US-China tariff pause helped STI rise for fifth consecutive week

Date: May 19, 2025

• A 90-day pause in US-China tariffs helped the STI rise for fifth straight week
• Major US indices rose 3.4-7.2% for the week; the STI rose 0.5%
• US consumer sentiment fell to second-lowest reading ever
• Frasers Property announced second attempt to privatise Frasers Hospitality Trust
• SingPost proposed S$0.09 special dividend from exceptional gain, shares take a beating because of weak underlying earnings
• City Dev to buy back 10% of preference shares at S$0.78 each
• Analysts positive on Sembcorp Industries
• Up to 17 companies have delisted or are pending delisting so far this year

 

US-China tariff pause helped STI to fifth consecutive weekly rise

The Straits Times Index, helped along by strong rises on Wall Street, last week managed a gain of 21 points or 0.5% at 3,897.87, its fifth consecutive weekly rise.

The main reason was the announcement that US-China tariffs would be paused for 90 days, during which US will lower its tariffs on China imports from 145% to 30% while China’s reciprocal lowering will be from 125% to 10%.

As a result, all three major US equity indices logged solid gains for the week – the Dow Jones Industrial Average, S&P 500 and Nasdaq Composite gaining 3.4%, 5.3% and 7.2% respectively.

US consumer sentiment fell sharply in May

Consumer sentiment fell to its second-lowest reading on record in May, inching down for the fifth straight month as the potential impacts of tariffs loom large in the American psyche.

The University of Michigan’s consumer sentiment index ticked down to a reading of 50.8 in the first two weeks of May, according to preliminary results released Friday.

That’s the index’s second-lowest reading since 1978. The all-time low was a reading of 50 recorded in June 2022, when inflation hit a 9.1% annual rate, the largest yearly increase since the 1980s.

“Tariffs were spontaneously mentioned by nearly three-quarters of consumers, up from almost 60% in April; uncertainty over trade policy continues to dominate consumers’ thinking about the economy,” said Joanne Hsu, director of consumer surveys.

Frasers Property announced second attempt to privatise Frasers Hospitality Trust

Frasers Property last week proposed to privatise Frasers Hospitality Trust (FHT) via a scheme of arrangement at S$0.71 per stapled security, citing an inability to improve the distribution and growth of FHT in the face of macroeconomic headwinds.

This is the second time in three years that Frasers Property has attempted to privatise the stapled group. It tried to do so in September 2022 for S$0.70 per stapled security, though the privatisation attempt failed then after being voted down by shareholders.

FHT’s manager said the present decision followed a strategic review of FHT amid a worsening macroeconomic environment. It said a weaker foreign exchange rate against the Singapore dollar and a higher interest rate environment, among other factors, have made it more difficult for the managers of FHT to grow its distribution and net asset value (NAV).

FHT has also faced challenges attracting capital flow due to its scale and size. As a small REIT and with a small float, it is unable to attract institutional investors to grow meaningfully nor does not have as much debt headroom as its peers to engage in acquisitions.

The scheme meeting for stapled securityholders is expected to be in late July.

SingPost proposed S$0.09 special dividend from exceptional gain, shares take a beating

Singapore Post has proposed a special dividend of S$0.09 per share after it booked a net exceptional gain of $222.2 million, largely from the recent divestment of its business in Australia.

Including an interim dividend of S$0.0034 which has been paid, SingPost shareholders are set to receive a total of S$0.0934, the company said.

Its net exceptional gain of $222.2 million for the full year ended March 31 came largely from a $302.1 million gain on its disposal of its Australian logistics business, Freight Management Holdings (FMH).

Net profit for the full year stood at $245.1 million, up 212.9% from $78.3 million the previous year. But excluding the net exceptional gain, underlying net profit fell 40.3% to $24.8 million.

For its second half-year, SingPost posted an underlying net loss of $0.5 million, reversing a $28.1 million profit in the same period last year.

On Thursday after the results were announced, SingPost’s shares plunged S$0.075 or 11.8% to S$0.56 on volume of 69.5m. They recovered S$0.015 to close the week at S$0.575 on Friday. The nett loss for the week was S$0.05 or 3.2%.

Following the results, OCBC equity research analyst Ada Lim trimmed her fair value estimate for the stock to S$0.605 from S$0.62. She maintained her “hold” call on SingPost, while awaiting further clarity on its next engine of growth.

City Dev to buy back 10% of preference shares at S$0.78 each

Property player City Developments Limited (CDL) is offering to buy 10% of its preference shares – or about 26.8 million shares – at S$0.78 a share through off-market equal access, with each preference share holder entitled to sell 10 per cent of such shares held as at 5.30 pm on Jun 2.

CDL said that there will be no implications for takeovers or mergers arising from this scheme, as these shares do not carry voting rights, and will be scrapped.

The offer, to be made in cash, allows it to exercise greater control over its share capital structure in relation to the preference shares.

Analysts positive on Sembcorp Industries

Goldman Sachs has initiated coverage of energy and urban solutions provider Sembcorp Industries with a “buy” recommendation and a target price of S$8.40 on the back of its “solid business model”.

In a May 8 report, Goldman Sachs analysts Nikhil Bhandari and Wayne Wang noted that Sembcorp is “attractively valued”, with the market pricing its renewables business at a level aligned with its peers in China and developed markets.

“Despite the company’s China exposure, where curtailment rates are rising, we believe the current valuation is overly punitive,” the analysts said.

“Sembcorp is rapidly expanding in regions with more favourable dynamics, such as India and the Middle East, where renewables are cheaper on the power cost curve, and in areas like the Philippines and the UK, where power supply demand is tight,” they added.

“This expansion drives faster earnings growth compared to China and developed market peers’’.

DBS Group Research analyst Ho Pei Hwa believes Sembcorp could see an uplift in its price-to-earnings valuation multiple, on the back of accretive acquisitions in new renewable markets, steady earnings delivery and potential capital recycling that is value-unlocking.

“Sembcorp is set to deliver promising earnings CAGR of more than 10% through 2028 as its three key business segments enter expansion mode,” Ho said in a report following Sembcorp’s FY2024 results, noting that the company is “firing on all cylinders”. DBS has a “buy” call on Sembcorp with a target price of S$8.

Up to 17 companies have delisted or are pending delisting so far this year

The Business Times (BT) on Tuesday reported that at least 16 companies so far this year are on the delisting track as of the first week of May. They have either delisted, confirmed delisting dates or announced plans to exit the Singapore Exchange (SGX).

After the report was published, the controlling shareholders of Ossia International – group executive chairman Goh Ching Wah, chief executive Goh Ching Huat, and non-executive director Goh Ching Lai – made an unconditional offer to take the lifestyle products retailer and distributor private at S$0.16 a share.

Meanwhile, only one initial public offering (IPO) has taken place so far this year – car dealer Vin’s Holdings, which listed on the Catalist board in mid-April.

“The latest to announce plans to delist includes nursing operator Econ Healthcare (Asia) as well as hospitality player ICP and hotel group Amara Holdings from the healthcare and hospitality sectors.

In the technology sector, IT solutions provider Procurri Corp and technology products distributor Ban Leong are preparing to delist.

in the engineering and industrial sector, lifting service provider Sin Heng Heavy Machinery and engineering company PEC are also planning to go private’’ reported BT. Property developer Sinarmas Land and SLB Development are also following suit.

Already four firms have delisted from the SGX this year: offshore oil-and-gas contractor Dyna-Mac and software company Silverlake Axis in January, shipping firm Jes International in February, and waste management company 5E Resources in March.