Date: May 20, 2024
- The STI held on to the 3.300 mark for two days, rising 0.7% to 3,313.48
- On Wall St, a benign April CPI reading helped push the Dow above 40,000 and the S&P 500 above the 5,300-point level for the first time ever.
- Probability of first rate cut in September is 65%
- Five stocks dropped from MSCI Singapore index
- Cordlife shareholders vote to remove co-founder and independent director
- SIA reported 0.3% rise in 2H net profit to S$1.2b
The STI managed to stay above 3,300, thanks to a firm Wall St
After several failed attempts over the past six months or so, the Straits Times Index last week finally managed to rise above the 3,300 level – and stay there for more than one day. It achieved this on Thursday when it closed at 3,304.99 and on Friday added a further 8.49 points to end the week at 3,313.48, a net gain of 24 points or 0.7% for the five days.
US indices rose to all-time highs courtesy of benign CPI data, Dow above 40,000
Helping drive the index up was a firm Wall Street where the Dow Jones Industrial Average crossed 40,000 for the first time ever on Thursday, underpinned by a seemingly benign April consumer price index rise of 3.4%, slightly below the previous month’s figure, thus boosting hopes that high interest rates are doing their job of lowering inflation – which would then lead the US Federal Reserve to cut interest rates.
On Friday however, the Dow closed above 40,000 for the first time ever. The positive sentiment also pushed the benchmark S&P 500 above the 5,300-point level for the first time ever. The Dow marked five straight weeks of gains, while the S&P 500 and Nasdaq have risen for four weeks. It was the Dow’s longest winning streak since February.
At 40,000, it had a 23% gain from the low point of 32,417 it reached in late October. It first touched 30,000 in November 2020.
For the week, the S&P 500 added +1.5%, the Dow rose +1.2%, and the tech-heavy Nasdaq Composite climbed +2.1%.
First rate cut expected in September, probability is 65%
According to the CME Group’s FedWatch tool, there is now a 65% chance that rates will be cut at the September Federal Open Markets Committee meeting, with the odds being 15% that the cut could be 50 basis points.
On Thursday this week, minutes of the last US Federal Open Markets Committee meeting will be released which could provide further clues on the fate of interest rates.
Five stocks dropped from MSCI Singapore Index
Seatrium, City Developments, Mapletree Logistics Trust, Mapletree Pan Asia Commercial Trust and Jardine Cycle & Carriage were dropped from the MSCI Singapore Index at the index provider’s quarterly review last week, resulting in all plunging in price when the announcement was made on Wednesday.
Seatrium was the worst hit that day, crashing S$0.21 or 11.7% to S$1.59 on volume of 74.5m. The stock a week earlier underwent a 20-1 share consolidation that saw it close its first day as a newly-consolidated stock on 7 May at S$1.94. It ended the week at S$1.57 which means it has lost S$0.37 or 19% in nine trading days.
Jardine C&C lost S$1.21 or 4.3% at S$26.81 but ended the week at S$27.39, City Developments fell S$0.13 or 2.2% at S$5.80 but ended the week at S$5.81. Mapletree Logistics Trust lost S$0.05 at S$1.31 but ended the week at S$1.37 and Mapletree Pan Asia Commercial Trust fell S$0.02 to S$1.22 and finished at S$1.25 on Friday.
The quarterly index reviews are closely watched as billions of dollars invested in exchange-traded funds track MSCI indexes. The indexes are also used as a performance benchmark for fund managers.
In total, 42 securities will be added to the all-country world index, while 121 will be cut. In the Asia-Pacific, India emerged as the biggest winner from the latest review, with 13 securities to be added and three to be excluded. China will see 10 securities added but 56 to be deleted from the index; Japan will have one new addition but 15 exclusions.
UOB Kay Hian analyst Adrian Loh was quoted by The Business Times saying the changes to the MSCI index are overall negative for the Singapore market, as the funds that benchmark the index would have fewer stocks to choose from.
He said the new look of the index is even more concentrated on the banks, and that the strong first-quarter share performance by the local banks and Sea – the index’s major constituents – likely led to the removal of the five stocks.
However, SGX analyst Geoff Howie was quoted saying “Fund managers have a number of factors that influence their allocation’’.
“For instance, the trio of banks saw S$200 million in net institutional fund outflow in Q1 2024, which has been followed by S$700 million net institutional fund inflow since. These flows were more associated with revised economic outlooks, financial reporting and performances rather than any index developments per se.”
Howie also pointed to the example of Venture Corporation, which was omitted from the MSCI index at the end of August 2023. “Since then, Venture has booked close to S$100 million of net institutional fund inflow,” he said.
Cordlife shareholders vote to remove co-founder and independent director
Shareholders of embattled private cord-blood bank Cordlife Group voted on Tuesday at the company’s Annual General Meeting (AGM) to remove acting chairman and co-founder Dr Ho Choon Hou and independent director Yeo Hwee Tiong.
Shareholders also voted against the re-election of another independent director, Titus Cheong. He will retire at the end of the AGM.
Meanwhile, three directors proposed by substantial shareholder Nanjing Xinjiekou Department Store were elected to the board. They are Dr Teo Tong Kooi, Dr Xu Tianhong and Cai Yong.
Shareholders present also rejected resolutions on granting Cordlife’s directors the authority to allot and issue shares, as well as the proposed renewal of the company’s share purchase mandate.
They also voted against approving the payment of directors’ fees of up to S$450,000 for the financial year ending Dec 31, 2024, which would have been payable quarterly in arrears.
The AGM follows the company’s six-month suspension by the Ministry of Health (MOH) from collecting new cord blood and human tissue, after the ministry found that seven of Cordlife’s 22 storage tanks were exposed to temperatures above acceptable limits at different periods since November 2020.
Cordlife had on Monday said that it intends to terminate the S$8.2 million private placement announced on Apr 17.
SIA reported 0.3% rise in 2H net profit to S$1.2b
Singapore Airlines (SIA) reported a 0.3% increase in net profit to S$1.2 billion for the half year ended Mar 31, 2024. Revenue rose 5.3% to a record high of S$9.9 billion and its board recommended a final dividend of S$0.38 per share for FY2024, up from S$0.28 per share that was declared a year earlier.
SIA said the rise in revenue was driven by a 10.1% increase in passenger flown revenue on a 17.5% gain in traffic. However, the group’s passenger yields declined 6% on intensifying competition as other airlines progressively restored capacity. For the full year, SIA posted a 24% year-on-year (yoy) increase in net profit to a record high of S$2.7 billion, while revenue climbed 7% to S$19 billion.
On Thursday, SIA’s shares fell S$0.08 or 1.2% to S$6.73 with 20.6m traded though they rebounded later to close the week at S$6.78.
The Straits Times said UOB Kay Hian maintained its “hold’’ call with unchanged target price of S$6.31 as it expects earnings to moderate due to keener competition, continued pressure on yields and rising costs.
Selected earnings in brief
Thai Beverage posted a 4.9% drop in net profit to seven billion baht (S$257 million) for its second quarter ended Mar 31 2024, mainly due to a lower share of profits from investment on its associated companies and joint ventures. Earnings per share stood at 0.28 baht for the quarter, down from 0.29 baht the previous year. Sales revenue for Q2 rose 6.3% to 71.6 billion baht due to an increase in sales in its beer, non-alcoholic beverages, food and spirits businesses. An interim dividend of 0.15 baht per share was approved for the half-year, unchanged from a year earlier.
The dividend will be paid on Jun 12, after books closure on May 29.
SBS Transit reported a 7.5% increase in net profit to S$17m for the first quarter ended 31 March due to higher fare revenue and ridership and despite a 6.6% increase in operating costs to S$374.8 million, from S$351.6 million a year earlier. The rise was mainly due to factors such as higher staff costs, and higher repairs and maintenance costs. Operating profit stood at S$17.3 million, 5.5% higher year-on-year. Revenue for the quarter rose 6.6% to S$392.1 million.
Frasers Property reported an 81.8% drop in net profit for its first half ended 31 March to S$35.8m whilst revenue fell 20.4% to S$1.5 billion. Earnings per share dropped to 0.91 Singapore cent, from 5.02 Singapore cents in the previous corresponding period. Attributable profit fell 74.6% to S$57.4 million which was largely due to non-cash unrealised fair-value losses and impairment on “certain commercial properties” in the UK of around S$115 million amid weak business sentiment there. No interim dividend was declared, same as the previous year.
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