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“Hot” On The Plate
The US debt ceiling has popped up on the discussion table, as the US Congress look to reach a deal to raise the federal borrowing limit before the government runs out of money by mid-October. In 2011, S&P reduced the credit rating of the US from triple A to double A, when the Congress came close to not extending the ceiling, which resulted in an increase in treasury borrowing costs of about $1.3b in the fiscal year. While the US House has passed a measure to keep the government funded till Dec and suspended its borrowing limit through 2022, the bill still need to be passed in the Senate. More on the US debt ceiling explained here: https://www.wsj.com/articles/us-debt-ceiling-explained-11632429692
The cryptocurrency market suffered another blow last week, after China tightened its stance again on cryptocurrencies. The central bank of China had deemed all cryptocurrency related activities as illegal. While China’s strong stance on the cryptocurrency has dampened the short term sentiments for the cryptocurrency market, the cryptocurrency market also has its fair share of supporters. If you are buying on the dip, here is something to consider. According to JP Morgan, big investors have begun pivoting out of bitcoin futures into Ethereum amid a “strong divergence in demand”. Read more here: https://www.forbes.com/sites/billybambrough/2021/09/26/jpmorgan-warns-big-investors-are-suddenly-dumping-bitcoin-for-ethereum-amid-a-150-billion-crypto-price-crash/?sh=2bc36744213f
Week Ahead
Looking ahead, this will be the end of 3Q which could be a volatile week, as investors closed out their books for the quarter. US Fed Chair and Treasury Secretary Janet Yellen will be speaking to Congress as investors also look to see if the US lawmakers will be able to pass a funding plan in time to avert a government shutdown.
China Evergrande’s debt problem will continue to hog the headlines. The Chinese government had over the last few days injected more cash into the financial system to boost liquidity and calm short term nerves. However, investors continue to be nervous after China Evergrande stayed silent on the interest payments on its US dollar bond which was due on last Thursday and due to mature in March 2022. While no payment has been made on last Thursday, China Evergrande will not technically default unless it fails to make payment within 30 days. For the rest of the year, Evergrande has interest payments due each month in October, November and December.
About GEM COMM
We are an International Investor Relations firm (IR) based in Singapore. We specialise in Investor Relations, Public Relations, marketing, branding and messaging strategies for clients that include organisations of all sizes across Asia, Oceania and US.
GEM COMM advice and solves stakeholders’ issues, drive growth, reposition your business, improve your marketing and Public Relations (PR) or engage with investment community in your leadership or strategy story. We have a track record of helping clients reach these goals. We create and implement PR & media content, mitigate crisis and issues, establish and improve thought leadership & content marketing.
GEM COMM Engagement types include:
– IR/PR retainer program
– Crisis and issues projects;
– Content marketing (from research to lead generation) inclusive of Press Release drafting, Media Pitch, Website content, etc.
“Hot” On The Plate
US stocks pulled back from record highs. This is the second consecutive weekly drop for US markets amid the seasonally weaker month for markets, as investors take profit after a good run for US stocks year to date. With data backing up to 1928, September has been the worst months for US markets with the average return for S&P 500 recording a loss of 0.99%.
Debt headache of China Evergrande. On the international front, China property stocks have been hammered on rising concerns of a default by the world’s most indebted property developer- China Evergrande. Evergrande’s stock is now down 90% from its 2020 high, as investors worry of a default by the developer, dragging our property developers along with it.
A default by China Evergrande has sparked concerns over the entire property sector, with concerns that it may also lead to a broader credit market meltdown. (Click here to read more on what went wrong at China’s Evergrande)
Week Ahead
Coming Thursday (23 Sep), will see the interest payments on 2 China Evergrande notes due, with investors pricing in a high likelihood of a default (one of notes trading at less than 30% of face value). This will be a critical test of whether China Evergrande can stay afloat. Evergrande was also scheduled to pay interest on bank loans on Monday – however according to sources familiar with the matter, Chinese authorities have already told major lenders not to expect repayment as Evergrande and banks work to discuss the possibility of extensions and rolling over some loans.
Focus will also be turned on the US Fed Meeting which will be followed by a press briefing by Fed Chairman Powell on Wednesday (22 Sep). Most economists are now expecting a November Taper, while eying for clues on what the Fed will do in the latest meeting announcement.
About GEM COMM
We are an International Investor Relations firm (IR) based in Singapore. We specialise in Investor Relations, Public Relations, marketing, branding and messaging strategies for clients that include organisations of all sizes across Asia, Oceania and US.
GEM COMM advice and solves stakeholders’ issues, drive growth, reposition your business, improve your marketing and Public Relations (PR) or engage with investment community in your leadership or strategy story. We have a track record of helping clients reach these goals. We create and implement PR & media content, mitigate crisis and issues, establish and improve thought leadership & content marketing.
GEM COMM Engagement types include:
– IR/PR retainer program
– Crisis and issues projects;
– Content marketing (from research to lead generation) inclusive of Press Release drafting, Media Pitch, Website content, etc.
“Hot” On The Plate
More alarm bells sounded on US stock market on valuation and growth concerns
US markets have been on a tear this year, with major US stock indexes up more than 10% YTD, and about doubled from the COVID-19 trough in March 2020. The fast run up had made this bull market the fastest bull market according to an analysis by CNBC (just 354 trading days vs on average of 1,000 trading days). While investors had attributed the rise to the easy money policy, with central banks flooding the market with unprecedented stimulus, the rise has still draw concerns by strategists in recent days amidst (i) Valuations at historical extremes (ii) Concerns of a slowing economic growth and (iii) Anticipation of a stimulus taper by the US FED
Valuations at historical extremes
Concerns of a slowing economy
According to the US latest Beige Book, the Fed noted a “deceleration in economic activity largely attributable to a pullback in dining out, travel and tourism in most districts, reflecting safety concerns due to rise of the Delta variant“. Concerns of US slowing growth were also voiced out by economists who lowered their economic growth forecasts for 3Q to 5% (from 6.8%) and 4Q estimate to 5.3% (from 5.6%) based on median forecasts from Bloomberg’s monthly survey.
Apple falls on unfavorable court ruling for its app store
Pulling down the index is also Apple which was down more than 3% on Friday after a US court ruling in Epic Games’ antitrust lawsuit which would not allow Apple to force developers to use in-app purchases. (i.e. Apple can no longer prohibit developers from including links that drive users away from Apple’s store, where the company takes 15% to 30% of gross sales.) Apple forms about 11% of the overall Dow Index. OVer the last few weeks, Apple and Alphabet’s Google has been under pressure over their control over app stores, with analysts believing the US Congress may seek to force the app stores to open up their payment mechanisms as well as allow for other competing app stores.
Week Ahead
12 Sep: On the crypto front, the 3rd largest cryptocurrency, Cardano, is targeted to roll out its alonzo upgrade, which will allow the crypto network to run a range of crypto applications from smart contracts to NFTs. (According to Cardano’s founder Charles Hoskinson, its equivalent to what Javascript brought to web browser- from static boring webpages to Facebook, Google and Youtube!)
14 Sep: On the economic data front, US will be reporting its inflation data on Tuesday, which will be closely watch, given it is a key metric/data point affecting US Fed’s decision of when to taper. Currently, the market is expecting US Fed to formerly announce its tapering of its bond-buying program in Nov/Dec 2021, after US reported a much weaker jobs report in August (just 235,000 jobs created, 500,000 less than expected)
About GEM COMM
We are an International Investor Relations firm (IR) based in Singapore. We specialise in Investor Relations, Public Relations, marketing, branding and messaging strategies for clients that include organisations of all sizes across Asia, Oceania and US.
GEM COMM advice and solves stakeholders’ issues, drive growth, reposition your business, improve your marketing and Public Relations (PR) or engage with investment community in your leadership or strategy story. We have a track record of helping clients reach these goals. We create and implement PR & media content, mitigate crisis and issues, establish and improve thought leadership & content marketing.
GEM COMM Engagement types include:
– IR/PR retainer program
– Crisis and issues projects;
– Content marketing (from research to lead generation) inclusive of Press Release drafting, Media Pitch, Website content, etc.
“Hot” On The Plate
US stocks ended mixed on Friday after US August Jobs Report disappointed with just 235,000 jobs created, well below estimates of 720,000. More on the US jobs report here
This was the smallest monthly addition since January, as US president Joe Biden blamed the delta variant and unvaccinated people for the weaker jobs number. According to the US centers for disease control and prevention, less than 64% of the US adults are fully vaccinated.
The weaker jobs report helped the tech heavy Nasdaq outperform the DOW in recent days, as investors weigh if a slowdown in US hiring may result in the US Fed reconsider their time line for the tapering of stimulus.
Locally, Singapore announced that it will be rolling out the booster shots for COVID-19 vaccine. More than 84% of Singapore’s population have received their first dose.
Week Ahead
US markets are closed on Monday for Labor Day. Following the weak August Jobs Report, attention will be turned to the Jobs opening and jobless claims in the US on Wednesday and Thursday respectively. Notable earnings ahead include Coupa, Lululemon and Gamestop.
Our Favorite Read Over The Weekend
So as we scan for articles over the weekend for analyst reports, favourite blogs and websites, we will be highlighting our favorite read over the weekend, so that we can all learn together 🙂
Whether you are a fan anot, cryptocurrency has started to pop in the radar of investors (big or small). While some of us invest in it, many of us are probably still not exactly sure how it works and why when we “stake it”, we can get such a high interest rates especially for the alternate coins like Solana, Matic etc.
So here is our favourite read over the weekend: Crypto banking and decentralized finance explained
Another useful link to see which are the largest cryptocurrencies now by market cap – Coinmarketcap.
The largest cryptocurrency by market cap is Bitcoin which currently stands at about US$933b (as of writing). And when we compared it to the largest companies in the world by market cap, it is 7th (behind likes of Apple, Microsoft and Facebook). Too High or Too Low? Only time will tell. Have a great week ahead!
Source: coinmarketcap
About GEM COMM
We are an International Investor Relations firm (IR) based in Singapore. We specialise in Investor Relations, Public Relations, marketing, branding and messaging strategies for clients that include organisations of all sizes across Asia, Oceania and US.
GEM COMM advice and solves stakeholders’ issues, drive growth, reposition your business, improve your marketing and Public Relations (PR) or engage with investment community in your leadership or strategy story. We have a track record of helping clients reach these goals. We create and implement PR & media content, mitigate crisis and issues, establish and improve thought leadership & content marketing.
GEM COMM Engagement types include:
– IR/PR retainer program
– Crisis and issues projects;
– Content marketing (from research to lead generation) inclusive of Press Release drafting, Media Pitch, Website content, etc.
What happened in markets this week, and what are analysts talking about?
SBS Transit
•DBS; Initiate with HOLD with TP S$3.44. The House initiated SBS Transit with a HOLD with TP of S$3.44 representing SBS’s 10 year average PB of 1.74x. Total average daily rail ridership across SBS train lines was 1.22m in FY19 vs FY20’s 709,000, a 42% decline. The house believes average daily riderships will take some time to recover
Food Empire
•UOBKH; Maintain BUY with TP S$1.30: 1HFY2021 net profit has come below estimates forming just 37% of the House’s full year estimate, as margins come under pressure from high commodity prices and ocean freight rates. However the house believes earnings will improve as price increases and normalisation of costs. All markets continue to show sales growth with double digit growth in the 2 largest markets reflecting Food Empire’s strong brand power.
Sunpower Group
KGI; Maintain Outperform with TP S$1.22. The House continues to like the company as sees most of new capacity to come onstream by end 2021/early 2022, that will contribute to the Group next year