14 Nov2023 Reports

Ada Tam Ying Ying

Nov 26, 20236 min read

My AM interview with ZaoBao on 14th Nov : 本地股市星期二早盘跌0.36%

https://www.zaobao.com.sg/realtime/singapore/story20231114-1449865

SGX

10 in 10 with CDL Hospitality Trusts - Taking a Long-Term View on Singapore

https://x.edm.sgx.com/ats/msg.aspx?sg1=432fff014023fb58f8fb93a6a03006b9

Phillip OCBC DBS UOB KGI CIMB Lim&Tan MayBank

https://www.zawya.com/en/mena

Phillip Capital Market Reports:

Stock Research

Phillip Daily Morning Note :

US Market (By Phillip Global Markets Night Desk)

13 November 2023

The Proxy Fed Funds Rate May Have Peaked

Monetary policy is tighter than it appears, but it may have peaked in July and started to ease according to our analysis of the Proxy Funds Rate, an analytical tool tracked and updated monthly by the Federal Reserve Bank of San Francisco. At the end of October, the rate was 6.7% compared with the official fed funds target of 5.25%-5.5%. It peaked at 7.1% in July and has declined through October. The rate recognizes that central bankers in the twenty first century use many tools (not just short-term interest rates) to meet their "dual mandate" of stable prices and maximum sustainable employment. The Fed uses forward guidance to communicate the direction of monetary policy and influence longer-term interest rates and broader financial conditions. The Fed also can expand its balance sheet through the large-scale purchase of Treasury and Mortgage Backed Securities, which is known as quantitative easing, or reduce its holdings, which is known as quantitative tightening. The Proxy Funds Rate uses the analysis of 12 financial variables, including Treasury rates, mortgage rates, and borrowing spreads, to translate the full range of policy actions into an analogous level of the funds rate, That can help assess whether policy is tighter or easier than the official funds rate suggests. In a November 2022 San Francisco Fed Economic Letter, the developers of the proxy rate noted the following: "As the FOMC increasingly used forward guidance and the balance sheet, the proxy rate has tended to lead the actual funds rate, reflecting the fact that financial markets are forward looking." It could be a good sign for conventional Fed watchers if the proxy rate peaked in July. The letter also noted that "combined policy tools have a more complex effect on the economy than the federal funds rate indicates." That suggests to us that Fed watchers should become even more diligent.

Market Wrap

US equity futures pointed to a slightly weaker start for Wall Street, following two weeks of robust gains, as investors waited for inflation data that could show if the Federal Reserve is done hiking interest rates.

Contracts for the S&P 500 and the Nasdaq 100 slipped about 0.2%, after the underlying indexes closed sharply higher on Friday. Boeing Co. shares advanced more than 3%, thanks to a $52 billion deal with Emirates, as well as news that China is weighing an end to a freeze on purchases of Boeing aircraft.

OCBC

DBS

Market News

Moody’s to lower its rating outlook on US Treasurys on the back of its massive government debt and deficits
Xiaomi makes record US$3.1bn sales across various online platforms on Singles Day
Emirates orders 95 Boeing aircraft for US$52bn; China weights ending freeze on Boeing with 737 Max deal

Oil-sensitive Companies

2 stocks to watch as you navigate volatile oil price

Brent’s retreat over the past 1.5 months due to fading geopolitical risk premium and mounting demand concern may have near-term downside as it reach our 2024 base case forecast of $80-85pbl and below our 4Q23 forecast of US$90pbl
Theoretical impact of volatile oil price on oil sensitive stocks have differed from reality with (1) ComfortDelGro recently resilient to oil price swings while (2) energy solutions provider Seatrium’s share price correlation to oil has diminished in recent years
How would ComfortDelGro and Seatrium be affected by volatility in oil prices?
Click here to read our views

China Internet Sector

Alibaba and JD reported positive GMV growth in Double 11

Double 11 gross merchandise value (GMV) growth of overall e-commerce platforms slowed to 2% y-o-y, according to Syntun
Alibaba’s Tmall resumed positive GMV growth (vs flattish last year), in line; JD reported record-high GMV
Alibaba, PDD and live stream platforms are more resilient amid consumption downgrade
What is our preference for the counters?
Click here to read our views

SATS Ltd (SATS SP)

Upside within broad trading range

2QFY24 earnings came in-line on encouraging signs of stabilisation in air cargo market
Operating profits surpassing pre-pandemic levels and on-track integration of WFS are positives
Stock has upside within its 1-year trading range as 2QFY24 business update looks encouraging
What are the key technical levels to watch?
Click here to read our views

ARA US Hospitality Trust (ARAUS SP)

Another quarter of RevPAR above pre-pandemic levels

3Q23 RevPAR of US$105 up 8.2% y-o-y and surpassed pre-pandemic levels for second consecutive quarter; momentum to continue going into 4Q23
Borrowing costs to rise to 6-6.5% after hedges roll off in Feb-24
Valuations attractive at 0.35x P/NAV, with forward yields in mid-teen range
Is the group’s net asset value well-supported by strong cash flows?
Click here to read our views

UMS Holdings (UMSH SP)

2H23 recovery intact; stronger 2024 expected

2H23 recovery intact, with strong performance q-o-q
3Q23 margins improved, partly due to the renewal of its contract with key customer
Semiconductor industry recovery intact; upcycle to continue through 2026
Do we expect an improving outlook?
Click here to read our views