Trump-threatened tariffs in focus as STI struggles with 3,800 mark

Date: January 27, 2025

  • The STI fell 6 points or 0.15% to 3,804.26 in lowered volume
  • Markets waiting to see what tariffs the US under Trump will impose
  • US tech stocks enjoy boost from planned US$500b AI fund; all 3 indices rise for the week
  • There will still be opportunities even with Trump tariffs: JP Morgan
  • Futures market not expecting any Fed action this week
  • Great Eastern given until 25 May to restore free float
  • OCBC CEO Helen Wong met shareholders holding out on offer: BT report
  • Lian Beng’s Ong family offers to privatise SLB Development at S$0.23 per share

 

Market in wait-and-see mode with regards to Trump tariffs

According to most observers, movements in markets this week were dictated by utterances by incoming US President Donald Trump with regards to possible tariffs on various countries.

So far, there have been no concrete developments. In his first days as US President, Trump signed a slew of decrees, many of them undoing or targeting actions taken by Joe Biden’s previous administration.

Notably however, he refrained from immediately announcing tariffs on other countries, though he said Canada and Mexico could be targeted as soon as February.

He did reiterate his “make in America or face tariffs” message at the World Economic Forum in Davos-Klosters, Switzerland, on Thursday, while also touching on topics such as oil prices, interest rates, Big Tech, and banking. Later, in a Fox News interview at the Oval Office, Trump said he’d “rather not” put tariffs on China.

The lack of direction has led to a slight dip in liquidity here and the Straits Times Index’s inability to break convincingly above the 3,800 mark. Last week, the index lost 6 points or about 0.15% at 3,804.26 whilst average daily volume was S$1.01b, down from S$1.04b the week before.

Banks, Singtel, SGX and Yangzijiang Shipbuilding were the main index components in play. In a 23 Jan Market Update, SGX Research said China play Yangzijiang was the top STI performer in 2024 and the fifth most traded Singapore-listed stock by turnover.

“Since 2017, the company has significantly increased its market presence and order book value, with greener shipping solutions, while also diversifying into the LNG terminal business’’ noted SGX Research.

How Wall St fared

Over on Wall Street, technology stocks received a boost after Trump announced plans for a US$500b fund for artificial intelligence.

Also buoyed by earnings reports, the Dow Jones Industrial Average ended the week 2.2% higher, following the previous week’s 3.7% gain. The index marked its biggest two-week gain since late 2022, and its first consecutive gain of 2% or more since July 2023.

The S&P 500 and Nasdaq gained 1.7% each.

There will still be opportunities even with Trump tariffs: JP Morgan

Even as US President Donald Trump stirs up the market with a barrage of executive orders, JPMorgan’s chief market strategist for the Asia-Pacific Tai Hui believes there is no need for investors to panic and get too “whipsawed” by his policy announcements.

“If we take a step back and look at what’s enveloping this whole discussion on tariffs, it is about the global supply chain and how the US wants to shore up its own manufacturing, or at least diversify so that it is not exposed to one particular exporter,” he said.

“The overall direction of the new administration… still offers a lot of long-term investment opportunities.”

Instead of the uncertainties, investors should focus on broader implications on the global supply chain, as well as diversification strategies, he added.

In Asean, for example, one of the positives is the emergence of countries such as Vietnam, Indonesia and Thailand as alternative hubs for production.

Futures market not expecting any Fed action this week

The US Federal Reserve meets this week for its first Open Markets Committee meeting of 2025, and neither a rate hike or cut is being forecast – as of Friday, the federal funds futures was predicting a 98% chance that interest rates will remain the same.

Great Eastern given until 25 May to restore free float

Great Eastern now has until May 25 to explore options to comply with free float requirements under the Singapore Exchange’s (SGX) listing rules.

The insurer had made an application to SGX for a further extension of time to examine its options for complying with these requirements, as information from its annual report on the 2024 financial year – which is expected to be made available towards the end of March 2025 – will be important for this process.

It added that it has been assessing the courses of action available for compliance since its suspension and intends to appoint a financial adviser to explore its options.

One recourse would be to approach OCBC for assistance in complying with the relevant rules, Great Eastern noted.

Last May, OCBC made a S$1.4 billion bid for the remaining 11.56 per cent stake in Great Eastern that it did not already own, with the aim to delist the insurer.

The bank held nearly 94% of the insurer when the takeover offer closed in July, but this was not enough for Great Eastern to delist, or for OCBC to compulsorily acquire the rest of its shares.

However, it did result in Great Eastern breaching the minimum free float requirement, and its shares were suspended from trading.

OCBC CEO Helen Wong met shareholders holding out on offer: BT report

The Business Times (BT) on Saturday reported that OCBC’S chief executive officer Helen Wong made a fresh effort to win over key shareholders of Great Eastern that the bank has been trying to take full control of for over two decades.

According to the report, earlier this month she met with Wong Hong Sun and his brother Hong Yen, as well as representatives of Lee Thor Seng and his family, who are long-time shareholders of Great Eastern Holdings with a combined 3% stake.

OCBC’s cash offer of S$25.60 a share was well above where Great Eastern was trading in the months before last year’s takeover bid was announced. But some shareholders have said the price reflects a 30% discount to the company’s embedded value, a metric that’s been used to value other insurers.

The Wongs and the Lees are among Singapore’s moneyed clans, said BT. The Wong brothers’ grandfather, Wong Siew Qui, was chairman of Great Eastern Life Assurance from 1951 to 1969. The siblings own a total of 4.8 million shares, or a 1.01% stake in the listed company, according to Great Eastern’s 2023 annual report.

Three companies controlled by Lee and his sons, who are members of the clan that founded OCBC, own about 2% of the insurer.

Lian Beng’s Ong family offers to privatise SLB Development at S$0.23 per share

Lian Beng Group’s board of directors – comprising the controlling Ong family – has proposed to acquire and privatise property developer SLB Development at S$0.23 per share in cash via a scheme of arrangement.

This comes after Lian Beng completed its privatisation in 2023 by the Ong family. It officially delisted in August 2023.

Lian Beng currently holds about 708.5 million shares in SLB, representing about 77.6% of the total number of issued shares. Both companies said that they entered into an implementation agreement setting out the terms and conditions of the scheme.

Shares of SLB were last transacted at S$0.169, on Jan 22, its last trading day. The offer price represents a premium of 36.1% over the last transacted price.

Selected earnings and news in brief

Mapletree Industrial Trust reported a 1.5% increase in distribution per unit (DPU) to S$0.0341 for its third quarter ended Dec 31, 2024. Revenue for the quarter was up 2% to S$177.3 million This was due to contributions from a newly acquired mixed-use facility in Tokyo, the completion of fitting out works of a data centre in Osaka, as well as new leases and renewals across various property clusters. Net property income (NPI) in Q3 grew 2.6% to S$133.2 million. Distributable income rose 2% to S$97.1 million, from S$95.2 million. The distribution will be paid out on Mar 14, after books closure on Feb 3.

Sabana Industrial Real Estate Investment Trust reported a 32.2% increase in DPU for the half-year ended Dec 31, 2024 to S$0.0152. The increase came even as about 10% of total income available for distribution in FY2024 was retained for “prudent capital management”, in view of additional costs incurred and to be incurred during the internalisation of the REIT manager. Revenue for H2 2024 rose 2.7% to S$58.1 million lifted by strong positive rental reversions across the portfolio. NPI grew 8.9% for the half-year to S$30.3 million which was mainly attributed to higher revenue and lower overall property expenses. The second half’s results bring the DPU declared for FY2024 to S$0.0286, a 3.6% increase.

Mapletree Logistics Trust reported an 11.1% fall in DPU to S$0.02003 for its third quarter ended Dec 31, 2024. Revenue was down 0.9% at S$182.4 million, mainly due to lower revenue contribution from China, the absence of contribution from divested properties, and depreciation of various regional currencies against the Singapore dollar. NPI fell 1.4% on the year to S$157.2 million and the amount distributable to unitholders declined 9.7% to S$101.3 million. The distribution will be paid out on Mar 13, 2025, after the record date on Jan 31. Broker Maybank maintained a BUY on the stock with a target price of S$1.60 when the counter was trading at S$1.27 on Wednesday.

OUE Real Estate Investment Trust reported an 8.7% rise in DPU to S$0.0113 for the second half of its financial year ended Dec 31, 2024. This came as revenue increased 1.7% on the year to S$148.8 million. The growth was mainly due to the stable operational performance of the REIT’s Singapore office portfolio, as well as the successful asset enhancement of Crowne Plaza Changi Airport, which was completed in December 2023. NPI for the half year slipped 2.3% to S$116.9 million due to an upward revision of prior years’ property tax for Hilton Singapore Orchard and Crowne Plaza Changi Airport. Including the release of the remaining S$2.5 million capital distribution from the 50% divestment of OUE Bayfront, the amount to be distributed to unitholders was S$62.4 million, marking an 8 per cent increase. The distribution for the period, comprising taxable income distribution, tax-exempt income distribution and capital distribution, will be paid on Mar 5, 2025, after books closure on Feb 4.

Investing with Insight: Watch this Week’s Technical Outlook


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