainly due to the business directive of the customer to consolidate its production line. The registered activity is currently located in Manila, the Philippines. The customer is the Catalist-listed group’s major revenue contributor. Based on preliminary assessment, the discontinuing project is one-off and will affect about 18.4 per cent of revenue from the subsidiary in the Philippines. The impact on the consolidated net tangible assets and consolidated earnings per share of the group for the next financial year is estimated to be about 1.2 per cent and 48.5 per cent respectively.
US job openings rose to a fresh record high in July, illustrating the lingering staffing shortages that are making it challenging for businesses to meet demand. The number of available positions rose to 10.9 million during the month from an upwardly revised 10.2 million in June, the Labor Department’s Job Openings and Labor Turnover Survey, or Jolts, showed Wednesday. Economists in a Bloomberg survey had called for openings to remain little changed at 10 million. After shedding millions of workers from payrolls last year, the rapid snapback in economic activity has left many businesses severely short-staffed. “Help Wanted” signs can be seen in the windows of businesses across the US, and many restaurants have limited their hours of operation. Employers have offered incentives to attract applicants – like higher wages and one-time bonuses – but the pool of available workers remains constrained by pandemic-related factors.
US payments giant PayPal Holdings Inc said it would acquire Japanese buy now, pay later (BNPL) firm Paidy in a US$2.7 billion largely cash deal, taking another step to claim the top spot in an industry experiencing a pandemic-led boom. The deal tracks rival Square Inc’s agreement last month to buy Australian BNPL success story Afterpay Ltd for US$29 billion, which experts said was likely the beginning of a consolidation in the sector. “The acquisition will expand PayPal’s capabilities, distribution and relevance in the domestic payments market in Japan, the third largest e-commerce market in the world, complementing the company’s existing cross-border e-commerce business in the country,” PayPal said in a statement on Tuesday.
The US dollar rose to its highest in a week against peers on Wednesday, buoyed by higher Treasury yields and a weaker euro a day ahead of a European Central Bank (ECB) policy decision. The dollar index, which measures the currency against six rivals, traded 0.2 per cent higher at 92.673 after earlier touching 92.732, a level not hit since Sept 1. The euro traded 0.2 per cent lower at US$1.1819 after hitting US$1.1812, its lowest since Sept 1. Helped by higher US yields, the greenback also hit a 31/2 week high of 110.45 yen before retreating to 110.20 yen. The benchmark 10-year Treasury note rose as high as 1.385 per cent on Sept 7, its highest since mid-July and a climb of almost 6 basis points from Sept 3’s close. Sept 6 was a US holiday.
Oil prices jumped on Wednesday and settled up more than 1 per cent as US Gulf of Mexico producers made slow progress in restoring output after Hurricane Ida. Brent settled up 91 cents, or 1.3 per cent, at US$72.60 and US West Texas Intermediate (WTI) crude settled up 95 cents, or 1.4 per cent, to US$69.30 a barrel. Producers in the Gulf are still struggling to restart operations nine days after Ida swept through the region with powerful winds and drenching rain. About 77 per cent of US Gulf production remained offline on Tuesday, or about 1.4 million barrels per day (bpd). About 17.5 million barrels of oil have been lost to the market so far. The Gulf’s offshore wells make up about 17 per cent of US output.
Source: SGX Masnet, The Business Times, Bloomberg, Channel NewsAsia, Reuters, CNBC, PSR
Jiangxi Copper Co Ltd
Analyst: Chua Wei Ren
Recommended Action: Technical BUY
Jiangxi Copper (HKEX: 358) corrective range has been ongoing for 6 months since March 2021 and it has formed a corrective descending channel which resemble a large bullish flag. Technical has also shown prices is set to continue on the upside
Buy stop: 16.56 Stop loss: 13.25 Take profit 1: 20.80 Take profit 2: 23.90
HK Reports – Read up on our Hong Kong reports here
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