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“Hot” On The Plate
US Macro – US markets were weaker on Friday due to a weak jobs report, although major US indexes closed up for the week.
US debt ceiling deal reached. The US avoided the risk of a default this month, after the US senate approved to temporarily increase the federal government’s debt ciling of $28.4T, putting off the decision till 3 December for a longer term remedy. The bill will now be passed on to the House of Representatives, which needs to approve it before President Joe Biden can sign it into law.
Weak US jobs report. Following a weak jobs report in August, the US reported another month of disappointing jobs report in September of just 194,000 (lowest since Dec 2020) vs estimates of 500,000. Nonetheless, unemployment dipped to 4.8% in September as number of unemployed people fell by 710,000 to 7.7 million.
Week Ahead
US earnings season. US corporate earnings season for 4Q is expected to start kicking in from next week with major banks such as JPMorgan (Wed), Morgan Stanley, Wells Fargos and Bank of America on Thursday, and Goldman Sachs on Friday. (More on what to expect from banks earnings – here)
Supply chain problems have negatively affected companies during this COVID-19 period, with 71% of S&P500 companies citing negative impact from the supply chain on their 3Q earnings calls, according to Factset. Other factors include labour costs and impact of COVID
Source: Factset
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
The end of 3Q – Last week marked the end of the 3Q which was an uneventful quarter for the market after a strong start to the year. In the US, major indexes were mostly flat, with only S&P 500 up just 0.2% for the quarter. Nasdaq and Dow jones were down 0.4% and 1.9% respectively. Locally, Singapore’s STI was down 1.4% while Hong Kong’s HSI index was down 14.8% during the quarter to close negative for the year. This follows the regulatory tech crackdown in China which weighed heavily on the tech stocks such as Tencent, Alibaba and Meituan.
The cryptocurrency market rebounds over the last week with Bitcoin, the largest cryptocurrency by market cap, having its largest daily increase since July. The bullish movement may be attributable to comments from the US Fed Chair Powell which cited that the central bank had “no intention” to ban cryptocurrencies. The cryptocurrencies market had previously been under pressure after China increases its regulatory crackdown on the market. Among the biggest winners in alt coins include Luna and Solana.
(Source: Quantifycrypto)
Luna which is the utility and governance token for the terra’s crypto network which is used to support Terra’s stablecoins and payment processing systems, and has hit a new all time high (despite many other cryptocurrencies still struggling to regain their lost grounds). (More on it here) Luna is now the 11th largest cryptocurrency at the time of writing.
Week Ahead
Start of 4Q- This is seasonally a stronger quarter for the markets. According to CFRA, the S&P 500 has averaged gains of 3.9% in 4Q and up out 4 out of every 5 years since World War II. (3Q was the worst quarter, so glad that we are over). However, before we get to the stronger months of the quarter, October has tended to be one of the most volatile months for markets
US Jobs Report – The upcoming US jobs report may set the directions for the market which is due to be released on Friday. Economists are expecting 475,000 jobs to be created in September. In August, 235,000 jobs were created which was 500,000 less than expected. The upcoming report will see if the miss in August jobs report was just a temporary blip or a start of a new trend, as investors also try to estimate the timeline of the tapering by the US Fed. The Fed is widely expected to announce a tapering in November. The 10 year US treasury yield has also risen from 1.31% to as high as 1.56%.
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
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
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?
SGX
•Phillip Capital; Maintain Neutral with lower TP S$10.78. The House maintained Neutral on the stock, reducing its FY22F earnings by 6.1% as the House factor in lower volumes for FTSE China A50 contracts, following HKEX’s move to launch MSCI China A50 Connect Index in Oct this year. FTSE China A50 Index Futures has the largest turnover of equity index futures for SGX, accounting for 57% of its total equity index futures, and contribute to 10% of overall revenue in FY21.
Golden Energy & Resources
•KGI;Initiate at Outperform with TP S$0.64: The House likes Golden Energy with its roots as one of Indonesia’s largest coal miner, and having branch out into precious metals over the past 4 years. The House sees the company growing its production by 30% over the next 3 years and have a DCF based TP of S$0.64.
Keppel Pacific Oak US REIT
UOBKayhian; Initiate at BUY with TP US$1.10 The House initated the Company at BUY with TP US$1.10, as it sees the company benefitting from in-migration to Texas and Washington where there is no state level personal income tax. Keppel Pacific Oak US REIT offers an attractive yield of 8.6% for FY21.
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?
Propnex
•Phillip Capital; Downgrade to Accumulate. The House downgraded the stock to Accumulate with TP S$2.08. The House lift its FY21F PATMI estimates by 53% but believes the recent rally has priced in most of the positives. The downgrade follows UOBKH who also downgraded the company to HOLD with TP S$2.09 a week ago. Click here
Sasseur REIT
•KGI; Downgrade to Neutral: The House downgraded the REIT to neutral even as it raise its TP to S$0.97 as they believe the year to date price appreciation has priced in the recovery from the COVID-19 lows. The House also turns more cautious of China’s economic growth in 2H with the regulatory-induced slowdown and spread of Delta Strain.
Straits Trading
UOBKayhian; Non-rated The House highlighted Straits Trading’s diverse investment portfolio that span across asset class and geographies with a good track record of recycling capital. Recent sale of its ARA stake will also see an increase in its NAV and underscore Straits Trading’s ability to recycle capital. The House notes that Straits Trading is trading at just 0.5x P/NAV post completion of its sale of ARA stake.
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?
Civmec
•KGI; Initiate Outperform with TP S$0.86. The House thinks that Civmec has both short and long term drivers. Short term drivers include favourable industry dynamics driven by China’s appetite for iron ore. The likelihood of increased contract wins as Australian government ramps up defence and infrastucture spending also bodes well for the Group in the long term. The House has a TP of S$0.86 based on 12x FY2022F P/E
Propnex
•UOBKH; Downgrade to HOLD with TP S$2.09: The House downgraded Propnex to HOLD but with a higher TP of S$2.09. Propnex reported a very strong 1H21 profit of +115% yoy to S$34.4m. However, the House is worried that 2021 could be the peak for the company’s earnings given the strong transaction volumes seen in 1H21, and new and potentially lucrative en bloc team now in place. In the short term, the house think share price will be continued to be prop up on newsflow on transaction volume and enblocs. However, the house believe that, the strength will be difficult to sustain going into 4Q21 and 2022.
Singtel
Maybank; Maintain BUY with higher TP S$2.83 1QFY22 net profit (+31% yoy) of S$451m was broadly in line with estimate, driven by broad-based growth across all business segments. The House is starting to see green shoots emerge despite a challenging operating environment driven by (1) Turnaround in Bharti’s profit (2) increase in ARPU from 5G plans and (3) return of roaming revenues with gradual reopening of travel borders.
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.
About GEM COMM
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.
See more on our factsheet.