Date: March 3, 2025
- The STI closed at a new all-time high of 3,934.04 during Feb
- US stocks hit by Trump tariff fears
- Father-son boardroom tussle at CDL grabbed most headlines
- Analysts downgrade CDL
- Yangzijiang takes a beating after US proposed fees on China-built ships
- Banks announced their latest results, announced generous payouts
- Three privatisation offers made in Feb
- MAS unveiled first package of initiatives to boost stock market
The STI gained 1% in Feb, closed at all-time high on 19 Feb
A major, headline-grabbing boardroom tussle at City Developments Ltd (CDL), a spectacular crash in the shares of 2024’s best performing Straits Times Index (STI) component Yangzijang Shipbuilding, and a slew of measures announced by the Monetary Authority of Singapore (MAS) committee to improve the stock market were the main local events in the month of February, during which all three banks announced record profits and generous capital-returning exercises that helped propel their shares higher, taking with them the STI to a new all-time record.
Wall Street in the meantime, was rocked on Thursday last week by confirmation from US president Trump that he will indeed go ahead with March 4 tariffs of 25% on imports from Canada and Mexico—at least until they make progress limiting illegal immigration and fentanyl smuggling. China will also face an additional 10% tariff.
Thursday’s selloff in the US meant the STI on Friday slumped 25.49 points to 3,895.70, though it still recorded a 40 points or 1% gain for the month. On 19 Feb, the index had finished at a new all-time high of 3,934.04.
For the week, the index lost 34 points or about 0.9%.
Friday’s selloff came with S$2.43b traded, the highest single-day turnover for the month. Of this volume, five stocks contributed S$1.03b or 42% – DBS, OCBC, Yangzijiang, Singtel and UOB.
Meanwhile over in the US…
One of the biggest events on Wall Street last week was chip giant Nvidia’s quarterly results. The company’s blockbuster earnings over the last two years have turned it into the world’s second-biggest firm by market capitalization. Despite strong fiscal fourth-quarter results, the stock fell more than 8% in the wake of massive expectations.
Tariff drama continued to dominate headlines. Trump confirmed that previously delayed 25% tariffs on imports from Canada and Mexico would indeed go into effect in March, along with an additional 10% tariff on imports from China.
Trump also met with Ukraine President Volodymyr Zelenskyy at the White House to discuss efforts to bring an end to the Russia-Ukraine war and sign a minerals deal. However, the meeting turned heated, and Zelenskyy was seen leaving the White House with no deal signed.
The January core personal consumption expenditures price index reading was another highlight of the week. The metric—widely seen as the Federal Reserve’s preferred inflation gauge—came in line with consensus estimates.
For the week, the S&P 500 slipped 1.0%, while the tech-heavy Nasdaq Composite slumped 3.5%. The blue-chip Dow (DJI) bucked the trend, rising 1%.
Boardroom drama at CDL
The market was first shocked by news that CDL chairman Kwek Leng Beng said that he had filed court papers on Tuesday to deal with an “attempted coup” – by group chief executive officer and his son Sherman Kwek, Philip Lee, Wong Ai Ai and a group of directors acting with them – to allegedly consolidate control of the board and the group.
Lee is the lead independent director of the board, while Wong is an independent non-executive director.
The action taken was “to set things right” and to “restore corporate integrity”, said Kwek Leng Beng, 84.
On Thursday however, his son countered with a statement of this own that the “primary reason” for the ongoing dispute is “a very serious issue of corporate governance” involving Dr Catherine Wu, Kwek Leng Beng’s adviser.
He cited Dr Wu as holding an official position as adviser to the board of Millennium & Copthorne Hotels (M&C), a wholly owned and principal subsidiary of CDL.
“(She) has been interfering in matters going well beyond her scope, and she wields and exercises enormous influence. These matters have troubled us as directors,” he said.
Kwek Leng Beng on Friday then alleged that his son’s denial of an attempt to oust him “misses the point”, in yet another twist to the father-son tussle rocking the company.
“Protecting good governance, including the office of the executive chairman, and not me as an individual, is critical. Stripping away any meaningful authority of the executive chairman is a coup,” he said.
In a separate statement, Philip Yeo, a non-independent non-executive director of CDL, repeated Kwek Leng Beng’s assertions on the alleged corporate governance lapses by the majority directors.
“This is an attempt to distract everyone from the matter at hand,” he said, adding that Sherman Kwek should focus on making back the S$1.9 billion of shareholders’ losses through CDL’s investment in China’s Sincere Properties, as well as other losses from UK property investments.
“Instead, he seems more concerned about grievances, mobilising a group of independent directors to remove an adviser to the CDL hospitality business, which has actually seen profit improvements for the past few years since Covid,” said Yeo.
Some analysts downgrade CDL, reduce price target on boardroom tussle
JP Morgan on Wednesday downgraded its rating for CDL to “neutral”, with a price target of S$4.85. UOB Kay Hian on Thursday downgraded its rating for the counter to “hold”, with a target price of S$4.60.
Morgan Stanley, meanwhile, reiterated its “underweight” call on the counter, with a price target of S$5. HSBC on Wednesday kept its “hold” call on CDL.
OCBC Investment Research has a “buy” call on CDL but lowered its fair value estimate to S$6.02, from S$6.57. It widened its revalued net asset value (RNAV) discount to 60% from 45%.
The adjustments come as OCBC expects uncertainties over CDL’s outlook and potential share price overhang until the boardroom tussle is resolved.
DBS Group Research on Thursday slashed its target price on CDL to S$6.70 from S$10.50 previously.
Citi Research’s analyst Brandon Lee said on Wednesday that while the potential impact is “hard to quantify”, he believes that the boardroom tussle, as well as lengthiness of a potential court case, could weigh on share price in the short term.
The last major director departure had resulted in a 19% share price decline in over two weeks, he pointed out.
Yangzijiang takes a beating after US proposed fees on China-built ships
Shares of Yangzijiang Shipbuilding, which surged 80% in 2024, last week suffered a beating after the US Trade Representative (USTR) office proposed to slap fees on Chinese-built vessels entering US ports.
Over the five days, the stock crashed S$0.84 or 26% to S$2.38 in heavy volume.
On Feb 21, the USTR office proposed to hit Chinese-built vessels entering US ports with fees of up to US$1.5 million, as part of investigations into China’s rising dominance in the global shipbuilding, maritime and logistics sectors.
The probe’s findings, published in January, were that China’s global shipbuilding tonnage share rose significantly over 1999 to 2023 from 5 to 50% due to hefty state subsidies and preferential treatment for state-owned businesses that are hurting international competitors, Reuters reported.
Yangzijiang’s latest financial results showed strong year-on-year profit growth of 77.2% cent to 3.1 billion yuan (S$553.7 million) for its first half ended June 2024.
Its win of shipbuilding contracts worth US$2.6 billion announced in December 2024 brought orders secured to US$14.3 billion for the year till Dec 2. In January, the world’s biggest asset manager BlackRock bought 10.8 million of its shares.
Banks announced their latest results, announced generous payouts
DBS reported an 11% rise in Q4 net profit to S$2.52b that brought full-year net profit to S$11.29b, 12% higher than the previous year and a new record. It also proposed a final dividend of S$0.60 per share for Q4, which brings it to S$2.22 per share for the full year – an increase of 27% over the previous year.
UOB reported a net profit of S$1.52 billion for the fourth quarter ended Dec 31, 2024, up 8.6% from S$1.4 billion a year earlier. Full-year profit was S$6.045b, up 6%. UOB announced a S$3 billion package to distribute surplus capital over the next three years, as it aims to bring down excess capital.
OCBC posted a fourth-quarter net profit of S$1.69 billion, which missed a consensus estimate of S$1.78 billion based on a Bloomberg survey of five analysts. It announced plans to return S$2.5 billion of capital to shareholders over two years via special dividends and share buybacks.
Three privatisation offers made in Feb
On 11 Feb, Cuscaden Peak Investments proposed to privatise Paragon REIT at S$0.98 per unit.
On Feb 14 Catalist-listed nursing home provider Econ Healthcare that it had received an offer for all its shares from Enabler Bidco, a special purpose vehicle indirectly owned by US investment firm TPG Global.
Econ Healthcare shareholders can opt to receive S$0.33 a share in cash or S$0.224 in cash plus 0.32 shares in a TPG-controlled holding company of Enabler Bidco. If no choice is made, shareholders will receive the cash option by default. A special dividend of S$0.025 a share will also be paid if the offer is approved.
On 17 Feb, mainboard-listed engineer PEC said PEC said it had received a proposal by Alliance Energy Services to take it private at S$0.84 per share comprising S$0.64 in cash and a special dividend of S$0.20.
Alliance Energy is a subsidiary of Liberty Energy Solutions, which provides engineering and chemical decontamination services to oil and gas refineries and petrochemical facilities.
The proposal will require shareholder and regulatory approval. Major shareholders holding 63.38% of PEC share have already agreed to vote in favour of the offer.
MAS unveiled first package of initiatives to boost stock market
Among the initiatives announced to rejuvenate the stock market was a S$5 billion initiative, called the Equity Market Development Programme, which will channel the funds to asset managers with a “strong investment track record” and a focus on Singapore-listed equities.
Another key measure unveiled was a revision to the Global Investor Programme (GIP), which grants permanent residency to eligible foreign investors.
The Economic Development Board, which administers the GIP, will adjust the requirements for family offices, requiring them to invest a more targeted proportion of their assets directly in Singapore-listed equities. Under the revised rules, single-family offices must allocate at least S$50 million of their assets under management to equities listed on Singapore-approved exchanges.
Investing with Insight: Watch this Week’s Technical Outlook
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