share_log

SG Markets Weekly Update (August. 18): Singapore's non-oil domestic exports slid 20.2 percent on the year in July

moomoo News ·  Aug 18, 2023 10:04

Welcome to the Markets Weekly Update, the column committed to delivering essential investing insights for the week and key events that could move markets in the week ahead.

Macro Matters

US

Bond Yield Hits Highest Since 2008, Adding Pressure to Borrowing Costs

The yield on the 10-year U.S. Treasury note hit a 15-year high, threatening steeper costs for many borrowers and raising concern on Wall Street about the potential fallout in the stock, bond and housing markets. A key benchmark for interest rates across the economy, the 10-year yield settled at 4.258%, according to Tradeweb. That was up from 4.220% Tuesday and marked its highest close since June 2008, months before the collapse of Lehman Brothers and expansive Federal Reserve policy ushered in more than a decade of historically low bond yields.

Fed Saw ‘Significant’ Inflation Risk That May Merit More Hikes

Federal Reserve officials at their policy meeting in July largely remained concerned that inflation would fail to recede and that further interest-rate increases would be needed. At the same time, cracks in that consensus were also becoming more apparent. But two Fed officials favored leaving rates unchanged or “could have supported such a proposal,” instead of the rate hike the Federal Open Market Committee ultimately authorized at the conclusion of the meeting, the minutes showed. The July rate hike brought the target range for the Fed’s benchmark rate to 5.25% to 5.5%, the highest level in 22 years. That marked a resumption of increases after officials left rates unchanged at the previous gathering for the first time since they began tightening in early 2022.

Strong US retail sales underscore economy's resilience

U.S. retail sales increased more than expected in July as Americans boosted online purchases and dined out more, suggesting the economy continued to expand early in the third quarter and keeping a recession at bay. The report from the Commerce Department on Tuesday also showed consumers splurging on hobbies, sporting goods and clothing, underscoring their resilience despite the Federal Reserve's aggressive interest rate hikes to tame inflation. Demand is being underpinned by strong wage gains from a tight labor market. Though consumer spending continues to show signs of persistent strength, economists did not expect the Fed to raise rates next month, with inflation retreating.

China central bank unexpectedly cuts rates to support sputtering economy

China's central bank unexpectedly cut key policy rates for the second time in three months on Tuesday, in a fresh sign that the authorities are ramping up monetary easing efforts to boost a sputtering economic recovery. The People's Bank of China (PBOC) said it lowered the rate on 401 billion yuan ($55.25 billion) worth of one-year medium-term lending facility (MLF) loans to some financial institutions by 15 basis points to 2.50% from 2.65% previously. Analysts said the move opened the door to a potential cut in China's lending benchmark loan prime rate (LPR) next week.

SG

Singapore's July visitor arrivals grow to 1.4 million on strong return of Chinese travelers

Singapore's international visitor arrivals climbed to 1.42 million in July, driven by a stronger return of Chinese travelers, which more than doubled from June. July's reading was up from the 1.13 million recorded in the previous month, according to the latest data from the Singapore Tourism Board (STB) on Wednesday (Aug 16). It is also slightly less than double the 726,739 visitors recorded in the corresponding month in 2022.

Singapore key exports contract 20.2% in July in steepest slide since January

Singapore's non-oil domestic exports (NODX) slid 20.2 per cent on the year in July, a sharper fall than June's 15.6 per cent contraction, data from Enterprise Singapore (EnterpriseSG) showed on Thursday (Aug 17).

Marking the 10th straight month of decline, the month's key exports loss surpassed the median 14.3 per cent drop forecast by economists in a Bloomberg poll. Both electronics and non-electronics exports continued to decline on a year-on-year basis. The month also observed the steepest drop since January 2023, when it had fallen 25 per cent.

On a seasonally adjusted monthly basis, NODX dropped 3.4 per cent in July, reversing from the preceding month's 5.2 per cent growth. Both electronic and non-electronic shipments declined month on month.

Smart Money Flow

US

REIT exposure at 'Lehman levels' as global sentiment surges in August

Manager exposure to REITs is now at “Lehman levels” despite sentiment improving considerably in August, the Bank of America Global Fund Manager survey revealed. Cash levels in portfolios have plunged to a 21-month low, falling from 5.3% to 4.8% in a month, as the survey reported its least bearish views since February 2022.

SG

New private home sales surge in July with 4 major launches, but sentiment may be turning

Developers' sales of new private residential units were robust in July with several big launches on the market. But unexpectedly weak sales at new projects last weekend, combined with slower take-up at launches in the months before, point to sentiment turning as demand pulls back.

A slowdown could put pressure on the 10 or so projects lined up for the rest of the year. Another 2,600 to 3,600 new private homes are slated to be marketed, on top of the roughly 6,000 units already launched from January to July.

Lam Chern Woon, head of research and consulting at Edmund Tie, said: "Price pressures have palpably weakened amid the intensified competition. The deluge of launches in July has led to cautious pricing not just among the newly launched projects, but also across projects which were previously launched."

SGX FX Futures notional volume in July rises 60.49% m-o-m to US$241.1 billion

Top Corporate News

US

More and More Companies Are Talking About GLP-1 Weight Loss Drugs on Earnings Calls.

Mentions of weight loss drugs like Ozempic, Wegovy and Mounjaro are soaring, with Bloomberg data showing references to “GLP-1” in earnings call transcripts this quarter having more than doubled since the same period a year ago.

Walmart raises full-year earnings forecast as grocery, online growth fuel higher sales

Walmart’s net income for the fiscal second-quarter jumped by 53% to $7.89 billion, or $2.92 per share, compared with $5.15 billion, or $1.88 per share a year earlier.

Walmart said it now expects full fiscal-year consolidated net sales to increase by about 4% to 4.5%. It said adjusted earnings per share for the year will range between $6.36 and $6.46. That compares with its prior guidance for consolidated net sales gains of 3.5% and an adjusted earnings per share range of between $6.10 and $6.20.

Warren Buffett Dumps $3 Billion in Activision, Buys Into Home Construction Firms

Berkshire Hathaway sold off about $3 billion in Activision Blizzard Inc. stock last quarter, representing more than two-thirds of its holdings as of just three months ago, as Warren Buffett's company also shook up its home construction, energy, materials, and healthcare holdings. The firm sold off more than two-thirds of its position, or about $3 billion in shares, in Activision Blizzard, and entered new positions in three firms, all of which specialize in home construction. The largest of these was a $726-million new investment in D.R. Horton.

Target sees profit boost on fewer discounts, Pride backlash hurts sales

Target cut its full-year sales and profit expectations even as its quarterly profit exceeded Wall Street estimates on Wednesday, benefiting from fewer discounts and better stocked store shelves. The retailer's second-quarter sales, however, dropped 5%, partly due to the fallout of a backlash against its Pride merchandise in May. For the second half of the year, Target executives said, the company was taking a "cautious approach" even though consumer confidence was beginning to recover. Target now expects annual comparable sales to decline in the mid-single digit range compared to its prior forecast of low-single digit decline to a low-single digit increase.

SG

SIA, Scoot fly 3 million passengers in July, but cargo loads weaken

Singapore Airlines (SIA) and its budget carrier Scoot served about three million passengers in the month of July, 45.1 per cent higher than in the year before, as passenger traffic remained strong across all route regions amid the peak summer travel season in the northern hemisphere.

Group passenger load factor, however, dipped slightly from 90.6 per cent in June to 89.4 per cent for July – though the 89.4 per cent is still 2.4 percentage points higher year on year, according to SIA’s operating results released on Tuesday (Aug 15).

Singapore Airlines recorded a passenger load factor (PLF) of 89 per cent; Scoot had a PLF of 92.7 per cent in July. The figures were slightly lower than June’s, when PLFs were 89.7 per cent and 93.6 per cent for SIA and Scoot respectively.

SGX H2 profit up 23% to S$286.3 million, considers higher dividends amid revenue growth plans

The Singapore Exchange (SGX)'s net profit for the second half ended Jun 30 was up 23.1 per cent to S$286.3 million from S$232.7 million in the corresponding period the year before, the bourse said on Thursday (Aug 17).

Operating revenue for the group increased 7.9 per cent year on year to S$623 million from S$577.4 million.

The revenue growth was mainly due to contributions from currencies and commodities, which rose 35 per cent to S$179.8 million from S$133.2 million in the second half.

Shopee’s shift to growth shows fear over TikTok Shop’s rise

Sea's latest quarterly showing, while profitable, missed analysts' estimates on revenue. Its e-commerce arm Shopee also reported its slowest growth in years.

But that was not the reason why investors sold down Sea shares, which fell 29 per cent, losing US$16.32 to US$40.58 on Tuesday's market close.

In a shift in strategy, chief executive officer Forrest Li said the group would be investing in growing its e-commerce business, and "such investments will have impact on our bottom line and may result in losses". In an earnings call, Indonesia was mentioned as a key market for growth in e-commerce.

CapitaLand Ascendas REIT completes acquisition of fifth data centre in the UK for $199.9 mil

CapitaLand Ascendas REIT (CLAR) has completed the acquisition of its fifth data centre in the UK for GBP119.4 million ($199.9 million). The data centre was acquired from an unrelated global data centre operator.

The data centre is a two-storey, high-specification Tier III colocation data centre facility that is located in Watford in North-West London. It has a total land area of 25,000 sqm (269,097.76 sq ft) with a total lettable area of 8,412 sqm. Its occupancy rate as at June 30, is at 80% and it has a weighted average lease expiry (WALE) of 3.3 years by gross revenue. The data centre has five tenants as at June 30. Its remaining land lease tenure is at 85 years.

Upcoming Economic Data

This presentation is for informational and educational use only and is not a recommendation or endorsement of any particular investment or investment strategy. Investment information provided in this content is general in nature, strictly for illustrative purposes, and may not be appropriate for all investors. It is provided without respect to individual investors’ financial sophistication, financial situation, investment objectives, investing time horizon, or risk tolerance. You should consider the appropriateness of this information having regard to your relevant personal circumstances before making any investment decisions. Past investment performance does not indicate or guarantee future success. Returns will vary, and all investments carry risks, including loss of principal.

Moomoo is a financial information and trading app offered by Moomoo Technologies Inc.

In the U.S., investment products and services available through the moomoo app are offered by Moomoo Financial Inc., a broker-dealer registered with the U.S. Securities and Exchange Commission (SEC) and a member of Financial Industry Regulatory Authority (FINRA)/Securities Investor Protection Corporation (SIPC).

In Singapore, investment products and services available through the moomoo app are offered through Moomoo Financial Singapore Pte. Ltd. is regulated by the Monetary Authority of Singapore (MAS). Moomoo Financial Singapore Pte. Ltd. is a Capital Markets Services Licence (License No. CMS101000) holder with the Exempt Financial Adviser Status. This advertisement has not been reviewed by the Monetary Authority of Singapore.

In Australia, financial products and services available through the moomoo app are provided by Futu Securities (Australia) Ltd, an Australian Financial Services Licensee (AFSL No. 224663) regulated by the Australian Securities and Investment Commission (ASIC). Please read and understand our Financial Services Guide, Terms and Conditions, Privacy Policy and other disclosure documents which are available on our websites https://www.futuau.com and https://www.moomoo.com/au. Moomoo Technologies Inc., Moomoo Financial Inc., Moomoo Financial Singapore Pte. Ltd. and Futu Securities (Australia) Ltd are affiliated companies.

Disclaimer: This content is for informational and educational purposes only and does not constitute a recommendation or endorsement of any specific investment or investment strategy. Read more
    Write a comment