Date: November 4, 2024
- The STI fell 1.05% to 3,555.43 as Wall St faltered
- Latest US economic data sent mixed signals, all 3 US indices lose ground
- Big week ahead – US presidential elections, FOMC meeting
- Bond yields have been creeping up, 99% chance of 25-bp rate cut this week
- Hongkong Land’s shares up sharply after plans to shift to fund management
- Singtel’s shares slide after news of Optus lawsuit
Ahead of US presidential election and FOMC meeting, lack of trading cues sent STI down 1.05%
The Straits Times Index fell 38 points or 1.05% to 3,555.43 in a holiday-shortened week in response to a spike up in US Treasury yields and probable caution ahead of the upcoming US presidential elections.
Average daily volume was possibly inflated by month-end portfolio rebalancing, rising to S$1.32b versus S$1b the week before. The highest daily business done was S$1.71b on Wednesday, the final trading day of the month.
Latest US economic data sent mixed signals, all 3 major indices lose ground
October’s payroll growth disappointed, with only a shocking 12,000 jobs created during the month—after averaging a monthly gain of 194,000 over the past year.
But the unemployment rate remained steady at 4.1% and the pace of wage growth was largely unchanged. While labour strikes and hurricanes did cause major data distortions, those factors explain away only some of the weakness seen in the details of Friday’s report.
The overall data suggested a continued deterioration in the labour market, an economy that was still chugging along, and an inflation situation that may not be completely out of the woods yet. It keeps the Fed on track to deliver another interest rate cut next week.
For the week, the S&P 500 slipped 1.4%, while the Nasdaq Composite slid 1.5% and the Dow Jones Industrial Average fell -0.2%.
A big week ahead – US elections and FOMC meeting
Apart from knowing who the next US president will be, markets will also have to wait for the outcome of the Federal Open Market Committee (FOMC) meeting on 6-7 Nov. The FOMC will have to decide how to follow its September interest-rate cut of a half percentage point, as the central bank continues to try to navigate a soft landing for the U.S. economy.
Currently, the futures market is pricing in a 99% chance that rates will be cut by a quarter percentage point. In the US Treasury market, bond yields have been gradually rising, placing pressure on stocks. The 2-year yield closed at 4.21% and the 10-year at 4.38%.
Hongkong Land’s shares up sharply after plans to shift to fund management
Hongkong Land last week announced that it will pivot towards fund management and focus on ultra-premium integrated commercial properties in Asia’s gateway cities.
The new business strategy will reinforce its core capabilities, generate growth in long-term recurring income and deliver superior returns to shareholders, said Hongkong Land, which is part of the Jardine Matheson conglomerate.
The news sent Hongkong Land’s shares surging on Wednesday, up US$0.42 or 10.8% at US$4.31 on volume of 27.6m. They closed Friday at US$4.48 for a gain of US$0.55 or 14% on the week.
The group intends to recycle up to US$10 billion in capital by 2035 and grow assets under management from US$40 billion today to up to US$100 billion by then. It expects to double its profit before interest and tax, and double dividends per share in that time.
The moves came after a strategic review of its business. Hongkong Land swung to an underlying loss of US$7 million in the six months to Jun 30, 2024, from an underlying net profit of US$422 million in the year-ago period.
Singtel’s shares slide after news of Optus lawsuit
Shares of telco Singtel came under heavy pressure on Friday after court proceedings against its subsidiary Optus Mobile in Australia commenced the day before.
After hitting a low of S$2.90, they rebounded to finish the day at S$3.10 for a nett loss of S$0.03 that came with almost 62m shares traded. For the week, the counter fell S$0.11 or 3.4%.
The heavy trading of Singtel shares comes after the Australian Competition and Consumer Commission (ACCC) filed court proceedings against Optus Mobile over allegations of inappropriate sales conduct.
The commission is pursuing penalties, consumer redress, a compliance programme and costs from Optus. Singtel said in a Thursday bourse announcement that while it could not “determine the quantum of penalties, if any”, it has taken disciplinary action against staff who engaged in misconduct.
Some of its employees are suspected of inappropriate sales practices, including the use of debt collectors to pursue customers despite knowing their contracts were fraudulent. The commission’s press statement said Optus allegedly sold mobile phones and plans to vulnerable customers, including those with cognitive impairments and learning disabilities. All in, 429 customers were affected.
Selected Earnings in Brief
CDL Hospitality Trusts posted a net property income (NPI) of S$36.3 million for the third quarter ended Sep 30, down 6.8% from the previous corresponding period. Revenue for the quarter was down 3.7% on the year at S$67.5 million. For the nine months ended September, the stapled group, which comprises CDL Hospitality Real Estate Investment Trust and CDL Hospitality Business Trust, posted 2.9% growth in revenue to S$194.8 million. NPI for the nine months was S$102.9 million, up 1%. As at end-September, CDLHT’s gearing stood at 38.8%, with S$707 million debt headroom to 50%. Its weighted average debt to maturity was about two years.
Mapletree Industrial Trust reported a DPU of S$0.0337 for the second fiscal quarter ended Sep 30, 2024, up 1.5% from the corresponding year-ago period. Its manager noted a “robust operational performance”, with higher average overall portfolio occupancy quarter on quarter, and positive rental revisions in Singapore. Distribution to unitholders, at S$95.8 million, grew 1.9% from S$94.1 million in the year-ago quarter. Revenue for Q2 in the current financial year rose 4.2% year on year to S$181.4 million. NPI climbed 4.6% to S$134.5 million. For the six months ended Sep 30, DPU grew to S$0.0680. This came alongside an increase in distribution to unitholders, which grew 2.8% to S$193.1 million. The distribution for Q2 will be paid in cash or DRP units on Dec 18.
Starhill Global REIT reported a 1.4 per cent rise in its net property income (NPI) to S$37.9 million for its first fiscal quarter ended Sep 30, 2024, from S$37.4 million in the corresponding year-ago period. This was in line with an increase in revenue, partially offset by higher operating expenses at one Australian property, Myer Centre Adelaide. Revenue was up 1.9% to S$48 million, on account of higher contributions from its Singapore and Perth properties, as well as appreciation of the Malaysian ringgit against the Singapore dollar. Revenue for Ngee Ann City came in at S$16.5 million, compared with S$16.3 million in the same period a year ago. Similarly, Wisma Atria registered revenue of S$13.3 million in Q1, up from S$12.9 million in the previous year.
Sheng Siong posted a 12.6% increase in net profit to S$39.1 million for the third quarter ended Sep 30. Revenue grew 5% year on year to S$363.2 million, driven by the opening of five new stores over the same period. The supermarket operator’s gross profit grew by 8.4% year on year to S$113.8 million in Q3 FY2024. Earnings per share stood at 2.60 Singapore cents, 12.6 per cent higher than in the year-ago period.
Investing with Insight: Watch this Week’s Technical Outlook
