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Author: traderhub8   |   Latest post: Wed, 12 May 2021, 10:43 AM

 

Phillip Capital Morning Note - 16 Apr 2021

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Asian stocks look poised to gain after surprisingly robust economic data helped propel U.S. benchmark indexes to records. Yields on benchmark 10-year Treasury notes declined. The S&P 500 Index’s advance was led by real estate and health care, while rallies in technology shares also lifted the Nasdaq 100. Wall Street stocks shot to fresh records on Thursday (April 15) following blowout earnings from large banks and strong US economic data showed the recovery picking up speed. The Dow Jones Industrial Average climbed 0.9 per cent to a record 34,035.99, and the first close above 34,000. The broad-based S&P 500 also ended at a record, gaining 1.1 per cent to 4,170.42, while the tech-rich Nasdaq Composite Index jumped 1.3 per cent to finish at 14,038.76. The records came as Citigroup and Bank of America joined the parade of large banks reporting at least a doubling of quarterly profits on strong trading results and large reserve releases amid the improving economic outlook.

Elsewhere, China is expected to report the highest quarterly economic growth ever since it began releasing such data 30 years ago. But investors will need to look beyond that number to assess the state of the Chinese economy’s post-pandemic recovery. Bitcoin gained and Coinbase fell despite news that three funds at Cathie Wood’s Ark Investment Management bought shares at Wednesday’s debut of the largest digital asset exchange. Oil extended gains from Wednesday’s surge.

SG

Singapore Medical Group (SMG) announced that a potential transaction involving its company's shares will not be explored further, according to an exchange filing on Thursday. In December last year, the group said that it was in preliminary discussions with a third party regarding a transaction involving SMG's shares. This was shared in response to a query from its sponsor CIMB Bank Singapore regarding "unusual price movements" and the significant volume of trading in the shares. In the filing, SMG said that it remains open to exploring various avenues to improve shareholder value, including corporate actions.

Mainboard-listed Gallant Venture on Thursday morning gave notice of recording three consecutive years of pre-tax losses, based on its audited full-year consolidated accounts. Gallant Venture, a developer, master planner and manager for industrial parks and resorts in Batam and Bintan, said its six-month average daily market capitalisation as at April 14 was S$709.8 million. This means it still meets the financial entry criteria to avoid being placed on the Singapore Exchange's (SGX) watch list. Firms are placed on the SGX watch list if they record losses for the three latest consecutive financial years and have an average daily market cap of under S$40 million over the last six months.

ERA Realty eyes 40% increase in revenue amid boom in property transactions. Target amount is S$550 million by early next year, in line with its 40th anniversary; goal this year is S$450 million. ERA Realty Network is on a roll, as it rides the momentum of the nation's gangbuster residential market. The company, Singapore's second largest real estate agency is gunning for 40 per cent increase in revenue to S$550 million by early next year, in line with its 40th anniversary, senior executives said in an exclusive interview with The Business Times.

New private home sales in S'pore hit 4-year high for March as buyers flocked to high-end condos.  An estimated 3,574 new private homes were sold in the January-March of this year. Buyers jumped in after the Chinese New Year break in anticipation of an economic recovery, sending new private home sales last month to 1,296 units - the highest March take-up since 2017 and double the 645 units sold in February. Year on year, developers booked 96 per cent more sales in March, with a little under half of the units coming from high-end condominiums in the prime districts. "Buyers flush with cash and seeking stability are investing in stable assets like properties," said Mr Lee Sze Teck, director of research at Huttons Asia. An estimated 3,574 new private homes were sold in the January to March period this year - the highest quarterly sales since the second quarter of 2013 when 4,538 units were taken up, he added. Developers launched 959 units for sale in March, up from 167 in February, but down from 2,600 in January. Year on year, they launched nearly 66 per cent more units.

Singapore exports blow past forecast, jumping 12.1% on low base, chip crunch in March. Singapore’s key exports extended gains in March for the fourth straight month, helped by non-electronics shipment growth and a low base for electronics. Non-oil domestic exports (NODX) surged by 12.1 per cent year on year, a pickup from the growth of 4.2 per cent in the month before. The expansion, announced on Friday by trade agency Enterprise Singapore (ESG), handily beat the median rise of 2.6 per cent estimated by private-sector analysts in a Bloomberg poll. Electronic NODX grew by 24.4 per cent, compared with 7.3 per cent in February, and lifted by a year-ago trough in March 2020. The latest performance was driven by a 19 per cent jump in integrated circuits, with ESG citing reports of global chip shortages worldwide.

US

The Federal Reserve is seeing both labour and material shortages mounting up across several sectors of the US economy, which may have consumers paying even more for everything from fuel to new homes. In the Fed's Beige Book report released on Wednesday (April 14), the central bank references "shortage" or "shortages" 37 times, up six mentions from a previous decade-high total in March. That's also 12 times more than the same period in 2020, during the early days of the Covid-19 pandemic. Shortages have been a persistent economic theme since the early days of the outbreak, when store shelves were completely emptied of lockdown necessities such as toilet paper, hand sanitiser and personal protective equipment. More than a year after the pandemic's onset, scarcity concerns are primarily focused around global supply-chain issues and strengthening demand in the rebounding economy.

Bank of America reported a jump in first-quarter profit that breezed past estimates on Thursday as it released reserves it had set aside to cover potential coronavirus loan losses. The bank released US$2.7 billion from its reserves, betting on a swift economic recovery as more people get vaccinated and businesses return to normal. The second-largest US bank by assets also reported a 12 per cent fall in consumer banking revenue to US$8.1 billion in the quarter ended March. Appetite for new loans waned during the pandemic as customers spent less and saved more and large companies relied on capital markets for funds rather than their bank.

Citigroup on Thursday posted results that beat analysts’ estimates for first-quarter profit with strong investment banking revenue and a bigger-than-expected release of loan-loss reserves. The firm also said it was shuttering retail banking operations in 13 countries across Asia and parts of Europe to focus more on wealth management outside the U.S., one of the first big strategic moves made by CEO Jane Fraser, who took over in February. The bank said it was exiting consumer operations in Australia, Bahrain, China, India, Indonesia, Korea, Malaysia, the Philippines, Poland, Russia, Taiwan, Thailand and Vietnam. The firm will focus its non U.S. consumer banking operations on Singapore, Hong Kong, the UAE and London, the bank said.

Thermo Fisher Scientific has agreed to acquire PPD a provider of clinical and research services to the pharma and biotech industries, for US$17.4 billion as health-care dealmaking soars amid the pandemic. Thermo Fisher will pay US$47.50 a share for PPD, according to a statement on Thursday, and will assume about US$3.5 billion of debt. The price represents a premium of about 24 per cent to the PPD closing price Tuesday, before reports of a possible deal. The drug-testing field has become a hotbed of activity as the pandemic runs into its second year. Companies around the world are seeking to roll out new Covid-19 drugs and vaccines, even as they continue with their more standard business lines of developing new cancer therapies and other treatments. Health-care dealmaking has also been on a tear, with companies announcing more than US$160 billion of transactions this year - almost three times the volume in the same period of 2020. In February, Icon agreed to acquire PRA Health Sciences in a contract-research deal valued at about US$12 billion.

Coinbase stock closes down day after landmark Nasdaq debut. Coinbase shares whipsawed Thursday, a day after the cryptocurrency exchange went public in a blockbuster direct listing. The firm’s stock closed down 1.68%, though had climbed as high as 6.4% in the morning. The company said that it temporarily disabled withdrawals of ether tokens due to an issue with a recent upgrade to that currency’s network. The so-called “Berlin hard fork” is part of a broader effort to make the Ethereum blockchain faster and more secure.

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

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