SGX
Phillip Capital Market Reports:
Phillip Daily Morning Note :
US Market (By Phillip Global Markets Night Desk)
30 October 2023
Jobs Report is the Main Event
Even with a Fed meeting on tap, Friday's employment report is the most-important economic event of the week. Nonfarm payrolls are likely to provide important new information about the path of the economy and interest rates. There is less suspense surrounding Wednesday's announcement on monetary policy, as traders have parsed recent speeches by Jerome Powell and his colleagues and inferred that the Fed is likely to hold the policy rate steady at 5.25%-5.5%. Fed funds futures put that probability at 99%. September's payrolls surprised us and the Street, jumping by 336,000 and putting our "cooling" thesis in question. Job gains in July and August were revised higher by 119,000, taking the three-month average from a reassuring 150,000 to a rattling 266,000 and keeping the possibility of a December rate hike on the table (particularly after last week's report that 3Q GDP jumped 4.9%, boosted by consumer spending). We forecast signs of a cooling labor market, with October payrolls easing to 160,000 and the unemployment rate holding at 3.8%. We expect growth in average hourly earnings to slow to 4.1% and average hours worked to tick down to 34.3. The Fed's pre-meeting survey of U.S. economic conditions, known as "Beige Book," said "Labor market tightness continued to ease across the nation." As well, Mr. Powell told the Economic Club of New York that many indicators suggest conditions remain tight, but "the labor market is gradually cooling," with job openings well below their highs, the number of people quitting their jobs declining to pre-pandemic levels, and wage premiums declining for those who change jobs. If payrolls come in hot, the probability of a December 13 rate hike should rise and the 10-year yield could retest 5%, making Friday the scariest day of the Halloween week.
Market Wrap
Stocks rose, with Europe’s Stoxx 600 bouncing back from a 10-month low, and oil prices retreated as Israel’s military action in Gaza proceeded more cautiously than some investors had feared. Treasuries fell.
Europe’s Stoxx 600 and S&P 500 futures gained about 0.6%. Brent crude oil dropped to $89 a barrel and gold slipped below $2,000 an ounce. Ten-year Treasury yields climbed six basis points to about 4.9%.
Today's Big News
Israel Latest: War Deepens as Concerns Mount Over Gaza Civilians
HSBC Plans $3 Billion Buyback, CEO Touts Capital Strength (1)
Evergrande Liquidation Hearing Delayed in ‘The Last Adjournment’
McDonald’s Tops Estimates With Help From Pricier Burgers (1)
Meta to Offer Ad-Free Meta, Instagram Subscriptions in Europe
Oil Could Jump Above $100 on Small Disruption, World Bank Warns
OCBC
DBS
Market News
Fed’s preferred inflation gauge core PCE rose 0.3% m-o-m in Sep, in-line with consensus
Union leaders approve Ford’s US$8.1 billion manufacturing investment deal to add to electric vehicle production
China’s Evergrande faces winding-up petition in Hong Kong court
Energy Storage Sector
Vital for the path to carbon neutral
Booming markets for energy storage globally with 55% 3-year CAGR during 23F-25F
Soaring demand for both grid-scale and distributed energy storage markets on swift transition towards renewable energy sources
Grid-scale energy storage demand to dominant due to its significant scale
Who are the dominant players within this space?
Click here to read our views
Singapore Market View Update
5 reasons why we think market reward-risk looks favorable
There are five reasons why we think market reward-risk looks favourable
We do not think October’s sell-down on Middle East conflict and the rise in US 10-Y yield to 5% warns of a prolonged downturn
The multi-year sideways trend between 3040 to 3300 should hold intact, under our base case
What are these five reasons supporting our view?
Click here to read our views
China Property Sector
Rising inventory levels
The residential inventory cycle in the primary market saw a sharp pick-up since Jul 23
The inventory cycle has headed towards the highest level seen over the past decade with Tier 2 and 3 cities standing at record-high levels
This, along with yet-to-recover homebuyer sentiment, will likely weigh on the sector’s near-term property price outlook, especially on lower tier cities
Who are our top sector picks?
Click here to read our views
Capitaland Ascendas REIT (CLAR SP) Earnings resilience to be supported by the c.S$900m in acquisitions and AEI/developments YTD
3Q23 update reflects solid positive rental reversions and stable capital management metrics
Key positives: i) double digit positive rental reversions YTD in 2023, ii) slight uptick in portfolio occupancies driven by healthy take-up in Singapore, iii) all-in borrowing costs maintained at 3.3%
Borrowing costs expected to creep up with refinancing in the coming quarters
How do we expect portfolio valuations to shape up come financial year end in Dec-23?
Click here to read our views
Keppel Pacific Oak US REIT (KORE SP)
Falling below the US$0.20 omen
KORE’s price decline below the 20UScts level with high trading volume on Friday is an ominous sign
Selling pressure could extend further, based on our observations on past price actions of US SREIT peers
Sentiments are also likely to be weak over the near-near on 1) cautiousness over the US office markets, and 2) further discount rates / cap rates expansion risks
What datapoints support our view on this?
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: Monday, October 30, 2023 [GC Aviation, 916 HK, 2208 HK, 2333 HK, 2318 HK, 300124 CH, 168 HK, 000858 CH, LPPF IJ, INCO IJ, MAL Strategy, CTOS MK, EKO MK, OMH MK, CICT SP, MINT SP, MLT SP, PTTEP TB]
UOBKH: Country Dailies: Monday, October 30, 2023
Click on the link for Greater China Daily.
Click on the link for Indonesia Daily.
Click on the link for Malaysia Daily.
Click on the link for Singapore Daily.
Click on the link for Thailand Daily.
UOBKH: Retail Market Monitor: Monday, October 30, 2023
China Internet: Weekly News Summary (23 - 27 Oct 2023)
30 Oct 2023
SECTOR UPDATE
China Internet MARKET WEIGHT
Weekly News Summary (23 - 27 Oct 2023)
WHAT’S NEW
Tencent (700 HK/BUY/HK$420.00) using Hunyuan AI model in 180 services amid competition with local rivals Baidu and AlibabaChinese social networking and video gaming giant Tencent Holdings has baked its ChatGPT-like generative artificial intelligence (AI) model into scores of products and services as competition in the red-hot sector continues apace in the world’s second largest economy. The Shenzhen-based firm’s Hunyuan large language model (LLM), the technology that underpins OpenAI’s ChatGPT and similar products, is now integrated into more than 180 services, it announced in a post published to the official Hunyuan account on Tencent’s WeChat.
Kuaishou's (1024 HK/BUY/HK$100.00) E-commerce Sector Achieves Record-breaking Single-day GMV of over Rmb22b in home appliances industry on Double 11
The Double 11 shopping extravaganza is in full swing, and Kuaishou's e-commerce sector in the home appliances industry has already had a strong start to the Double 11 shopping festival. On October 21st, Kuaishou's e-commerce sector in the home appliances industry achieved a single-day Gross Merchandise Value (GMV) record-breaking figure of over Rmb22b. Various categories, including furniture, mobile phones, major appliances, and small appliances, experienced a surge in sales. Prominent brands such as MUSE, Anjel, ZUIMEI, TCL, Haier, and Midea excelled during this period.
Temu (PDD US/BUY/US$120.00) Surpasses Quarterly GMV of $5 Billion, Potentially Exceeding Annual Targets
In just one year since its launch, Temu, the cross-border e-commerce platform under Pinduoduo, has been growing at an astonishing pace. Exclusive information obtained by Chinese tech media 36Kr reveals that Temu’s sales in the third quarter of this year exceeded US$5b. Particularly noteworthy is September, during which, on the occasion of its first anniversary, Temu achieved a daily Gross Merchandise Volume (GMV) of up to US$80m.
https://pandaily.com/temu-surpasses-quarterly-gmv-of-5-billion-potentially-exceeding-annual-targets/
iFlytek (002230 CH/UR) says its large language model outperforms ChatGPT in Chinese as AI firm vows to counter US chip curbs
Chinese artificial intelligence (AI) company iFlytek, one of the first major tech firms in the country to launch an alternative to US chatbot ChatGPT, said its large language model (LLM) has now outperformed OpenAI’s GPT-3.5 within a Chinese language context. iFlytek Spark 3.0, first unveiled by the company in May and released to the general public in September after winning regulatory approval, has outperformed GPT-3.5 in six abilities including text generation, logic reasoning, maths and coding, and is set to rival GPT-4 by the first half of 2024, according to iFlytek chairman Liu Qingfeng.
NetEase (9999 HK/BUY/HK$193.00), miHoYo titles among the latest to receive approval from China’s video game regulator as industry recovers
Chinese authorities approved 87 video game titles in October, including those from top gaming firms NetEase and miHoYo, as China’s gaming industry continues to recover following the easing of a regulatory crackdown. Zenless Zone Zero, an action game from miHoYo, and NetEase’s new adventure role-playing title She Diao, were among the latest batch of titles approved by China’s National Press and Publication Administration (NPPA) on Thursday. She Diao, based on the famed wuxia novel The Legend of the Condor Heroes by Chinese writer Jin Yong, was announced in May last year, but an official release date has yet to be given.
Search engine Baidu (9888 HK/BUY/HK$183.00) and carmaker Geely’s venture starts delivery of self-driving EV, to compete with Tesla’s Model Y
The joint venture between search-engine giant Baidu and China’s top private carmaker Geely, began delivering an electric vehicle (EV) model with self-driving capabilities in a bid to take on Tesla’s Model Y in the mainland’s cutthroat market. JiYue 01, a premium battery-powered sport-utility vehicle (SUV), featuring autonomous driving system and voice-activated control technology, is priced from Rmb249,000 (US$34,148) to Rmb339,900, and will go head-to-head with Tesla’s Model Y which has a price tag of between Rmb263,900 and Rmb363,900. The car can run as much as 720 kilometres on a single charge.
Meituan (3690 HK/BUY/HK$210.00) Invests in Galaxy Bot Company
Recently, Beijing Galaxy Bot Co., Ltd. (hereinafter referred to as “Galaxy Bot”) underwent a business change, with the addition of Meituan‘s subsidiary Hanhai Information Technology (Shanghai) Co., Ltd. and Beijing Zhiyuan Development Entrepreneurship Investment Fund (Limited Partnership) as shareholders. At the same time, the company’s registered capital increased from approximately Rmb140,000 (＄19,133) to approximately Rmb180,000 (＄24,600).
Tencent's (700 HK/BUY/HK$420.00) corporate services no longer have revenue growth targets
Tencent have shifted their focus towards accelerating the profitability of Tencent Cloud and the Smart Industries Group (CSIG). Starting this year, Tencent no longer emphasizes revenue goals for these divisions, and their performance assessment is now primarily based on profit-oriented indicators that aim to reduce losses. CSIG encompasses various enterprise service-related businesses within Tencent, including Tencent Cloud, Tencent Meeting, Smart Retail, and Smart Transportation. (LatePost)
Alipay's (9988 HK/BUY/HK$120.00) "This Year Spend, Pay Next Year" campaign has begun
This allows Taobao and Tmall transactions during the Double 11 period to be deferred until January of the following year. Recently, some users posted that they received a message on their Huabei page, stating, "You can pay for your Taobao and Tmall transactions next year." With this promotion, transactions made from October 31st to November 11th on Taobao and Tmall will have their due date extended to the January 2024 bill with no additional charges. On October 23rd, when inquiring with Ant Huabei's official customer service, they mentioned that if users see "This Year Spend, Pay Next Year" on their page, they are eligible for this promotion; otherwise, they haven't received an invitation for this offer.
President of JD Cloud (9618 HK/BUY/HK$183.00): 80% of JD's Systems Have Completed Domestic Substitution
On the morning of October 25th, at the "2023 JD Supply Chain Financial Technology Conference," Cao Peng, President of JD Cloud Business Unit, stated that this year, JD has completed domestic substitutions for 80% of its systems. "We believe that large models should not be mere toys; they should create more industrial value and enhance various aspects such as marketing, deployment, and interaction," Cao Peng stated. He further explained that the current multimodal digital assistants can cover products and services across all scenarios. They have also developed a computing platform to make large models more accessible.
KGI
TRADING IDEAS: 🇸🇬 SINGAPORE
30 October 2023
🏙 Banyan Tree Holdings Ltd. (BTH SP): Growing expansion plans
BUY Entry 0.385 – Target – 0.410 Stop Loss – 0.373
🏢 Genting Singapore Ltd (GENS SP): Bottoming out
BUY Entry 0.86 – Target – 0.92 Stop Loss – 0.83
➡️ Read More: https://www.kgieworld.sg/research/oct30sg23
Top Stories, 30 Oct 2023
1. Stock futures rebound slightly with the S&P 500 mired in a correction ahead of a big week
2. CME Group's E-mini S&P 500 Futures provide one of the most efficient, liquid and cost-effective ways to gain market exposure to the S&P 500 Index.
Find out more: http://bit.ly/KGI_CMEemini
3. US Fed likely to pause again with rates at 22-year high
4. Oil and gas markets eye risk of escalation as Gaza war deepens
5. China Evergrande faces winding-up challenge in Hong Kong court
6. Gold Price Forecast: XAU/USD gains momentum above $2,000 amid the geopolitical risks, Fed rate decision eyed
Technical Analysis: 30 October 2023
🇸🇬 SG
CapitaLand Ascott Trust (ART SP)
Marco Polo Marine Ltd (MPM SP)
🇭🇰 HK
Trip.com Group Limited (9961 HK)
COSCO SHIPPING Holdings Co Ltd (1919 HK)
Read More: https://www.kgieworld.sg/research/oct30ta23
CIMB
SIN: CapitaLand Ascendas REIT - Resilient operations (ADD - Maintained)
SIN: CDL Hospitality Trust - More even, broad-based recovery (ADD - Maintained)
SIN: Starhill Global REIT - Another quarter of occupancy growth (ADD - Maintained)
MAL: CGS-CIMB Daybreak - 30 October 2023
ASEAN: CGS-CIMB ASEAN Daily - 30 October 2023
Equity Research Reports....
▌ RECOMMENDATION CHANGES & INITIATIONS
SIN: Mapletree Pan Asia Commercial Trust (ADD▲, tp:SGD1.54▼) - Valuations turning attractive (27/10)
▌ TARGET PRICE CHANGES
IND: BFI Finance (ADD, tp:IDR1,400.00▼) - Focusing on loan quality (27/10)
MAL: Lotte Chemical Titan (REDUCE, tp:MYR0.94▼) - Tough conditions to persist into FY24F (27/10)
SIN: CapitaLand Integrated Commercial (ADD, tp:SGD2.17▼) - Cautious optimism (27/10)
SIN: iFAST Corporation Ltd (HOLD, tp:SGD5.90▲) - ePension contributions commencing (27/10)
SIN: Sheng Siong Group (ADD, tp:SGD1.82▼) - Margins holding up well (27/10)
THB: R&B FOOD SUPPLY (ADD, tp:THB11.80▲) - On track for GPM recovery (27/10)
▌ SECTOR & COMPANY NOTES
SIN: ESR-LOGOS-REIT (ADD, tp:SGD0.39) - Strengthening balance sheet (27/10)
SIN: Wilmar International (ADD, tp:SGD4.05) - Signs of mending profitability (27/10)
THB: Amata Corporation (ADD, tp:THB28.75) (ESG) - Shifting into a higher gear in 4Q23F (27/10)
THB: Delta Electronics (Thailand) (REDUCE, tp:THB75.00) - Continued strong EV showing in 3Q23 (27/10)
THB: PTT Exploration & Production (ADD, tp:THB189.00) (HC) - 3Q23 core EPS driven by higher sales volume (27/10)
▌ RECENT 'IDEAs OF THE DAY'...
MAL: Strategy Note - Budget 2024: policy continuity (14/10)
MAL: Economic Focus - Budget 2024: Raise revenue, cut spending (14/10)
THB: Hana Microelectronics (ADD▲, tp:THB80.00▲) (ESG) - Multiple tailwinds to drive OP growth (10/10)
MAL: Strategy Note - One step at a time (4/10)
MAL: Economic Focus - Budget 2024 Preview: Tightening purses (2/10)
APAC: ASIA Pacific Daily - 30 October 2023
Equity Research Reports....
▌ RECOMMENDATION CHANGES & INITIATIONS...
SIN: Mapletree Pan Asia Commercial Trust (ADD▲, tp:SGD1.54▼) - Valuations turning attractive (27/10)
▌ TARGET PRICE CHANGES...
CHN: Anjoy Foods Group (ADD, tp:CNY240.00▲) - Resilient earnings growth should continue in FY24F (27/10)
CHN: China Tourism Group Duty Free (ADD, tp:CNY155.00▼) - Slightly higher expenses ratio in 3Q23 (27/10)
IND: BFI Finance (ADD, tp:IDR1,400.00▼) - Focusing on loan quality (27/10)
KR: Hotel Shilla (ADD, tp:KRW100,000.00▼) - Not giving up hope on Chinese recovery (28/10)
MAL: Lotte Chemical Titan (REDUCE, tp:MYR0.94▼) - Tough conditions to persist into FY24F (27/10)
SIN: CapitaLand Integrated Commercial (ADD, tp:SGD2.17▼) - Cautious optimism (27/10)
SIN: iFAST Corporation Ltd (HOLD, tp:SGD5.90▲) - ePension contributions commencing (27/10)
SIN: Sheng Siong Group (ADD, tp:SGD1.82▼) - Margins holding up well (27/10)
THB: R&B FOOD SUPPLY (ADD, tp:THB11.80▲) - On track for GPM recovery (27/10)
▌ SECTOR & COMPANY NOTES...
KR: Hyundai Mobis (ADD, tp:KRW300,000.00) - OPM recovery and new EV clients (27/10)
SIN: ESR-LOGOS-REIT (ADD, tp:SGD0.39) - Strengthening balance sheet (27/10)
SIN: Wilmar International (ADD, tp:SGD4.05) - Signs of mending profitability (27/10)
THB: Amata Corporation (ADD, tp:THB28.75) (ESG) - Shifting into a higher gear in 4Q23F (27/10)
THB: Delta Electronics (Thailand) (REDUCE, tp:THB75.00) - Continued strong EV showing in 3Q23 (27/10)
THB: PTT Exploration & Production (ADD, tp:THB189.00) (HC) - 3Q23 core EPS driven by higher sales volume (27/10)
▌ RECENT 'IDEAs OF THE DAY'...
MAL: Strategy Note - Budget 2024: policy continuity (14/10)
MAL: Economic Focus - Budget 2024: Raise revenue, cut spending (14/10)
THB: Hana Microelectronics (ADD▲, tp:THB80.00▲) (ESG) - Multiple tailwinds to drive OP growth (10/10)
MAL: Strategy Note - One step at a time (4/10)
MAL: Economic Focus - Budget 2024 Preview: Tightening purses (2/10)
Trendspotter of the day (SIN/HKG/MAL): 30th October 2023
Please refer to below for the technical charts of the day.
SIN
Bullish accumulation coming to a completion soon
Bullish trend intact
HKG
Bullish rebound at bottom
Bullish continuation
MAL
Short-term uptrend?
Removing the ceiling
APAC+US
Lim&Tan
MayBank
HK: DIM SUM DAILY
CapitaLand Ascendas REIT | Safe harbour; U/G to BUY Krishna Guha
CapitaLand Int. Comm. Trust | Stable performance Krishna Guha
Mapletree Pan Asia Comm. Trust | Weak performance; downgrade to HOLD Krishna Guha
Mapletree Industrial Trust | Slowing momentum Krishna Guha
SG Top of the Week | Brace yourselves! Singapore Research Team
Singapore Telcos | What to look for in upcoming results | POSITIVE Kelvin Tan
Global | Basket Trades and Hedges Saktiandi Supaat
Regional | Green Shoots Amidst Turmoil Hak Bin Chua
Regional | Both BNM and Fed to Hold Winson Phoon
[Maybank IBG Research] Today's Research
FEATURED CALLS
Singapore Telcos | What to look for in upcoming results | POSITIVE Kelvin Tan
Regional | Green Shoots Amidst Turmoil Hak Bin Chua
Regional | Both BNM and Fed to Hold Winson Phoon
Global | Basket Trades and Hedges Saktiandi Supaat
Comments