Date: July 22, 2024
- The Straits Times Index peaked at 3,509 but failed to hold on to 3,500
- Weakness on Wall Street meant the STI lost 1.4% at 3,447.56
- S$400m on institutional inflows in first 2 weeks of July: SGX Research
- Marine and shipping counters were best performers among 100 most traded stocks: SGX Research
- Singtel associate Intouch to merge with Thailand’s Gulf Energy to form new public entity
- Semiconductor stocks under pressure on worries of US sanctions
- Investors said to be rotating out of US tech stocks
- Yangzijiang in play after news of new China manufacturing base
- Yoma plunged 8.8% after replies to SGX queries on chairman in Myanmar custody
The STI tested the 3,500 mark but didn’t manage to stay above it
The 3,500 mark proved a bridge too far for the Straits Times Index last week, which is perhaps understandable given that it had already surged 165 points or about 5% in the first two weeks of July, bursting through the 3,400 level with relative ease on 3 July.
At the end of a week in which trading was relatively subdued as compared to the fortnight that preceded it, the STI stood almost exactly 50 points or 1.4% weaker at 3,447.56. However, it did touch a 6-year high of 3,509 in intraday trading last Monday.
Trading on Friday was marred by a software glitch that hit several systems worldwide.
STI’s 5% gain in first two weeks of July came with S$400m inflows: SGX Research
According to a 16 July SGX Research Market Update, the push in the first two weeks came as the broader Singapore stock market recorded over S$400 million in net institutional inflow.
“Half of the top 30 stocks with the highest net institutional inflow were non-STI stocks. By comparison the FTSE ASEAN Index and FTSE APAC Index returned 3.5% and 3.1% in SGD terms over the 11 sessions’’ said SGX Research.
“Among the STI constituents, DBS led the net institutional inflow over the 11 sessions, with inflow of S$118 million, reversing S$28 million of net institutional outflow in 1H24. The 10 July session also saw the largest trading turnover for the stock since the MSCI Singapore Index rebalance on 31 May 2023’’.
SGX Research also noted that on 10 July DBS saw its biggest session by trading turnover in two weeks following Macquarie Research upgrading its share price target for the stock on July, from S$38.30 to S$41.00. On that day, DBS jumped S$0.75 to S$38.15 on volume of 10.5m.
Marine and shipping counters were best performers among 100 most traded stocks: SGX Research
According to an 18 July Market Update from SGX Research, the top five performers among the 100 most traded stocks in Singapore for the year up to 17 July, were Beng Kuang Marine, Mermaid Maritime, Yoma Strategic, Yangzijiang Shipbuilding and Samudera Shipping.
During this period, all five stocks saw net institutional inflow and higher trading turnover compared to the previous year.
SGX Research also said that among the broader group of Singapore’s 200 most traded stocks this year, 63 stocks have generated YTD total returns of 10% or higher. Among the 63 stocks, the Industrials Sector representing as many as 18 (29%) of the 63 stocks, compared to the sector representing 38 (19%) of the broader group of the 200 most traded stocks.n
“The 63 stocks included five stocks with market cap of less than S$50 million, including King Wan, Jasper Investments, ISOTeam, Aspen and Pacific Radiance. Three of the five stocks, King Wan, Jasper Investments, and Aspen have moved into the 200 most traded stocks this year, from ranking outside the 200 in 2023’’.
Singtel associate Intouch to merge with Thailand’s Gulf Energy to form new public entity
Singtel associate Intouch Holdings has entered into a merger deal with Thailand’s Gulf Energy Development, which will result in the formation of a new public entity.
Gulf Energy is a holding company incorporated in Thailand that invests in energy, infrastructure, utilities and digital businesses. It is Intouch’s largest shareholder with a 47.4% stake, while Singtel Global Investment – a wholly owned subsidiary of Singtel – holds a 24.99% stake in Intouch.
Upon completion of the amalgamation, Intouch and Gulf will be dissolved and a new legal entity will be formed with the status of a public limited company in Thailand. Singtel intends to list the shares of the new entity on the Stock Exchange of Thailand.
In exchange for its stake in Intouch, Singtel will receive an estimated 9% stake in the new entity, which the group expects to become one of the largest and most liquid listed companies in Thailand. Singtel will also book an estimated gain of S$400 million from the amalgamation.
Maybank said it estimates that the deal would be about 1% earnings dilutive for Singtel as Gulf Energy’s calendar year earnings per share is lower compared to Intouch even adjusting for the swap ratio.
“Also, if Gulf (NewCo) maintains a similar payout ratio to Gulf Energy, we estimate that would lead to a 43% reduction in Intouch dividends, or S$45m/yr net dividend cash flow loss for Singtel. However, the cash flow losses could be bridged by about S$122m in special dividends from Intouch. We think the impact on earnings would likely come only in FY26’’ said Maybank.
Semiconductor stocks under pressure on worries of US sanctions
Semiconductor stocks have taken a pounding in the past few days following comments by former President Donald Trump, who said that he would force Taiwan to pay for the protection it receives from the US and news this week that the Biden Administration floated the possibility of stepped-up restrictions on certain semiconductor equipment makers’ sales to China.
As a result, Nvidia’s shares have plunged from US$135.83 on Tuesday to US$117.93 on Friday, a loss of US$17.90 or 13% in four days. Over the same period, Taiwan’s TSMC’s shares lost 8.5%. Here, semiconductor stocks like UMS Holdings, Frencken Group and AMS Holdings lost between 4.1 to 5% on Friday.
In a Friday report, DBS Group Research said it is cautious on UMS and AEM given “weaker order momentum from key customers’’. While it likes Frencken for its “diversified portfolio and positive guidance’’, DBS is nevertheless watchful of the company’s “exposure to a key customer in the global equipment maker space that is affected by trade restrictions.
Investors said to be rotating out of US tech stocks
For the week, the Nasdaq was down 3.65% and the S&P off 1.96%. Conversely, the Dow Jones Industrial Average was up 0.72% The primary driver of this week’s loss in the S&P 500 was a continued rotation out of technology stocks.
The unwinding of the “tech trade” was said to have been sparked by the previous week’s soft consumer inflation report. The data on consumer prices followed the June nonfarm payrolls report earlier this month that showed slowing jobs growth and an uptick in unemployment.
With inflation moving in the right direction and the highly resilient labour market finally showing signs of cracking, investors are believed to have gained the confidence to start moving out of technology names and into other assets such as defensive and value sectors and small-cap stocks.
Yangzijiang in play after news of new China manufacturing base
Shares of Yangzijiang Shipbuilding were in heavy play after it announced a framework agreement with the local government of Jingjiang City in China’s Jiangsu province to acquire land for the establishment of a new clean energy ship manufacturing base.
On Tuesday after the announcement, the stock closed S$0.13 or 5.7% higher at S$2.43 with 33.9m traded. However, it finished the week at S$2.31.
The company said it plans to invest an estimated three billion yuan (S$554.3 million) in capital expenditures over the next two years to complete this project, taking into account the long-term prospects of liquefied natural gas and other clean-energy vessels.
This, however, is subject to the group being satisfied with the outcome of the feasibility study on the project, which is currently being conducted. Implementation is also dependent on approval from various governmental agencies.
CGS International expects the new yard investment to increase the group’s capacity by around 10 per cent, delivering five to six vessels per annum or US$850 million to US$1 billion in orders.
DBS Group Research, meanwhile, is projecting a 20 per cent boost in the shipbuilder’s capacity, which will enable the delivery of an additional six ultra-large or high-value-added vessels.
“This could raise Yangzijiang Shipbuilding’s annual revenue run-rate from US$3.5 billion to US$4 billion to US$4.5 billion, lifting its growth prospects beyond 2026,” said DBS analyst Ho Pei Hwa.
Yoma plunged 8.8% after replies to SGX queries on chairman in Myanmar custody
Shares of Yoma Strategic plunged S$0.012 or 8.8% to S$0.125 Friday on volume of 59.7m following its responses to questions from the Singapore Exchange (SGX) about claims that its executive chairman was in Myanmar junta custody over alleged violations of banking regulations.
Earlier this month, Yoma issued a clarification on a report by news agency Myanmar-Now, which reported that Yoma chairman Serge Pun was summoned to Naypyitaw in early June and had since been detained along with eight senior employees of Yoma Bank and Yoma Land.
The report also cited an anonymous source, who “confirmed the 71-year-old tycoon is being held under house arrest as he faces unspecified charges”.
According to a Bloomberg report, Myanmar’s central bank announced that action would be taken against seven banks – including Yoma Bank – for granting housing loans that exceeded central bank limits under the country’s efforts to “stabilise the local economy”.
Yoma clarified that Pun is in Naypyitaw and has been meeting and cooperating with the relevant authorities on matters relating to the banking business.
On Thursday, SGX-ST asked Yoma if his presence in the capital and his meetings with the authorities would have an impact on its financials, operations and businesses.
It also wanted to know whether investigations into Yoma Bank and the group’s dealings with it would impact its financials, including assets, operations and businesses.
In response, Yoma said Pun’s presence in Naypyitaw and his meetings with the relevant authorities have no impact on the group’s financials, businesses and operations.
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