Ada Tam Ying Ying

Oct 10, 202311 min read

3 Oct2023 Reports

SGX

Economic Calendar :

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

Developing Asia remains attractive with 4.7% growth forecast in 2023

https://www.sgx.com/research-education/market-updates/20230928-developing-asia-remains-attractive-47-growth-forecast

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)

03 October 2023

Fourth Quarter Typically Positive for Stocks

In theory, investors can breathe easier heading into the fourth quarter, when markets typically post the strongest returns of the year. To draw this conclusion, we analyzed data collected on S&P 500 performance from 1980-2022. By our calculations, the quarter has generated average gains of 4.6%, compared to gains of 2.1%, 2.9%, and 0.3% for 1Q, 2Q and 3Q, respectively. The fourth quarter is consistent as well, with a "win percentage" of 81%. This means that stock returns are positive in the fourth quarter in four years out of five, and compares to winning percentages of 66% in 1Q, 66% in 2Q, and 61% in 3Q. To be sure, the fourth quarter has had its share of clunkers. In 1987, which included Black Friday, stocks fell 23% during the period; in 2008, stocks sold off 18%, after the collapse of Lehman Brothers and as the U.S. economy plunged into a deep recession. As recently as 2018, stocks slid 14% in the final quarter, when trade wars intensified and the Federal Reserve raised rates. But last year, when stocks were in a bear market, 4Q was the only quarter of the year with a positive performance (up 7%). This time around, it is not unreasonable to expect a slow start, given the government shutdown, labor strikes at automakers, oil prices above $90 per barrel, and high interest rates. In the current environment, we continue to recommend that clients focus on quality companies with clean balance sheets and experienced management teams.

Market Wrap

Stocks fell and Treasuries resumed a retreat as investors grew increasingly worried about the long-term effects of historically high borrowing costs.

The US 30-year yield rose to the highest level since 2007, and 10-year rates rose for a second day. The selloff rippled across equity and commodity markets, with Europe’s Stoxx 600 trading close to a six-month low and S&P 500 index futures down more than 0.5%. West Texas Intermediate crude futures slid to trade below $89 a barrel and the dollar index reached a 10-month high.

Today's Big News

- Brookfield Raises $12 Billion for Flagship Private Equity Fund

- Singapore Seizure Tops $2 Billion as Laundering Probe Widens

- Key Taiwan Tech Firms Helping Huawei With China Chip Plants

- Three Win Physics Nobel for Electron Study With Light Pulses

- Cargill’s Pandemic-Era Chicken Bet Is Finally Ready to Pay Off

- Singapore Mulls Family Office Rules as Launderer Ties Probed

OCBC

DBS

US ISM manufacturing index recovers to 49.0 in Sep (vs 47.6 in Aug)
Bank of Japan to increase bond purchases as government bond yields reach highest level in a decade
Birkenstock, the German premium footwear brand, seeks valuation of up to US$9.2bn in New York IPO

Singapore Banks

Here’s the support level heading into 3Q results season

Higher-for longer-rates and slow but stable GDP should underpin bank stocks heading into the 3Q results season
Fundamental view: Downside is limited in the near term and valuations are undemanding at c.1x FY24F P/B
Tactical view: Concurs with fundamental view for limited near-term downside
Is it time to relook Singapore banks ahead of 3Q results season?
Click here to read our views

Singapore REITs

Awaiting its time to shine

Too late to turn bearish as we approach (or past) peak rate hikes
Refinancing pressures well documented and “priced in”; perpetual securities reset a medium-term hurdle, but rates should have normalised by 2025
S-REIT managers to seek lower leverage through asset sales, but equity fundraising may not be as dilutive as investors perceive
Which sectors do we prefer?
Click here to read our views

Raffles Medical Group Ltd (RFMD SP)

Good Morning, Vietnam!

Raffles Medical acquired a majority interest in American International Hospital (AIH) – a fully equipped 120-bed tertiary hospital – in Ho Chi Minh City; the asset is valued at US$45.6m
AIH is believed to be founded and owned by Orion Health, a healthcare technology company from New Zealand / Australia; we believe this first partnership could possibly lead to further collaborations in the future
We believe this is a positive strategic move to further expand its presence in Vietnam with a small acquisition now that both hospitals in China are open
What is our current and long-term outlook?
Click here to read our views

DBS Group Research | Equity Picks

Singapore Equity Picks: Read more

Hong Kong Equity Picks: Read more

UOB

UOBKH: Regional Morning Meeting Notes: Tuesday, October 03, 2023 [GC PMI, GC Commodities, 17 HK, ID Alpha Picks, MAL Banking, SG REITs, TH Alpha Picks, TOP TB]

Click on the link for details.

https://research.uobkayhian.com/content_download.jsp?id=75389&h=84b3949b9be623728b1ca379a4cc0717

KGI

Top Stories, 3 Oct 2023

1. Asia-Pacific stocks fall even as China’s factory activity expands for the first time in six months

https://www.kgieworld.sg/research/m3zn

2. HKEX MSCI China A 50 Connect Index Futures is HKEX's first A-share derivatives product is based on the MSCI China A 50 Connect Index, a sector-balanced index that selects 50 names from among the largest stocks listed Stock Connect, and targets at least two stocks from each sector.

Find out more: https://www.kgieworld.sg/research/s53v

3. US manufacturing sector eyes recovery in September as production picks up

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

4. Oil tumbles 2% to 3-week low on strong dollar, profit taking

https://www.kgieworld.sg/research/k5in

5. World Bank cuts China's 2024 growth amid property crisis

https://www.kgieworld.sg/research/2n1z

6. US Dollar Index climbs to 107.00, claims eleven-month high as market sentiment extends risk-off flows

https://www.kgieworld.sg/research/5oq8

Technical Analysis: 3 October 2023

🇸🇬 SG

GuocoLand Ltd. (GUOL SP)

RH Petrogas Ltd. (RHP SP)

🇭🇰 HK

Hua Hong Semiconductor Ltd (1347 HK)

Semiconductor Manufacturing International Corp (981 HK)

CIMB

CHN: Strategy Note - Official mfg PMI back to expansion territory

https://rfs.cgs-cimb.com/api/download?file=5ac7525d-4b0f-441b-bcc8-953f15fcc89e

MAL: CGS-CIMB Daybreak - 03 October 2023 ▍ What's on the Table...

MAL: Bumi Armada (ADD, tp:MYR0.75▲) - EPS recovery and growth in 2H23F and FY24F - 2/10

Reiterate Add with a higher SOP-based TP of 75 sen on a lower Ke of 13% (from 16%), as we believe earnings will recover strongly from 3Q23F. This is on the back of the full recovery of FPSO Kraken from 7 Aug 2023 and the contribution of the FPSO Armada Sterling V from Nov 2023F. Other re-rating catalysts include the Sterling V potentially receiving standby rates and the TGT-1 contract potentially extended.

MAL: Economic Focus - Budget 2024 Preview: Tightening purses - 2/10

We project a narrower 2024 fiscal deficit of 4.3% of GDP (2023: 5.0%) with the budget focusing on the MADANI framework and targeted subsidies. We also expect a capital gains tax on unlisted shares to be rolled out while GST could be mentioned for implementation at a later date. Rising commodity prices could hamper further subsidy rationalisation. Meanwhile, we forecast debt ratios to rise but to remain well within limit.

▍ News of the Day....

Trendspotter – MY- Parlo (0022) (Technical Buy, 0.145): At 19-month high

• World Bank cuts Malaysia’s 2023 GDP growth forecast to 3.9% from 4.3%

• Malaysia government to channel RM400m of subsidies to buy imported rice

• AMMB and MetLife propose RM1.1bn disposal of insurance and takaful business

• Paris arbitral tribunal rules in Malakoff’s favour in dispute with Algerian partner

• Pestech receives RM21.2m contract from TNB for supply of smart meters

CGS-CIMB SG/Msia Preview 03 Oct

SINGAPORE

DOW -74pts (-0.2%) NDQ +88pts (+0.7%) SPX +0pts flat WTI (-2.2%) GOLD (-0.1%)

US stocks broadly closed in the green with DJI closed lower despite Congress delay government shutdown deadline till end of Nov. Technology (+1.3%), communications services (+1.5%) and consumer discretionary (+0.3%) were the only positive sectors in the broad market index. OIL prices -2% to a three-week low as a higher-priced Brent contract expired, the USD strengthened and traders took profits, concerned about rising crude supplies and pressure on demand from high interest rates. US 10yr Treasury yield briefly touched 4.7%, marking its highest since Oct 2007

CGS-CIMB Highlights

* Banks: Banking system loan growth stayed subdued, contracting 6% yoy in Aug 23. Shrinkage was broad-based. We see muted bank loan growth in 3Q23F. Overall system growth slowed to +3% yoy in Aug 23 but S$ deposit growth outpaced FCY deposits. CASA is still contracting and FD growth slowing. A higher-for-longer interest rate scenario may bode well for NIMs but we are cognisant of potential asset quality pressures. Reiterate Neutral.

* Property and Development: 3Q23 URA private residential price flash estimate showed a 0.5% qoq hike. We project slower price growth momentum ahead and maintain our expectation for price movement of +/-2% for 2023F. While valuations of developers are inexpensive, in our view, we also see a lack of sector re-rating catalysts. Maintain Neutral. Our sector top picks: CLI, CIT and UOL

CORPORATE NEWS

* Raffles Med (RFMD SP) acquired a majority interest in American International Hospital (AIH) in Ho Chi Minh City, Vietnam. The group expects to fund the cash consideration from “internally generated resources”. Acquisition value not disclosed.

* Dyna-Mac (DMHL SP) secured several contracts worth a total provisional sum of S$88 million from repeat customers. The main contract involves the construction of topside modules for a floating production storage offloading (FPSO) vessel. Other contracts include executing the fabrication, installation and integration work on vessels.

* Southern Alliance Mining (SAML SP ) Extended exclusivity period under non-binding MOUs of proposed acquisitions of 40% shares in MCRE Resources Sdn Bhd and 100% shares in Paramount Synergy Sdn Bhd to 31 Jul 2024

MALAYSIA

The Bursa Malaysia market experienced a mixed performance in line with Asian markets on Monday, as risk sentiment waned with a focus on Fed speech and upcoming US data releases. FBMKLCI declined by 0.38% to 1,418.76, with only healthcare and telecommunications sectors posting gains. Utilities, property, and technology sectors were the worst performers. Trading volume decreased to 3.02 billion, and trading value tapered off to RM1.80bn. Market breadth remained negative for the fifth consecutive day. The market's downward trend persisted, forming a third black candle and reaching a two-month low, indicating continued bearish momentum and the potential for further decline, possibly testing the 1,412-1,416 range and the psychological level of 1,400. OIL Oil fell as worries about further interest rate increases and a slowdown in the economy roiled broader markets. WTI: 88.82 (-2.17%) Brent: 90.71 (-1.62%) PLANTATIONS Palm oil fell the most in three weeks on lower prices for soybean oil, its main rival, and concerns over weaker demand from top importer India. 3rd MONTH FCPO: 3,704.00 (-1.67%) CGS-CIMB HIGHLIGHTS *Economic Focus - Budget 2024 Preview: Tightening purses https://bit.ly/3Q1WkOG *Bumi Armada (BAB MK) - EPS recovery and growth in 2H23F and FY24F (Maintain ADD; higher TP of RM0.75) https://bit.ly/46k9aO0 *Yinson Holdings Bhd (YNS MK) - Smooth execution of current projects (Maintain ADD; lower TP of RM3.27) https://bit.ly/3LK63X3 CORPORATE NEWS *Pestech International Bhd (PEST MK) received a RM21.2mil contract from *Tenaga Nasional Bhd (TNB MK) for the supply and delivery of smart meters. *Kimlun Corporation Bhd (KICB MK) has secured 2 contracts totalling RM140.2mil from Eco World Development Group Bhd (ECW MK). *Astro Malaysia Holdings Bhd (ASTRO MK) announced that it will close down its home shopping business under “Go Shop” from 11 Oct. *Star Media Group Bhd (STAR MK), has seen a series of acquisitions by its largest shareholder Malaysian Chinese Association over the last month that raised its stake to nearly 46%, jumped 11.11% or 4.5 sen on Monday to close at its highest since 19 Jun. *Econpile Holdings Bhd (ECON MK) has bagged a contract worth RM101.3mil. *Malaysia Building Society Bhd (MBS MK) has completed its acquisition of Malaysian Industrial Development Finance Bhd (MIDF) from Permodalan Nasional Bhd (PNB) for RM1.01bn worth of new share issuance at 96.52 sen per share.