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Writer's pictureAda Tam Ying Ying
Oct 24, 20238 min read

20 Oct2023 Reports



SGX


















 

Phillip Capital Market Reports:


Phillip Daily Morning Note :




US Market (By Phillip Global Markets Night Desk)

20 October 2023

Headed Back to Normal

For more than 40 years, long-term fixed-income investors have demanded a yield premium to the underlying inflation rate in order to maintain purchasing power. The "gap" between the 10-year yield and the CPI (ex-food and energy) has averaged 230 basis points (bps) since 1980. The widest gap was in August 1983, at 875 bps, when investors had serious doubts about whether the Federal Reserve could bring down runaway inflation. In recent years, though, the gap has been negative or inverted due to extraordinary global demand for the safety of Treasury securities as well as to quantitative easing programs that the central bank has implemented in order to avert economic catastrophe. The gap reached a historic low of -450 bps in February 2022. Of course, that's just before the Federal Reserve embarked on its rate-hike program that has taken the federal funds rate from 0.0% to the current level of 5.38%. The economy has held up, the Fed is now reducing its balance sheet, and long-term bond yields have risen in response. Currently, the yield gap is just about break-even. To get a sense of how high the 10-year yield might go, adding 230 bps to the current inflation rate arrives at a target 10-year bond yield of 6.6%. But going back to 2000, the more-recent history, the gap is only 90 basis points. That takes the target to 5.2%.

Market Wrap

Equities fell and oil topped $90 a barrel on concern the war between Israel and Hamas may widen to a regional conflict.

US equity futures dropped by about 0.4%, while Europe’s Stoxx 600 Index slumped by more than 1%. Treasuries erased earlier gains and gold approached $2,000 an ounce. Bitcoin inched closer to $30,000. The dollar edged higher.


Today's Big News

- Israel Latest: Concern Over Wider Conflict Before Leaders Summit

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- Kioxia Is Said to Approach JIC to Back Western Digital Deal (1)

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- Credit Suisse Readies for More Job Cuts, Financial News Says (1)

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- Jazz Pharmaceuticals Said to Explore Options Including Sale (3)

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- Merck to Pay as Much as $22 Billion for Daiichi Cancer Drugs (2)

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- Pimco Is Selling Hung Debt It Bought From Banks for a Premium







 

OCBC











 

DBS


Your daily newsletter

  • US weekly jobless claims fell to 198k, below estimates, suggesting sustained momentum in the economy

  • Powell signals Fed to maintain rates and keep future hike on table

  • TSMC’s 3Q profit of T$211bn beats estimates, expects recovery in 2024

Latest changes: DBS Equity Picks

DBS Equity Picks have consistently outperformed market benchmarks since inception.

NEW ADDITION(S)

  • Add DFI Retail Group to Growth category (Singapore)


China Hardware Sector

China+1: Origins and potential

  • Based on our research on 10 major hardware firms, more than half plan to expand overseas in 2023-24, with an ultimate target of 30%-50% overseas capacity

  • The primary reason for the shift has changed from cost savings to servicing clients’ diversification needs

  • Which companies are the key beneficiaries of supply chain diversification trend?

  • Click here to read our views

WH Group Ltd (288 HK)

Potential spin-off of US business Smithfield Foods

  • News reported WH Group’s plan to spin-off and relist Smithfield in the US in 2024 the earliest

  • Expect re-rating potentials should the spin-off be successful

  • How much upside do we expect if spin-off is successful?

  • Click here to read our views

DBS Group Research | Equity Picks

Singapore Equity Picks: Read more

Hong Kong Equity Picks: Read more



 

UOB


UOBKH: Country Dailies: Friday, October 20, 2023

Click on the link for Greater China Daily.


UOBKH: Retail Market Monitor: Friday, October 20, 2023

Click on the link for details.




 

KGI


Technical Analysis: 20 October 2023

🇸🇬 SG

Geo Energy Resources Ltd. (GERL SP)

AEM Holdings Ltd. (AEM SP)

🇭🇰 HK

Sunny Optical Technology Group Co. Ltd. (2382 HK)

Melco International Development Ltd. (200 HK)




TRADING IDEAS: 🇸🇬 SINGAPORE

20 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

🏢 DBS Group Holdings Ltd (DBS SP): SGD strengthens again

RE-ITERATE BUY Entry 33.10 – Target – 34.50 Stop Loss –32.35



Top Stories, 20 Oct 2023


1. Stock futures slip as investors eye key level for 10-year Treasury yield: Live updates

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. Oil up as Powell plays down US rate hike odds, reversing early loss on Venezuela

4. U.S. 10-year Treasury yields hits 5% for first time since 2007

5. Chinese investors’ sales of US stocks and bonds hit four-year high


6. NZD/USD sets new low for 2023 at 0.5815 as Kiwi continues to slide



 

CIMB


SIN: Frencken Group Ltd - FY24-25F outlook likely to improve (ADD - Maintained)




Trendspotter of the day (SIN/HKG/MAL): 20th October 2023


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

SIN

  • Bearish reversal confirmed

  • Bearish reversal confirmed

HKG

  • Return of the uptrend

  • Bullish reversal confirmed

  • Uptrend in an early stage

MAL

  • Bullish breakout to new high

  • Bullish engulfing pattern spotted





CGS-CIMB SG/MY Preview - KEP; Msia exports

SINGAPORE DOW -251pts (-0.7%) NDQ -128pts (-1.0%) SPX -37pts (-0.8%) WTI (+1.2%) GOLD (+0.1%) US stks edged lower as sentiments kept its bearish stance with comments from Fed chairman Jerome Powell coupled with corporate earnings release. All sectors closed red with Consumer Discretionary topping the charts. TSLA -9.3% plunges on margins pressure. Jobless claims was lower (198k vs 212k est). US 10Y hits session high of 5%, last seen since 2007. FSSTI poised to open lower on the back of bearish sentiment. Focus of the day; KEP, MUST, STM. CGS-CIMB Highlights * Keppel Corp (KEP SP) 3Q23 infrastructure profit up significantly yoy, with recurring income trend intact (1H23 recurring profit from infra was S$307m). YTD asset monetisation was at S$865m (2022: S$1.5bn), but we see acceleration in monetisation of asset co rigs given the strong rig market. Reiterate Add and SOP-based TP of S$8.70. It is trading at c.0.9x FY23F P/BV and offers decent cash dividend yield of 5.7% in FY23F. Potential re-rating catalysts: significant acquisitions/asset monetisation. * Genting Sing (GENS SP) MBS’s adjusted EBITDA +43.1% yoy and +13.7% qoq to US$491m in 3Q23, higher than pre-Covid-19 levels in FY19 (113% of 3Q19). Gaming and non-gaming revenue saw healthy yoy growth of 36.9% and 28.9%, respectively, driven by robust recovery in tourism post the pandemic. Reiterate our Add call as we think GENS could see its profitability surpass pre-Covid-19 levels for the first time since the pandemic. OTHER NEWS * Seatrium (STM SP) delivers floating production unit for deployment in Gulf of Mexico, which was for a contract signed with Shell Offshore in Nov 2019. * Manulife US Reit (MUST SP) secured 65-month renewal with its fouth largest tenant, Kilpatrick Townsend at 1100 Peachtree Ppty in Midtown Atlanta. * Brent / WTI ascend higher to US$92.38 / US$89.37 per barrel from ongoing concerns of regional conflict escalation in Gaza. MALAYSIA Bursa Malaysia market saw a minor consolidation on Thursday, mirroring the overall lower trend in Asian stock markets, with Hong Kong's HSI leading losses. FBMKLCI dipped by 3.88 points, a 0.27% decrease, closing at 1,442.66. Industrial products, construction, and technology sectors weighed on the broader market, while transportation and plantation were the only gainers. Trading activity declined, with a trading volume of 3.07bn shares and trading value decreasing to RM2.02bn. Market breadth remained negative, with 509 decliners outnumbering 337 gainers. The benchmark index formed a doji-like candle, indicating a potential minor consolidation phase, while market internals, as reflected by the advance/decline ratio, continued to show weakness. OIL Oil advanced as geopolitical tensions ratcheted higher in the Middle East. Israel is expected to launch a ground invasion of Gaza after massing troops on the border. WTI: 89.37 (1.19%) Brent: 92.38 (0.96%) PLANTATIONS Palm oil fell as weaker soybean oil and petroleum dampened demand in food and fuel markets. Positive external factors, such as a weak MYR, are not sufficient to support the market. 3rd MONTH FCPO: 3,758.00 (-1.36%) CGS-CIMB HIGHLIGHTS Economic Update - Export contraction likely to narrow in 4Q23F https://bit.ly/492m7xG CORPORATE NEWS *Tenaga Nasional Bhd (TNB MK) collaborating with Siemens Energy to speed up the decarbonisation of its thermal power plants, utilising green hydrogen produced from renewable energy (RE) resources. *Gamuda Land (GAM MK) signed MOU with 12 tenants for its upcoming Quayside Plaza in its twentyfive7 township development located in Telok Panglima Garang, Selangor. *Permodalan Nasional Bhd (PNB) has exercised its put option to dispose of all Maybank Asset Management Group Bhd shares held by the fund to *Malayan Banking Bhd (MAY MK) for a cash consideration of RM70.39mil. *Celcomdigi Bhd (CDB MK) top level executives have maintained their stance that the current additional charges for subscribers to upgrade to 5G services provides the most flexibility, instead of reducing their prices in accordance with lower cost from the new generation network provided by Digital Nasional Bhd (DNB). *AirAsia X Bhd (AAX MK) said Bursa Securities had, vide its letter dated 18 Oct 2023, rejected the airline’s application for proposed relief and PN17 upliftment.




 

Lim&Tan






 

MayBank



[Maybank IBG Research] Today's Research - Singapore



Central Pattana (CPN TB)

Globe Telecom (GLO PM) Swift Haulage (SWIFT MK)





MAYBANK SECURITIES - EM Asia Headlines 201023


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