Phillip Capital Morning Note - 24 Mar 2021

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Publish date: Wed, 24 Mar 2021, 09:03 AM

Asian stocks were poised to follow Wall Street lower on Wednesday as the cost of the U.S. stimulus and infrastructure plans and new pandemic curbs limited investors’ risk appetite. Hong Kong’s Hang Seng index futures fell 0.2%. In Japan, Nikkei futures were 0.6% lower. Australian futures traded either side of unchanged. Small cap stocks, energy and international equities fell on Tuesday. On Wall Street, the Dow Jones Industrial Average fell 308.05 points, or 0.94%, to 32,423.15, the S&P 500 lost 30.07 points, or 0.76%, to 3,910.52 and the Nasdaq Composite dropped 149.85 points, or 1.12%, to 13,227.70.

Benchmark 10-year notes rose 19/32 in price to yield 1.6153%, from 1.682% late on Monday after Federal Reserve Chair Jerome Powell and Treasury Secretary Janet Yellen spoke to Congress. Powell downplayed the risk of inflation. Yellen said the U.S. economy remains at risk as she fielded lawmakers’ questions about possible infrastructure and tax increase plans under consideration. Crude oil futures tumbled more than 6% due to demand concerns amid a third wave of the coronavirus pandemic.

1) OUE on Tuesday said it has signed a share-purchase agreement with Tokyo-listed Itochu Corporation to purchase 266.6 million shares, or a 6 per cent stake, in OUE Lippo Healthcare (OUELH) at S$27.7 million in cash, equivalent to S$0.10375 per share. The consideration is about 2.5 times OUELH's closing price of S$0.041 on Tuesday, which may hint at another move from OUE to support OUELH, after the developer last month agreed to convert S$189.6 million of its shareholder loans to OUELH to perpetual bonds to enable the healthcare unit to reset and be better placed to tap capital markets to fund its future growth.

2) SANLI Environmental on Tuesday said operations at its 60-per-cent owned subsidiary, Sanli Environmental (Myanmar), have been disrupted due to the political situation and declaration of martial law in Yangon on March 14. Sanli, which has its Myanmar office in Yangon, said it has remained focused on ensuring the safety of its employees, who have been advised to work from home until the situation improves. The company said: "It is still too early to ascertain the longer-term impact on the group's businesses. The company will continue to monitor the political developments in Myanmar and provide further updates when there are material developments." Sanli Myanmar provides engineering, construction and related services in the South-east Asian nation.

3) The manager of Far East Hospitality Trust (FEHT) has announced that it has received an outline advice from the Urban Redevelopment Authority (URA) in relation to the redevelopment of Central Square, which comprises a serviced residence and commercial spaces, including office and retail units. The outline advice was issued under an incentive scheme in response to a joint outline application. According to the manager, the proposed plan is intended to rejuvenate the precinct with an integrated development, and involves a potential rezoning and uplift in gross floor area which are subject to specific approvals from URA and other relevant authorities. It also includes plans for improvements of common areas to encourage a wide variety of activities such as outdoor dining, exhibitions and events.

1) Robinhood Markets Inc, the online brokerage at the center of the historic retail trading frenzy that gripped Wall Street this year, has confidentially submitted plans to regulators for a U.S. initial public offering, the company disclosed on Tuesday. The move to push ahead with a stock market flotation comes in the middle of a historic boom in U.S. capital markets, fueled largely by dealmaking through so-called special purpose acquisition companies. Companies have raised well over $100 billion through initial public offerings (IPOs) in the first three months of the year and are poised to overtake 2020’s record haul of $167 billion, data from Refinitiv and Dealogic showed. The amount raised includes blank-check IPOs.

2) GameStop Corp said on Tuesday it may sell new shares this year to take advantage of a more-than 800% run-up since January in the stock price of the U.S. video game retailer at the center of the Reddit rally of “meme stocks.” GameStop shares gyrated after hours and were last down 12%. The company made the comments about the share offering in a regulatory filing for fourth-quarter earnings which showed GameStop returned to profitability, with 175% growth in e-commerce sales. Grapevine, Texas-based GameStop’s shares have skyrocketed this year as retail traders bet against Wall Street hedge funds that had shorted the stock. The company’s valuation surged as high as $33.68 billion, more than Best Buy Co Inc.

3) Amazon.com Inc on Tuesday appointed Salesforce.com Inc executive Adam Selipsky to lead its high-margin cloud computing unit, Amazon Web Services. The move comes as AWS’ current lead Andy Jassy is vacating the role to become the chief executive officer of Amazon, after Jeff Bezos announced his exit in February. AWS, a key part of Amazon’s growth strategy, has raked in record profits for the world’s largest online retailer, and counts scores of startups, big corporations and many government agencies among its clients. Seattle-based Amazon said Selipsky, one of the first VPs hired in AWS in 2005 who ran the cloud computing division's sales, marketing, and support for 11 years, will return to AWS on May 17.

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

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