Date: April 1, 2024
- The STI responded to Wall St’s strength by rising 2.6% in March
- Volume improved from a daily average of S$1.04b in the first week to S$1.25 in the fourth week
- Banks and Singtel were the main index gainers
- US futures predicting first rate cut in June
- The Dow and S&P 500 ended the first quarter at all-time highs
- Best World to seek shareholders’ approval for delisting; separately, minorities send letter seeking, among other demands, removal of some directors
- Sabana REIT trustee’s first meeting with internalisation committee failed to materialise for unclear reasons
- Cordlife’s CFO latest to be arrested by CAD
- Seatrium’s former executives charged here with bribery in Brazil
- Singapore’s Feb factory output beat forecasts with 3.8% growth
The STI added 2.6% for March, in tandem with Wall St
Perhaps the most notable feature of March was how the local stock market, which for many weeks appeared oblivious to Wall Street’s strength, appeared to finally recouple with the US market.
The second notable feature was that the Straits Times Index managed to hold on to the 3,200 mark despite falling below a few times during the month, whilst even threatening to break below 3,100 in the first week when it closed at a month-low of 3,107 on 5 March.
However, thanks to support mainly for the banks and Singtel, the STI recorded an 83 points or 2.6% gain for the month at 3,224.01,
For the week, the index added 7 points or 0.2% and for the first quarter it recorded a loss of about 16 points or 0.5%.
Daily volume however, gradually improved as the month progressed, from an average of S$1.04b in the first week to S$1.25b in the final week. These figures are also an improvement over the average daily turnover of S$829m done in the first week of the year.
Banks and Singtel led the way
Notwithstanding earnings concerns going forward after interest rates are lowered, banks were mainly responsible for the index staying above 3,200.
For the month, DBS led the way with a very decent S$2.70 or 8.1% jump to S$36.03, UOB came next with a S$1.36 or 4.9% rise to S$29.31 and OCBC rose a very respectable S$0.51 or 3.9% at S$12.98.
Singtel in the meantime, also enjoyed a push, thanks mainly to speculation that it might sell its stake in Australian subsidiary Optus. Over the month the stock added S$0.18 or 7.7% at S$2.53, the highest since early August 2023.
US futures market still expects first rate cut in June
During the month, the US Federal Reserve held its second Federal Open Markets Committee (FOMC) meeting of the year where it lived up to expectations by keeping interest rates unchanged at 5.25-5.5%.
However, it signalled possibly three rate cuts of 25 basis points each this year, which was sufficient to send US stocks to record highs despite the release of strong consumer and producer price indices a week before the FOMC meeting.
According to the CME FedWatch Tool, the futures market expects the US Federal Reserve to keep interest rates unchanged at its 1 May meeting, whilst the chance of a 25-basis points cut in June is now 55%.
How Wall St fared – the Dow and S&P close the quarter at record highs
The Dow Jones Industrial Average and S&P 500 ended a strong quarter on a high note, notching record closing highs.
The Dow rose about 5.7% this quarter, marking its best first quarter performance since 2021, when it rose 7.8%. The S&P rose more than 10%, locking in its best first quarter since 2019, when it rose 13%. The Nasdaq rose more than 9% but couldn’t top its 16.8% gain from the first quarter of 2023.
Best World in the news:
a) Company looking to delist via selective capital reduction
Beauty products firm Best World International is looking to delist from the Singapore Exchange (SGX) by way of a selective capital reduction, citing the poor consumer sentiment and growth headwinds in its China market.
A selective capital reduction refers to the cancellation of all issued ordinary shares in the company, except those held by non-participating shareholders. In return for their cancelled shares, shareholders will receive cash.
Best World said it intends to obtain approval for the selective capital reduction at an extraordinary general meeting (EGM), where a special resolution must be passed by eligible shareholders, which does not include major shareholders who are involved with the business.
In its results for the year ended Dec 31, 2023, Best World posted a net profit of S$120.4 million, down 11.7% on weak consumer sentiment in China. Its revenue also declined, falling 7.7% to S$514.5 million year on year.
Best World’s cash and cash equivalents stood at S$574 million as at Dec 31, 2023. The company did not declare a dividend for FY2023, citing working capital requirements and an uncertain business climate.
b) Minorities send list of resolutions, including removal of independent directors
Best World said it had received a letter dated Mar 21 from shareholders seeking to pass six resolutions at the next general meeting.
The letter was sent by shareholders who hold at least 10% of shares in Best World, and serves as a notice requisitioning an EGM, or as a notice for the resolutions to considered at the next annual general meeting.
Among other requests, the requisitioning shareholders want the company to engage an independent financial adviser to advise the board on the appropriate cash reserves and dividend policy of the group, to disclose the recommendation of the group’s remuneration committee on the pay of its executive directors, and also to remove independent directors Lee Sen Choon, Adrian Chan and Chester Fong.
Sabana REIT trustee’s first meeting with internalisation committee failed to materialise
Sabana REIT’s trustee, HSBC Institutional Trust Services’ first meeting with the REIT’s internalisation committee which includes several employees from activist investor Quarz Capital that was scheduled for 25 March failed to take place, though reasons why are unclear.
According to the trustee’s statement, committee members wished to discuss proposed amendments to the trust deed as well as an ongoing court application filed on 9 Jan regarding the internalisation process.
However, BT reported on 27 March that according to the committee, it was “surprised to learn that many of the important correspondences between the trustee and the internalisation committee have been conveniently left out’’ in the statement and the meeting failed to occur because the parties were unable to agree on the agenda, format and appropriate terms and conditions for the meeting.
The 9 Jan court application submitted by the trustee was to seek the court’s guidance on the issue of whether the REIT manager, its shareholders, and related parties ought to be permitted to vote on any resolution to amend the trust deed.
In its latest announcement dated Mar 26, the trustee reiterated that the Jan 9 application was meant to clarify such key issues and steps for the internalisation process, and to “ensure that the views of all unitholders are properly considered in an appropriate forum”.
Therefore, it urged unitholders to “respect the ongoing court process”, and to allow for these issues to be “appropriately heard by the court and decided in an orderly manner”.
However, Quarz and members of the committee disagree that proposed trust deed amendments are needed for an internalisation of the manager and whether an EGM can be convened to consider such proposed amendments.
Cordlife’s CFO latest to be arrested by CAD
Cordlife Group’s chief financial officer (CFO) Thet Hnin Yi was the latest to be arrested by the Commercial Affairs Department (CAD) and released on bail after four of the company’s directors and its former group chief executive, Tan Poh Lan, went through the same process earlier.
The cord-blood bank on Wednesday said Thet was also arrested in connection with investigations related to irregular temperatures in a certain cryogenic storage tank, first disclosed by the group on Nov 30, 2023.
Cordlife, however, maintained that it would “be in the interests of the company” for Thet to remain at her post, as she has been with the company for about 17 years and is “very familiar” with its historical and current financial numbers and information.
Cordlife’s shares fell S$0.118 or about 41% over the month to end at S$0.172.
Seatrium’s former executives charged here with bribery in Brazil
Two former executives, including a top executive, of offshore and marine (O&M) giant Seatrium (previously known as Sembcorp Marine), were charged with corruption offences for paying bribes of more than S$20 million to further the company’s business interests in Brazil.
Wong Weng Sun, 62, was charged at Singapore’s State Court with five counts of conspiring to corruptly give gratification to a former consultant with Seatrium, Guilherme Esteves de Jesus.
Wong was president, executive director and chief executive of Sembcorp Marine for 14 years. He stepped down from Seatrium in February 2023, following the merger of Sembcorp Marine and Keppel’s O&M unit.
Lee Fook Kang, 75, who was Jurong Shipyard’s senior general manager at the time of the offences, also faces the same five bribery charges.
Seatrium’s shares were heavily traded every day, falling S$0.011 or 12.2% over the month to S$0.079.
Most S-REITs posted gains after latest FOMC held rates steady: SGX Research
In a 25 March Update, SGX Research said most S-REITs and property trusts posted gains after the Fed held its interest rates steady and reaffirmed its projection of three rate cuts this year at its FOMC meeting which ended on Wednesday 20 March.
“The iEdge S-REIT Index rallied 2.4% to 1,026.41 in the Thursday session, marking its highest level since Mar 8 – led by Manulife US REIT, Prime US REIT, Keppel Pacific Oak US REIT, Mapletree Pan Asia Commercial REIT, and Mapletree Logistics Trust’’ said SGX Research.
“Institutions made net purchases of S$5.7 million of S-REITs and property trusts during Thursday’s session after the FOMC meeting, and on a net sales basis, retail investors sold S$12.3 million of S-REITs. By sub-sectors, diversified and industrial REITs saw the most institutional inflows, with a combined inflow of S$9.7 million’’.
Singapore’s Feb factory output beat forecasts with 3.8% growth
Singapore’s factory output grew 3.8% on year in February, extending gains from January’s revised figure of 0.6% growth. February’s performance was better than expected by private-sector economists, who predicted a muted 0.5% expansion in a Bloomberg poll.
Excluding the volatile biomedical manufacturing cluster, output grew by 1.4% year on year in February, easing from the 4.7% growth posted in January. Factory output in the key electronics sector gained 2.6% from the year-ago period, a reversal from January’s 4.7% year-on-year decline.
Economists said that February’s growth was driven largely by the pharmaceutical segment under the biomedical manufacturing cluster, which surged 27.4% The pharmaceutical segment grew 73.2%, as a result of increased production of biological products and a different mix of active pharmaceutical ingredients.
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