US government debt ceiling talks hold centrestage

Date: May 22, 2023

  • US debt ceiling talks provided the main focus
  • Optimism that a deal could be struck soon supported Wall Street
  • The STI ended an uneventful week 6 points lower at 3,202.59
  • Singapore’s NODX fell for seventh straight month in April
  • CapitaLand Ascendas Reit raised S$500m via a placement at S$2.727 per unit
  • NetLink to make record full-year distribution
  • SIA reported all-time profits
  • Ever Glory debuted on Catalist with a 63.6% premium over IPO price
  • CDL’s Q! sales slowed to S$213.2m


US government debt ceiling talks took centre stage

Movements last week were directed mainly by US debt ceiling concerns, with inflation and interest rate concerns taking a back seat – for now.

Wall Street fell sharply on Tuesday on worries that the US government might default on its debt if the debt ceiling was not raised but then rebounded smartly on Wednesday and Thursday after politicians signalled that an agreement would soon be reached.

On Friday however, doubts again emerged after Republican representative Garret Graves walked out of debt ceiling negotiations with the White House, adding to uncertainty that a deal will be reached before the June 1 deadline

As a result, the Straits Times Index, which had plunged 40 points on Wednesday in response to the US market’s Tuesday slide, managed to rebound on Thursday and Friday to record a net loss of just 6 points or about 0.18% at 3,202.59. Average daily volume was a mediocre S$1.02b versus S$966m the week before.

For the week, the Dow Jones Industrial Average was up 0.4%, the S&P rose 1.7%, and the Nasdaq climbed 3%.

Singapore’s Non-oil Domestic Exports fall for 7th straight month; China’s reopening not helping yet

Singapore’s key exports posted their seventh consecutive month of year-on-year contraction in April, weighed down by both electronic and non-electronic products, prompting some economists to predict a few more months of declines before any improvements in the second half of 2023.

Non-oil domestic exports (NODX) fell 9.8 per cent year-on-year in April, following an 8.3 per cent decline in March, data from Enterprise Singapore showed on Wednesday.

This was slightly worse than the 9.4 per cent contraction forecast by economists in a Reuters poll and the 9.6 per cent drop in a Bloomberg poll.

The Business Times quoted OCBC chief economist Selena Ling saying “Global electronics demand conditions may still be searching for a trough and the anticipated 2H 2023 recovery for the global electronics industry looks elusive’’.

Maybank said “NODX to China continued to disappoint as the reopening failed to life exports of either electronics or non-electronics. The boost from the reopening remains elusive as its recovery has largely been driven by domestic services, while manufacturing remains subdued’’.

CapitaLand Ascendas REIT raised S$500m through placement at S$2.727 per unit

CapitaLand Ascendas REIT (CLAR) last week placed out 183.3m new units at S$2.727 per unit, raising gross proceeds of S$500m, of which S$139.5m will be used to partially fund the purchase of Seagate’s research and development facility, S$160.4m for debt repayment and S$130m for partially funding an asset acquisition in Europe.

The private placement, which was 3.1 times subscribed, while the issue price represents a 5.1 per cent discount to the volume-weighted average price (VWAP) of S$2.8727 per unit for all trades done on the Singapore Exchange on Monday, up to the time the agreement was signed on Tuesday.

After the announcement, CLAR’s units on Wednesday dropped S$0.10 to S$2.78. They ended the week at S$2.80.

NetLink to make record full-year distribution

Fibre network infrastructure provider NetLink NBN Trust reported a 6.9% increase in second half earnings ended 31 March to S$54.7m and a 19.7% rise full-year earnings to S$109.3m.

Thanks to this robust showing, the company is making a record-high total full-year distribution per unit of S$0.0524. The second half distribution per unit is S$0.0262 and will be paid out on 13 June.

On Friday, the counter added S$0.015 at S$0.90 on volume of 6.24m.

Ever Glory’s Catalist debut – 63.6% above IPO price

Mechanical and electrical engineering systems firm Ever Glory debuted on Catalist on Thursday, its shares finishing their first day of trading at S$0.36, a premium of S$0.14 or 63.6% above their S$0.24 offer price.

The company had offered 14 million placement shares. It has projects in the public and private sectors, including the development and redevelopment of public housing residential flats.

SIA reported record profits

Singapore Airlines reported a 32.7% jump in profit for its second half ended 31 March to S$1.2b versus its first half.

This boosted its full-year net profit to a record S$2.2b versus a net loss of S$962m for the previous financial year.

The airline has recommended a final dividend of S$0.28 per share, which brings the total dividend for the year to S$0.39.

The group attributed the stronger profit figures in H2 compared with H1 to a better operating performance, as well as a net interest income in the second half versus net finance charges in the first half. These were, however, partially mitigated by a higher tax expense.

Revenue for H2 came in at S$9.4 billion, nearly double that of revenue of S$4.8 billion in the year-ago period. This was also another record half-year revenue figure for the airline.

In the three days following the results announcement, SIA’s shares jumped S$0.34 or 5.7% to S$6.26.

With no new launch, CDL Q1 sales slow to S$213.2m

Property developer City Developments on Friday said it sold only 88 units with a total sales value of S$213.2m in the first quarter, compared to 188 units at S$477.9m in the same period last year.

The company said this was due to the absence of a new launch during the period and added that property cooling measures introduced in April “serve as a continued reminder that the group should not be overly reliant on a specific country or asset class’’.

It said it had to reschedule the preview for its 246-unit freehold project Newport Residences, originally planned for 29 April since the market would need time to absorb the new measures.

On Friday, CDL’s shares fell S$0.02 to S$6.89 on turnover of 2.03m.

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