Ada Tam Ying Ying

Oct 16, 202311 min read

16 Oct2023 Reports

Updated: Oct 17, 2023

SGX

Economic Calendar :

https://x.edm.sgx.com/ats/msg.aspx?sg1=922377ccc77441fec24cada3cca67d0b

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)

16 October 2023

Bull or Bear?

By one popular definition, the stock market began a new bull market in June after the S&P 500 rose 20% from its bear-market lows set in October 2022. However, there's another theory that says a bear market doesn't end until stocks reclaim all-time highs. Under that definition, the S&P 500 still needs to climb about another 430 points to surpass the 4796 level. The bull scenario certainly seemed reasonable through July, as the S&P 500 was surging 28% from its prior depths. But in August and September, doubts were raised as stocks tumbled 8% (though they have since reclaimed 3% of that lost ground). By our thinking, stocks remain in the early stages of a bull market, though volatility is an issue due to geopolitical developments, high interest rates, and the risk of recession. On the positive side, we anticipate that the U.S. economy will steer clear of recession into 2025, the Federal Reserve will start to lower interest rates in 2024, and earnings growth is poised to return in 2H23. The VIX Volatility Index is currently sending a more-optimistic signal. The current fear index reading is around 18, which is below the 15-year average of 20.5 and signals that investors aren't overly worried about the outlook. These readings compare to the average VIX of 24 during the most-recent bear market and 35 during the financial crisis of 2008-2009. During the long bull market in the 2010s, the VIX averaged 18 and even touched lows below 10 in 2017.

Market Wrap

US equity futures crept higher and Treasuries dropped as caution prevailed among investors tracking diplomatic efforts to contain the Israel-Hamas conflict.

Markets were broadly calmer Monday after last week’s rush into haven assets, as investors await further developments in the Middle East. The war is an additional concern for traders already busy interpreting the outlook for the economy and interest rates, just as the latest earnings reporting season gets into full swing.

Today's Big News

- Israel Latest: Biden, Scholz Make Diplomatic Push to Contain War

- Apple’s IPhones Off to Sluggish Start in China, Study Shows

- US to Tighten Curbs on China’s Access to Advanced Chip Tech

- Wells Fargo Kicks Off Top US Banks’ Post-Earnings Bond Issuance

- Elliott Said to Mull Buyout of Supply-Chain Software Firm E2open

- SBF’s Friends Force Him Into ‘Hail Mary’ Choice on Testimony

OCBC

DBS

MAS keeps Singdollar policy unchanged, expects improved economic growth for Singapore in 2024
JP Morgan’s 3Q EPS of US$4.33 beats estimates on higher net interest income and lower credit loss provision
US to further tighten curbs on China’s access to advanced chips technology

Latest changes: DBS Equity Picks

DBS Equity Picks have consistently outperformed market benchmarks since inception.

NEW REMOVAL(S)

Remove Keppel REIT from Dividend category (Singapore)

China Property

Oct begins on a low note

Average weekly GFA sold in 26 cities we track dropped 64.7% w-o-w for the week ended 8 Oct, translating to 34.9% y-o-y decline MTD (vs. 25.5% in Sep-23)
No. of new units launched in 11 key Tier 1 and 2 cities slid 66% w-o-w, marking the lowest level in recent two months
Average short-selling interest rose 5ppts to 20% last week
Which property stocks are investors betting against in the current China property downturn?
Click here to read our views

DBS Group Research | Equity Picks

Singapore Equity Picks: Read more

Hong Kong Equity Picks: Read more

UOB

UOBKH: Retail Market Monitor: Monday, October 16, 2023

Click on the link for details.

https://research.uobkayhian.com/content_download.jsp?id=75583&h=1e16cc9fc054b1c56a4411541ff63c4e

UOBKH: Regional Morning Meeting Notes: Monday, October 16, 2023 [GC Inflation, GC Money Supply, GC Trade, 2669 HK, 9618 HK, 9896 HK, 425 HK, MDKA IJ, MAL Strategy, IGBREIT MK, SATS SP, TISCO TB, HMPRO TB]

Click on the link for details.

https://research.uobkayhian.com/content_download.jsp?id=75582&h=9352fd9dbcde3ca2dd06de340f841b99

UOBKH: Country Dailies: Monday, October 16, 2023

Click on the link for Greater China Daily.

https://research.uobkayhian.com/content_download.jsp?id=75590&h=8ddc2bfdb3ada3f99bfb02ec06d1be4d Click on the link for Indonesia Daily. https://research.uobkayhian.com/content_download.jsp?id=75592&h=e0bd882f3fc45fe78a398b02a58d8e33 Click on the link for Malaysia Daily. https://research.uobkayhian.com/content_download.jsp?id=75609&h=8f3174e4071b3c496622057ad909fa7d Click on the link for Singapore Daily. https://research.uobkayhian.com/content_download.jsp?id=75584&h=911eead7b5a07dc2e40f71d7b9f230d9 Click on the link for Thailand Daily. https://research.uobkayhian.com/content_download.jsp?id=75611&h=e562fdbf7f367f9d874ab420631e39a3

KGI

Top Stories, 16 Oct 2023

1. Stock futures rise slightly to kick off a busy earnings week: Live updates

https://www.kgieworld.sg/research/up56

2. SGX FTSE China A50 Index Futures is the world’s only USD-denominated futures offering investors an efficient way to access the China A-share market.

Find out more: https://www.kgieworld.sg/futures/sgx-a50

3. Energy & precious metals - weekly review and outlook

https://www.kgieworld.sg/research/gk2q

4. China’s central bank chief vows to seize economic momentum to boost confidence

https://www.kgieworld.sg/research/lib0

5. Leak Reveals A Wall Street Crypto ‘Revolution’ That Could Crush The U.S. Dollar Has Suddenly Begun—Heralding Bitcoin, Ethereum, XRP And Crypto Price Chaos

https://www.kgieworld.sg/research/ebrg

6. Gold Price Forecast: XAU/USD hovers around $1,925 amid the geopolitical tensions, Chinese stimulus hope

https://www.kgieworld.sg/research/tkgi

Trendspotter of the day (SIN/HKG/MAL): 16th October 2023

Please refer to below for the technical charts of the day.

SIN

Sembcorp Industries Ltd – Technical Sell

Bearish corrective trend ongoing

HKG

Kingboard Laminates Holdings Ltd (1888) – Technical Buy

Bottoming out signal

MAL

Redtone Digital (0032) – Technical Buy

Rectangle breakout

Pantech Group Holdings (5125) – Technical Buy

Short-term uptrend?

APAC+US

APAC+US: Weekly Indices at a glance – Rebound stalled

TRADING IDEAS: 🇸🇬 SINGAPORE

16 October 2023

🏙 Oversea-Chinese Banking Corp Ltd (OCBC SP): Keeping wealth under lock and key

BUY Entry 12.85 – Target – 13.40 Stop Loss – 12.58

🏢 Singapore Airlines Ltd. (SIA SP): Expecting a seasonal rebound

BUY Entry 6.50 – Target – 6.90 Stop Loss – 6.30

Technical Analysis: 16 October 2023

🇸🇬 SG

AEM Holdings Ltd. (AEM SP)

Frencken Group Ltd. (FRKN SP)

🇭🇰 HK

Sinopec Kantons Holdings Ltd (934 HK)

China Oilfield Services Ltd (2883 HK)

CIMB

MAL: CGS-CIMB Daybreak - 16 October 2023

▍ What's on the Table...

MAL: Malaysia Airports Holdings (ADD, tp:MYR7.76) - Little long-term impact from MYAirline failure - 13/10

MYAirline effectively contributed 2% of MAHB’s core EPS in 1H23, while a potential bad debt write-off may hit c.3% of FY23F core EPS (our estimates). A hypothetical 1-year delay in effecting MAVCOM’s proposed landing and parking charge tariff increases may also reduce our FY24F core EPS by 2%. Reiterate Add, with SOP-based TP of RM7.76; the above downside risks are manageable in our view, and there are several re-rating catalysts for MAHB.

MAL: Economic Focus - Budget 2024: Raise revenue, cut spending - 14/10

Budget 2024 is focused on the MADANI framework, alongside raising taxable income and reduction in subsidy commitment, but still generous with handouts. Electricity tariff may target the top 10% households; chicken and eggs subsidy to be announced in two weeks. No news on RON95 measures thus far. Fiscal consolidation efforts on track with 2024 fiscal deficit at 4.3% of GDP. Fiscal outlook also improves with the passing of the Fiscal Responsibility Act.

MAL: Strategy Note - Budget 2024: policy continuity - 14/10

We believe Budget 2024 was balanced, driving through the fiscal consolidation agenda despite sizeable allocations for development. Moving to a targeted subsidy regime (and re-directing savings to lower income groups) is a medium-term positive. There were no significant losers from the budget, while domestic-driven sectors should benefit from proactive policy continuity, in our view.

▍ News of the Day....

Trendspotter – MY- Redtone Digital (0032) (Technical Buy, 0.725): Rectangle breakout

• Budget 2024 was tabled by Prime Minister in Dewan Rakyat on Friday

• MOF: Malaysia’s GDP projected to grow within the range of 4% to 5% in 2024

• MOF: Malaysia’s unemployment rate expected to return to 3.4% in 2024

• ICT and e-commerce contributed 23% or RM412.3bn to the economy in 2022

• Malaysia projects current account balance surplus of RM62.24bn in 2024

• TM remains focused on growing Malaysia’s connectivity and digital ecosystem

CGS-CIMB SG/MY Preview - STM, JAP, DBS; IJM

SINGAPORE

DOW +39pts (+0.1%) NDQ -167pts (-1.2%) SPX -22pts (-0.5%) WTI (+5.8%) GOLD (-0.5%)

US stocks largely closed lower on Friday, pressured by a higher oil prices and rising inflation expectations. Oil prices surged on fears Israel-Hamas war could escalate geopolitical tensions in the Middle East. Israel’s military continue urging residents to evacuate northern Gaza. Major financials firms kicked off Q3 earnings season. Preliminary US Consumer Sentiment for Oct slips from 67.4 est to 63. 10Yr Treasury yield -9bps to 4.62%.

CGS-CIMB Highlights

* SG Economic Update: MAS kept the rate of appreciation of the S$NEER policy band unchanged, in line with market expectations; lowers its inflation forecast for 2023. MAS sees stable 2024F CPI, at 3.0-4.0%, driven by the easing of constraints on food supply, weaker wage growth, and higher supply of COE. Separately, Singapore’s GDP grew 0.7% yoy in 3Q23 via gains in manufacturing; we keep our 2023F GDP forecast at 0.9% (2024F: 2.6%)

* DBS (DBS SP) DBS’s online banking, payment and ATM services were down for hours on 14 Oct. Citibank’s digital operations were also impacted. Both reported that banking services were back to normal on 15 Oct. Impact assessment: As the current disruption was allegedly due to an external data center disruption, it is unclear whether there will be a penalty imposed on DBS. We expect neutral share price impact from this issue. Our current call is Hold with TP of S$35.30

* Seatrium (STM SP) New York PSC rejected RE developers’ petitions for power sale contract price increases to incorporate inflation and supply chain impact. STM does not see an impact on timeline for EPC contract work on Equinor and BP’s Empire Wind farms. Other offshore projects are progressing well. We reiterate our Add call with a TP of S$0.19, based on 1.5x CY24F P/BV.

* Japfa (JAP SP) We think JAP returned to profitability in 3Q23F, supported by better ASPs of DOCs and swine in Indonesia and Vietnam, respectively. Swine prices in Vietnam are falling while corn prices in Indonesia are rising in Oct, could stymie recovery in 4Q23F. We believe 2H23F will see a lower net profit of US$35.5m (vs. our previous forecast of US$66.5m), which is insufficient to lift FY23F into profitability. Reiterate Reduce, with an unchanged TP of S$0.20.

OTHER NEWS

* Sen Yue (SYH SP) 9 months’ revenue +108%, from S$26.30M in 9M2022 to S$54.76M in 9M2023, driven by Commodities segment.

* Tuan Sing (TSH SP) considering turning its key asset Link@896 and the freehold site next to it into a hotel or serviced residence.

MALAYSIA

The Bursa Malaysia market exhibited a positive outlook, with the FBMKLCI rising 0.51% to close at 1,443.82, following the lead of other Asian markets, particularly Hong Kong's HSI, which saw a 1.93% increase. Most sectors experienced gains, except for plantation and energy. Notably, construction, property, and industrial products sectors made significant gains. The trading volume increased to 3.38bn, and market breadth remained positive for the third consecutive day, with 587 gainers surpassing 341 decliners. The market also saw a breakout above the 50-day and 200-day EMAs, and with this positive momentum, it is expected that the market may test the 1,450 resistance level in the near future. CGS-CIMB HIGHLIGHTS IJM Corp Bhd (IJM MK) - May beat order win forecast with RTS win (Maintain ADD; TP of RM2.15) https://bit.ly/3FgPQFc CORPORATE NEWS *Telekom Malaysia Bhd (T MK) will remain focused on growing Malaysia’s overall connectivity and digital ecosystem, harnessing 5G capabilities. *Hibiscus Petroleum Bhd (HIBI MK) received conditional approval for its proposed acquisition of a 42.5% stake in Rapid Oil Production Ltd’s licence for an undeveloped oil field known as Fyne Field. *One Glove Group Bhd (ONEGLOVE MK) plans to undertake a capital reduction of RM120m to eliminate accumulated losses of the glove manufacturing company. *The EPF has raised its stake in TIME dotCom Bhd (TDC MK) to 9% after acquiring a 1.47% stake in the telecommunications service provider and data centre operator.