Stocks moved in tandem with bond yields; STI up 0.2% for the week

Date: January 20, 2025

  • The STI added 9 points at 3,810.78 as US bond yields pulled back
  • Wall ST equity indices gained 2.4-3.7% over the week
  • 2-year Treasury down from 4.4 to 4.23%; 10-year yield from 4.79% to 4.61%
  • DBS may declare special dividend of S$0.50 per share for 4Q: CGS
  • Former Sabana REIT director Charlie Chan, other unitholders requisition EGM; seek to conduct ‘price discovery’ on assets
  • Institutions were net buyers in second half of 2024: SGX Research
  • Cordlife’s operation licences renewed for one year; MOH will monitor
  • Dec exports grew 9%, boosted by front-loading ahead of Trump’s tariffs
  • The US stock market will close for Martin Luther King Day on Monday. When it reopens on Tuesday, Donald Trump will be president

 

STI rose 9 points to 3,810.78 in tandem with fall in US bond yields

Rises and falls in US Treasury yields dictated movements in US stocks which in turn set the tone for the local market. The Straits Times Index fell for the first three days last week as US bond yields rose and Wall St stocks fell, but then rebounded on Thursday and Friday when yields pulled back.

On Friday, the STI closed at 3,810.78 to record a net gain of 9 points or 0.2% for the week. Average daily volume was S$1.04b.

The three banks were again in focus, DBS over the week falling S$0.28 or 0.6% to S$43.85, OCBC rising S$0.02 to S$17.12 and UOB gaining S$0.21 or 0.6% at S$37.03.

How Wall St fared – all major indices rose between 2.4-3.7%

The 2-yearUS Treasury bond yielded 4.4% last Monday but closed Friday at 4.23%, whilst the 10-year yield was down from 4.79% to 4.61%.

The pullback in yields came in the wake of some cooler-than-expected updates on producer and core consumer prices. That followed weeks of jitters in the stock market about whether the Federal Reserve will find room to cut interest rates this year, or of inflation will force the central bank to consider a rate hike.

Bets on multiple rate cuts were on the rise this week. Even Federal Gov. Christopher Waller said in an interview with CNBC that the central bank can cut rates multiple times—as long as inflation data cooperates. Most importantly, speculation about rate hikes have all but faded away.

Sentiment was also boosted by a strong start to the earnings season in the form of solid quarterly results from major banks. JPMorgan, Citi, Wells Fargo, Goldman Sachs, Bank of America, and Morgan Stanley all delivered quarterly beats driven by investment management activity and trading gains in what was a massive year for markets in 2024. The earnings calendar will turn into a deluge from next week, with some of the biggest companies in the world on deck.

For the week, the Dow Jones Industrial Average rose 3.7% to 43,487, the S&P 500 gained 2.9% at 5,996.66 and the Nasdaq Composite added 2.4% at 19,630.2.

DBS may declare special dividend of S$0.50 per share for 4Q: CGS

DBS may declare a special dividend of S$0.50 a share for the fourth quarter of FY2024 as well as raise its ordinary dividend per share to S$0.60, said CGS International in a 14 Jan report.

Reiterating its “hold” call on the bank, the securities company maintained its target price at S$43, which is 1.1 per cent below its latest closing price of S$43.50 for Wednesday.

CGS International analysts Andrea Choong and Lim Siew Khee predict “modest earnings” for DBS in Q4 FY2024 amid softer business activity across Singapore banks during the year-end season.

With the trio of Singapore banks – DBS, UOB, and OCBC – set to declare final dividends in Q4 FY2024, Choong and Lim think that DBS will raise its ordinary dividend to S$0.60 a share from the quarter onwards.

“DBS estimates S$6 billion in transitory excess capital; S$2 billion will be used redeem its additional tier-1 capital securities, with the rest available for shareholder return,” they explained.

Choong and Lim said that DBS will turn a modest net profit of S$2.7 billion for Q4 FY2024 – an 11 per cent quarter-on-quarter (qoq) decline and a 13 per cent year-on-year improvement.

Former Sabana REIT director Charlie Chan, other unitholders requisition EGM; seek to conduct ‘price discovery’ on assets

THE manager of Sabana Industrial Real Estate Investment Trust (Sabana REIT) has received a requisition notice for an extraordinary general meeting (EGM) from unitholders owning over 10% of the trust.

The manager said it is considering the requisition notice and consulting with the trustee, as well as seeking legal advice.

The letter was submitted by Chan Wai Kheong, better known as Charlie Chan, and sought to pass three resolutions.

The first resolution asked for trustee HSBC Institutional Trust Services (Singapore) and the manager to commence and undertake a price discovery process, with a view of “achieving a possible sale of all or majority” of the REIT’s assets.

The former independent non-executive director, together with the unitholders, also requested that the trustee and/or the manager appoint an “internationally reputable” firm of property consultants “with a track record” of selling Singapore industrial properties to oversee the price discovery process.

Lastly, they also asked Sabana REIT’s trustee and manager to complete the price discovery process within three months from the passing of the resolutions.

The unitholders have called for the EGM as they believe “significant costs” have been and continue to be incurred by the REIT in relation to the internalization of the manager which so far has come to S$10.9m

“Given the costs incurred and to be incurred in connection with the internalization, about 10% of distributable income for H1 2024 was retained for prudent capital management and further retention may be required for subsequent periods, which will result in a reduction in distribution per unit (DPU),” they noted.

The group also cited the poor performance of Sabana REIT’s unit price and DPU as a reason for requisitioning an EGM.

Institutions were net buyers in second half of 2024: SGX Research

In a 15 Jan Market Update, SGX Research said institutions were net buyers of S$856 million worth of local shares in 2H24, following on from S$1.17 billion in net selling in 1H24. For every Singapore-listed stock that experienced net institutional selling in 2024, another stock saw net institutional buying, said SGX research.

“Singtel recorded the highest net institutional buying in 2024 at S$826 million, with its average daily trading turnover rising 80% from 2023, to S$90 million. Analysts also revised their target prices for the stock, with the 12-month consensus estimate increasing from S$3.08 to S$3.72 over the year’’ noted SGX Research.

The stocks that saw the next highest net institutional buying in 2024 were UOB, OCBC, SGX, ST Engineering, Yangzijiang Shipbuilding, SATS, DBS, ComfortDelGro, and Suntec REIT. Total returns for the 10 stocks were mixed in 2024, ranging from 1% for Suntec REIT to 108% for Yangzijiang Shipbuilding.

“Looking ahead, Singapore’s consensus economic outlook for 2025 is cautiously optimistic with steady growth and moderating inflation, amid the ongoing global uncertainties. The December MAS Survey of Professional Forecasters projects Singapore GDP will expand by 2.6% in 2025, with the most probable growth outcome of the survey between 2.5% and 2.9%’’.

Cordlife’s operation licences renewed for one year; MOH will monitor

Cord-blood bank operator Cordlife’s cord blood banking and human tissue banking service license has been renewed for one year by the Ministry of Health (MOH), with MOH saying it will closely monitor the company’s governance and ensure its practices are consistent and compliant with regulatory requirements.

Previously, MOH allowed the company to resume its cord blood banking service operations “in a controlled manner”, restricting its operations to not more than 30 units per month of new cord blood from infant donors, until Monday.

“The company is committed to meeting all applicable regulatory requirements and compliance measures, before considering the full resumption of operations in Singapore,” said Cordlife adding that it is currently unable to assess the impact on its fiscal performance for the financial year ending Dec 31, 2025.

Dec exports grow 9%, boosted by front-loading ahead of Trump’s tariffs

Singapore’s non-oil domestic exports (NODX) grew more than expected in December, but economists noted that this reflects front-loading ahead of expected tariffs from incoming US president Donald Trump.

In December, NODX grew 9% year on year, as both electronics and non-electronics shipments rose. This extended November’s 3.4% rise and beat the 7.8% rate expected by private-sector economists in a Bloomberg poll.

But with Trump having threatened to impose tariffs on key US trading partners – not least China – upon taking office on Jan 20, exporters may have brought forward their shipments to avoid this, observed economists.

Maybank economists Chua Hak Bin and Brian Lee said: “Front-loading of shipments in anticipation of Trump 2.0 tariffs has been evident in the strong NODX outturns for November and December, particularly for electronics shipments to China, Hong Kong and Malaysia.”

DBS economist Chua Han Teng also expects that with more near-term front-loading, Singapore’s positive NODX performance is likely to continue into early 2025.

The stock market will close for Martin Luther King Day in the US on Monday. When it reopens on Tuesday, Donald Trump will be president.

Investing with Insight: Watch this Week’s Technical Outlook


Subscribe to Newsletter

Subscribe to SIAS Mailing List and get updates to all upcoming events and news

By clicking submit, you agree to our privacy statement, collection, use and/or disclosure of your personal data to the extent necessary to provide you with this service.