Ada Tam Ying Ying

Oct 10, 202310 min read

5 Oct2023 Reports

SGX

Economic Calendar :

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

https://investors.sgx.com/_security-types/stocks/CC3

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 :

https://mailchi.mp/phillip/phillip-morning-note-256567?e=ffecca3682

US Market (By Phillip Global Markets Night Desk)

05 October 2023

Higher Rates, Higher Stock Valuations

Our bond/stock asset-allocation model is indicating that bonds are the asset class offering the most value at the current market juncture, as interest rates have risen over the past few weeks. Our model takes into account current levels and forecasts of short-term and long-term government and corporate fixed-income yields, inflation, stock prices, GDP, and corporate earnings, among other factors. The output is expressed in terms of standard deviations to the mean, or sigma. The mean reading from the model, going back to 1960, is a modest premium for stocks, of 0.15 sigma, with a standard deviation of 1.0. The current valuation level is a 0.98 sigma premium for stocks, inside the normal range but up from the 0.50% sigma premium at the beginning of the year. Stock valuations have risen not only because stock prices are higher for the year, but because interest rates have been climbing as well. Indeed, the benchmark U.S. Treasury 10-year bond yield is now near 20-year highs. Other valuation measures show reasonable multiples for stocks. The current forward P/E ratio for the S&P 500 is 16, which is within the normal range of 10-21 and down from 22 a year ago. The current S&P 500 dividend yield of 1.5%, while below the historical average of 2.9%, is up from an ultralow 1.2% as recently as 2021. Looking ahead, we expect the results from our stock-bond valuation model to improve, as interest rates start to decline next year and EPS growth picks up. Based on the current valuation levels, as well as those interest rate and earnings forecasts, we have called for a recovery in stock prices in 2023 from bear-market lows and are maintaining our year-end S&P 500 target of 4,600. Our current recommended asset allocation for moderate accounts is 67% growth assets, including 65% equities and 2% alternatives; and 33% fixed income, with a focus on opportunistic segments of the bond market.

Market Wrap

After a week of sharp market swings, investors took a pause on Thursday and looked ahead to key data on the labor market.

Ten-year Treasury yields slipped two basis points to 4.71% and contracts on the S&P 500 were flat. Oil extended a retreat, with Brent futures sliding below $85 per barrel for the first time since late-August. The dollar was steady against a basket of Group-of-Ten currencies.

Today's Big News

- JPMorgan’s Cash-Hoarding Bond Manager Sees 6% Yield Within Reach

- Fed Puts Soft Landing at Risk by Accepting Treasury Yield Surge

- US Weaves Web of Intelligence Links in Asia to Counter China

- Video Game VC Funding Slumps as Publishers Battle Covid Hangover

- India Wants Canada to Cut Number of Diplomats as Tensions Simmer

- India Widens Crackdown on Modi Critics With Lawmaker Arrest

OCBC

DBS

US ADP employment change weaker-than-expected at 89,000 in Sep vs 160,000 consensus
TikTok Indonesia discontinues e-commerce service in line with one-week deadline to become standalone app
European airline SAS plunges 95% on restructuring deal after declaring bankruptcy in July 2022

Market view update

Don’t capitulate in the last 10%

While near-term market volatility may continue, we are turning watchful of a major top in yields and a corresponding low for equities if the sell-off continues.
Growing optimism that the US can avert a recession and higher-for-longer rates positioning lifted the US 10-yr yield to a high of 4.87% sell-off this week before easing a little to 4.735% last night
What does the technical picture suggest?
Click here to read our views

SingTel (ST SP)

Would record Holding Company discount narrow?

The expansion in HoldCo discount to a record 47% level seems to be a timing issue; a delay in its core operating profit growth to 3QFY24F could be the key reason
Potential consolidation in Singapore could aid further recovery in Singtel’s core operating profit in the medium term
Raise FY24F/25F earnings by 3%/4%, to reflect the sale of Trustwave
What potential catalysts do we see?
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: Thursday, October 05, 2023

Click on the link for details.

https://research.uobkayhian.com/content_download.jsp?id=75424&h=192e289694724c3ecb2e0868855e684f

UOBKH: Country Dailies: Thursday, October 05, 2023

Click on the link for Greater China Daily.

https://research.uobkayhian.com/content_download.jsp?id=75438&h=528033f021a62293c2be4c0eb21abc65 Click on the link for Indonesia Daily. https://research.uobkayhian.com/content_download.jsp?id=75441&h=a32bfcf5c87aa42d2a0367c1f6bb17c Click on the link for Malaysia Daily. https://research.uobkayhian.com/content_download.jsp?id=75452&h=532f46f52e673dcf04c80bd66f92ce38 Click on the link for Singapore Daily. https://research.uobkayhian.com/content_download.jsp?id=75425&h=82b1e0df295ee681f1fa2f213ade823d Click on the link for Thailand Daily. https://research.uobkayhian.com/content_download.jsp?id=75454&h=e0b5b498f16be63117db8605f5ad6262

UOBKH: Regional Morning Meeting Notes: Thursday, October 05, 2023 [GC Shipping and Ports, GC IT Hardware, ID Banking, EKO MK, SG REITs, KTC TB]

Click on the link for details.

https://research.uobkayhian.com/content_download.jsp?id=75423&h=4a3e0ce5382bfb7cbb486a519c109724

KGI

Technical Analysis: 5 October 2023

🇸🇬 SG

Comfort Delgro Corp. (CD SP)

Food Empire Holdings Ltd. (FEH SP)

🇭🇰 HK

CSOP HSI Daily (-2x) Inverse ETF (7500 HK)

CSOP Hang Seng TECH Index Daily (-2x) Inverse ETF (7552 HK)

Top Stories, 5 Oct 2023

1. Stock futures tick lower on Wednesday night after Dow snaps 3-day string of losses: Live updates

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

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 credit rating already includes another possible shutdown, Fitch says

https://www.kgieworld.sg/research/dw8v

4. World's biggest bond markets hit by wave of selling, then bounce

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

5. IMF likely overestimating China’s economic growth prospects, US analyst says

https://www.kgieworld.sg/research/w9b7

6. EUR/USD recovers some lost ground above 1.0500, German trade data eyed

https://www.kgieworld.sg/research/676t

CIMB

MAL: CGS-CIMB Daybreak - 05 October 2023

▍ What's on the Table...

MAL: Telekom Malaysia (ADD, tp:MYR6.80) - New retail broadband prices announced - 5/10

Telekom Malaysia’s (TM) new retail broadband prices, while below our expectations, should leave ARPUs tracking within our expectations. Free speed upgrades for existing subscribers should mitigate the impact of price reductions, with subscribers taking the upgrades. Reiterate Add call, with an unchanged target price of RM6.80 (5.7x adj FY24F EV/EBITDA).

MAL: Strategy Note - One step at a time - 4/10

One of two key catalysts we highlighted in June is taking shape while the expected capitulation in the US dollar has unfortunately not yet materialised. In this note, we discuss market implications of policy clarity and continuity, something that has been notably absent since 2018. We make three upgrades and one downgrade to our sector recommendations and four changes to our top picks list of 20 stocks.

▍ News of the Day....

Trendspotter – MY- Ekovest (8877) (Technical Buy, 0.535): To swing higher?

• M’sia expects savings of at least US$1bn-2bn from cutting subsidies next year

• Subsidies given by government throughout Malaysia to exceed RM81bn in 2023

• Malakoff to invest c.RM2.5bn to develop 500MW of solar projects over 5 years

• LTAT plans to buy out BPlant at RM1.55/share after KLK deal falls through

• Proton sales decreases by 1,725 units mom in Sep 23 to 12,230 units

CGS-CIMB SG/MY Preview - M'sia strategy

SINGAPORE DOW +127pts (+0.4%) NDQ +177pts (+1.4%) SPX +34pts (+0.8%) WTI (-5.6%) GOLD (+0.1%) US stks gained last night after Treasury yields came down from highs to reach 4.735% stemming from private payroll data coming in at +89k vs +160k expected and +180k in Aug. US is also set to report jobless claims and trade balance numbers today. Brent fell steeply and now trades at the $85/bbl lvl. OTHER NEWS * ESR-Logos Reit (EREIT SP) has proposed to activate it's option to redeem and cancel US$600k of 1.5% convertible bonds due 2025. Furthermore, it's new property at 7002 Ang Mo Kio Avenue 5 has obtained its Temporary Occupation Permit following the completion of its AEI, and has an occupancy of c.50% * LHN (LHN SP) has completed the acquisition of two properties along River Valley Rd in SG for total consideration of S$22,087,500 exclusive of GST. * Mermaid Maritime (MMT SP) subsidiaries in Thailand, the Middle East, western Sub Sahara, and the United Kingdom have secured multiple project awards with the combined value of approximately USD 485 Million, projects are expected to be completed in 2025. MALAYSIA Most Asian stock markets faced a decline due to concerns over persistently high US interest rates following robust US jobs data. FBMKLCI dropped 0.29% to close at 1,415.84, with most sectors in the red, except for a slight gain in industrial products. Telecommunications, energy, and technology sectors performed poorly. Trading volume decreased to 3.03 billion, while trading value saw a slight increase to RM2.23 billion. Market breadth remained negative for seven consecutive days. The benchmark index, despite an earlier inverted hammer-like candle, is now positioned within the 1,412-1,416 support range, potentially indicating an oversold condition and the possibility of a minor rebound. CGS-CIMB HIGHLIGHTS *Malaysia Strategy* - One step at a time {https://bit.ly/48BR7UX} LOCAL NEWS *Malaysia is counting on its plan to cut subsidies next year to help narrow the budget deficit, giving the government room to avoid resorting to “too many taxes,”* according to Economy Minister Rafizi Ramli. The government expects savings of at least RM4.7bn a year from its shift to targeted subsidies that could begin as soon as the second quarter of 2024. *The government will focus on small and medium enterprises (SMEs) in Budget 2024*, said Deputy Finance Minister II Steven Sim Chee Keong. CORPORATE NEWS *Malakoff Corporation Bhd (MLK MK) is expected to invest around RM2.5bn to develop 500 MW of solar projects. *The proposed disposal of a 33% stake in Boustead Plantations Bhd (BPLANT MK) to Kuala Lumpur Kepong (KLK MK) has fallen through. *Ramssol Group Bhd (RAMSSOL MK) 51%-owned has entered into a memorandum of agreement with TGV Cinemas Sdn Bhd to bring concerts and prestigious events into the cinemas. *Boustead Heavy Industries Corp Bhd (BHIC MK) planned disposal of a 20.77% stake in troubled Boustead Naval Shipyard Sdn Bhd (BNS) to the Ministry of Finance (Inc) has been extended by 21 business days.