Date: July 15, 2024
- The Straits Times Index gained 87 points or 2.5% at 3,497.78
- Powell’s testimony and CPI figures gives hope of Sep interest rate cut
- Probability of Sep cut now 93%
- OCBC’s 93.52% falls short of compulsory acquisition threshold
- Yoma Strategic’s shares in heavy play after news that authorities questioned chairman
- Offer to privatise Second Chance at S$0.30 per share
- Singapore’s GDP grew better-than-expected 2.9% in 2Q
STI surged 2.5% to a six-year high, close to 3,500
A continued push on blue chips on the back of rising hopes of a US interest rate cut in September meant that the Straits Times Index not only put meaningful distance between it and the 3,400 mark that was only just regained earlier this month but put it within touching distance of 3,500 at 3,497.78 – the highest in about six years.
With volume increasing to an average daily figure of S$1.31b, and boosted by active trading of the banks, Singtel, SATS and CapitaLand Invest, the STI surged 87 points or about 2.5% last week.
Fed chair Powell’s testimony gives market hope of Sep rate cut…
When testifying to the US Congress on Tuesday, US Federal Reserve chair Jerome Powell said the US job market has “cooled considerably’’, adding that the economy’s growth has moderated after a strong expansion in the second half of last year.
In the previous week. the government reported that hiring remained solid in June even as the unemployment rate rose for a third straight month to 4.1%. However, Powell said the job market “is not a source of broad inflationary pressures for the economy’’.
Although Powell did not provide what Wall Street investors are watching for most closely, namely any clear indication of the timing for when the Fed might make its first rate cut, the market took it to mean his testimony hinted that the first reduction will come at the central bank’s September meeting.
…and so did the CPI figures
On Thursday, data for June’s US consumer price index was released, reinforcing hopes of a Sep rate cut. Overall CPI increased by 3% year over year in June vs. 3.1% expectations, according to FactSet. The index decreased by 0.1% month over month vs. expectations for a 0.1% increase. It was the first monthly decline since May 2020. The core price index rose by 3.3% year over year vs. expectations for a 3.4% rise.
The odds of a September rate cut rose to 83% following Thursday’s inflation report, up from just 70% on Wednesday, according to the CME FedWatch tool. On Friday, this rose to 93% even after news that the June producer price index rose at a 2.6% annual rate compared to expectations at 2.3%.
OCBC’s 93.52% falls short of compulsory acquisition threshold
OCBC and its concert parties have garnered 93.52% of shares in Great Eastern at the close of the offer on July 12, which is lower than the 98.87% shareholding required to trigger a compulsory acquisition of shares that OCBC does not already own in the insurer.
It also falls short of the 97.17% level at which frontline regulator SGX RegCo may have directed Great Eastern to make an offer to delist.
Trading in GEH’s shares will be suspended with effect from 9 am on Jul 15, as the number of shares in public hands has dipped below the 10% free float threshold.
However, existing GEH shareholders who have yet to accept OCBC’s offer can still do so, as the bank and its concert parties hold more than 90% of the insurer’s shares.
A notice will be sent to these shareholders by Jul 24, following which a three-month period in which they can exercise the right to encash their shares will kick in.
In a media release on Friday night, GEH stressed that the suspension of trading in its shares will “have no impact whatsoever” on its insurance business and operations.
There will also be no changes to policyholders’ insurance contracts with GEH, said group chief executive officer Khor Hock Seng.
“Our financial strength remains solid as before, and arguably stronger based on the increased market value of our shares following the announcement of the offer,” he added.
Yoma Strategic’s shares in heavy play after news that authorities questioned chairman
Shares in Myanmar-focused conglomerate Yoma Strategic Holdings sank on July 10 after the company said executive chairman Serge Pun was cooperating with authorities in the capital Naypyitaw on bank business matters.
Yoma stock was down 25.7 per cent, or 3.7 cents, to 10.7 cents as of 3.54pm, with a hefty 146.3 million shares changing hands. It closed at 10.3 cents on July 10, down 28.47 per cent or 4.1 cents on volume of 168.5 million shares.
“There are no charges filed against him,” the company said in a statement on July 10, adding that Mr Pun had been meeting with authorities including the central bank.
Mr Pun is currently executive chairman of Yoma Bank, according to the lender’s website. The bank is part of First Myanmar Investment, a Yangon-listed company that is part of Mr Pun’s businesses along with Yoma Strategic.
Yoma Bank, one of Myanmar’s largest commercial banks that was founded by Mr Pun, has come under scrutiny alongside six other private lenders for breaching housing loan norms set by the Central Bank of Myanmar (CBM), a state-run newspaper reported last week.
“Some private banks grant large sums of housing loans, breaking the directives of the CBM for their own sake,” the Global New Light Of Myanmar said on July 2, adding that the lenders and central bank officials will face action.
Offer to privatise Second Chance at S$0.30 per share
The founder and chief executive of Second Chance Properties, Mr Mohamed Salleh Marican, and his family have proposed to privatise the company at S$0.30 per share in cash through a voluntary unconditional offer.
As at July 10, the company has an issued and paid-up share capital of about $174.7 million, comprising 927.8 million shares. Salleh and his family own around 789.2 million shares in Second Chance, representing about 85.06% of the total number of issued shares.
The offer price is a premium of about 39.5% over Second Chance’s last traded price of 21.5% on July 9, the last full trading day before the offer announcement.
Second Chance was listed on the Singapore Exchange’s mainboard in 2004, and its core businesses include property investment, retailing of apparel and gold jewellery, and investing in financial instruments.
Singapore’s GDP grew better-than-expected 2.9% in 2Q
Gross domestic product (GDP) grew 2.9% year on year in the second quarter, according to advance estimates from the Ministry of Trade and Industry (MTI). That came after the first-quarter growth was revised higher to 3% – the fastest pace since the 4.2% expansion in the third quarter of 2022.
On a quarter-on-quarter basis and seasonally adjusted, the economy expanded 0.4%, the most since the second quarter of 2023 and up from a revised 0.3% gain in the first quarter of 2024.
The year-on-year growth was higher than the 2.7% forecast by economists polled by Bloomberg, while quarter-on-quarter growth was in line with their projection.
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