Like a football match, it was a game of two halves

Date: February 10, 2025

• After dropping from Mon to Wed, the STI rebounded on Thurs and Fri
• The net rise was 6 points or 0.16% to 3,861.42
• US stocks hit on Friday by weak consumer sentiment, tariff worries
• No US rate cut in 2025: Macquarie
• SGX’s H1 net profit up 20.7% to S$340m, stock price up sharply
• Maybank issued “buy’’ on SGX; RHB is “neutral’’
• Keppel H2 profit from continuing operations up 19.9% at S$527.9 million

 

The STI first fell, then rebounded

To borrow from football commentaries, trading in the local stock market last week was a tale of two halves. The Straits Times Index first lost about 40 points when it weakened on Monday, Tuesday and Wednesday, before rebounding 46 points on Thursday and Friday.

The net outcome for the week was therefore a 6 points or 0.16% rise to 3,861.42, not an overly exciting showing but in the light of uncertainties created by a slew of US tariffs, still noteworthy, to say the least.

Average daily volume traded amounted to just under S$1.2b, with the banks, Singtel and SGX leading the way.

How Wall St fared – weak consumer sentiment, increased inflation expectations and tariff worries hit stocks on Friday

Official data on Friday showed the United States added fewer jobs than expected in January while unemployment ticked down.

The jobs data missed expectations, but Wall Street’s three main indexes initially rose. They quickly fell into the red, however, after separate data showed US consumers now expect inflation to jump.

This occurred after the University of Michigan published its initial consumer sentiment index reading for February—which was its lowest reading since July 2024.

Respondents reported a sour mood that crossed age and income demographics. Both Republican and Democratic participants reported low consumer sentiment with survey respondents reporting feeling less confident and more concerned about inflation.

Year-ahead inflation expectations rose to 4.3 percent, up a full percentage point from a month earlier.

Stocks were further pressured after US President Trump said in a news conference that he plans to announce reciprocal tariffs next week. If foreign countries impose tariffs on goods imported from the U.S., Trump could levy matching fees on goods imported from those nations.

For the week, the Dow Jones Industrial Average fell 0.5%, the S&P 500 lost 0.2% and the Nasdaq Composite slipped 0.5%.

No US rate cut in 2025: Macquarie & Bank of America

Macquarie economists said Friday that they no longer see the Federal Reserve making any changes to its benchmark policy rate in 2025.

Blame the change on the January jobs report, released Friday morning. The team, led by analyst David Doyle, said that recent payroll numbers that were revised higher, coupled with January’s lower unemployment rate and stronger wage growth, “leads us to change our baseline view” on the Fed’s strategy.

Macquarie’s position echoes that of Bank of America, which declared in January that “we think the cutting cycle is over.”

Not all banks are in agreement: Morgan Stanley on Thursday reiterated its forecast of one 25 basis points rate cut in June. Goldman Sachs, meanwhile, is expecting two rate cuts of 25 basis points each in June and December.

SGX’s H1 net profit up 20.7% to S$340m

THE Singapore Exchange (SGX) reported a net profit of S$340 million for the first half ended December, up 20.7% from S$281.6 million in the previous corresponding period.

Earnings before interest, taxes, depreciation and amortisation for H1 grew 23.4% on the year to S$425.3 million whilst earnings per share (EPS) stood at S$0.318, up from S$0.263.

Revenue for the half-year period increased 15.2% to S$682.2 million, from S$592.2 million in the previous corresponding period.

Excluding transaction-based expenses such as processing and royalty fees, net revenue would have risen 15.6% to S$646.4 million, from S$559 million in the year-ago period.

SGX’s board of directors has declared an interim quarterly dividend of S$0.09 per share to be paid on 21 Feb, up from the S$0.085-per-share payout in the previous corresponding period. This brings total dividends in H1 FY2025 to S$0.18 per share.

On Thursday when the results were announced, SGX’s shares shot up S$0.28 or 2.3% to S$12.71 on volume of 4.6m. This was followed by a jump of S$1.28 or 10% on Friday to S$13.99 on turnover of 12.6m.

Maybank issued “buy’’ on SGX; RHB is “neutral’’

In a Thursday report, Maybank said that increased global geopolitical volatility, and monetary and fiscal uncertainty “should give SGX a competitive advantage as a deeply liquid risk management venue”.

“One month into the Trump administration, trade war driven volatility and uncertainty – especially in Asia – is showing no signs of abating. In fact, risks are rising. We believe this could drive further demand for SGX’s platform,” said Maybank as it lifted its target price for the counter to S$14.16 from S$10.12.

It said: “While a higher dividend is unlikely, positive tailwinds as a regional safe haven and risk management venue should catalyse SGX going forward.”

The “stronger cash equities velocity and derivatives demand” that drove the bourse’s better-than-expected H1 performance will likely persist and should make it a competitive trading venue, the bank added.

Meanwhile, RHB analyst Shekhar Jaiswal reiterated his “neutral” rating on SGX, citing H1 core profit that was “in line with estimates”. He foresees the bourse’s profit after tax and minority interests declining in H2 and its earnings growth moderating beyond FY2025.

In a Friday report, Jaiswal stressed that any “material improvement in SGX’s moderating earnings growth outlook” would depend on numerous factors that are “difficult to pencil into our estimates right now”.

These include elevated local equity market sentiment, an increase in new IPO listings, successful new product launches, earnings-accretive acquisitions, and a favourable outcome for the ongoing market review exercise.

Keppel H2 profit from continuing operations up 19.9% at S$527.9 million

Keppel Corp reported a profit from continuing operations of S$527.9 million for its second half ended Dec 31, up 19.9% from the previous corresponding period.

Including profit from discontinued operations, this brings its total profit to S$636 million for its second half, up 44.6%.

This translates to a basic earnings per share (EPS) of S$0.349, a 41.9% rise. EPS from continuing operations was S$0.29, up 17.9%.

Revenue for H2 rose 3.9% to S$3.4 billion driven largely by growth from its real estate segment which registered a 46.4% rise in H2 revenue to S$339.3 million. This was attributed to property trading projects in Singapore and Indonesia, but was partly offset by lower revenue from property trading projects in China, the group said.

The asset manager proposed a final cash dividend of S$0.19 per share for FY2024, unchanged from that in the previous corresponding period. The proposed final dividend will be paid on May 9 if it is approved by shareholders at the next annual general meeting scheduled for Apr 21.

Together with an interim dividend of S$0.15 per share, paid to shareholders in August 2024, this brings the total cash dividend for FY2024 to S$0.34 per share.

Earnings in brief

CapitaLand Ascendas Real Estate Investment Trust announced a 1.1% drop in revenue for the second half ended 31 Dec 2024 to S$753 million. This was mainly attributed to divestments of four properties in Australia and Singapore, and lower utilities income. Distribution per unit (DPU) for the six months was S$0.07681, an increase of 3.2%. Distributable income rose 3.4% to S$338 million and the distribution will be paid on Mar 11, after the record date of Feb 14.

CapitaLand China Trust reported a 6.5% decrease in revenue for the half-year period ended 31 Dec to S$168.5 million mainly due to a weaker yuan against the Singapore dollar. On a yuan basis, revenue fell 5.5 per cent yoy. Net property income (NPI) for the second half stood at S$108.6 million, down 7.6%. DPU was 12% lower at S$0.0264 for the period. This brings total DPU for FY2024 to S$0.0565, down 16.2% and was attributed to an enlarged unit base.

Investing with Insight: Watch this Week’s Technical Outlook

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