Top Reads this Week (6 Dec)

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Rounding up top reads from around the web, including articles shared by fellow investors in the Financial Horse Facebook Group.


Moderna seeking HSA approval for use of its Covid-19 vaccine in Singapore (Straits Times)

American biotechnology company Moderna has asked the authorities in Singapore to approve the use of its Covid-19 vaccine here. If all goes well, the first batch of vaccines could arrive as early as this month. Moderna chief executive Stephane Bancel told The Straits Times on Tuesday night (Dec 1) that the company is in talks with the Health Sciences Authority (HSA) in Singapore.


Singapore to have 4 digital banks, with Grab-Singtel and Sea getting digital full bank licences (Straits Times)

The Monetary Authority of Singapore (MAS) said on Friday (Dec 4) it will award digital full bank licences to the Grab-Singtel consortium and tech giant Sea, in a first for the city-state and a highly anticipated move that aims to liberalise the financial industry. Like traditional banks, these players will provide retail customers with services such as opening accounts, deposits as well as issuing debit and credit cards. However, digital banks will not have a physical presence and all banking services will be done online.

Singapore’s central bank will also grant digital wholesale bank licences to Ant Group as well as a consortium comprising Greenland Financial Holdings, Linklogis Hong Kong and Beijing Co-operative Equity Investment Fund Management. The four successful applicants beat 10 other contenders, such as Razer Youth Bank; and a consortium led by Osim founder Ron Sim’s V3 Group and EZ-Link.


Biden pledges help ‘on the way’ for US economy (CNA)

Even with good news on possible vaccines, economists warn they may not come soon enough to prevent further damage as an initial sharp recovery loses steam. “I know times are tough, but I want you to know that help is on the way,” Biden said at the event to introduce the “tested and experienced” team led by former Fed chief Janet Yellen, his pick for Treasury secretary. He called on Congress to rapidly approve a “robust” new relief package, but said anything accomplished by the lame-duck legislature will not be enough.


Xiaomi halts Hong Kong trading after record stock placement (Business Times)

China’s No 2 smartphone maker Xiaomi has suspended trading of its Hong Kong shares after completing the city’s largest top-up placement on record. Xiaomi said in a Hong Kong exchange filing that trading would be halted Wednesday, without giving a reason.

While the company has yet to disclose its stock sale, deal terms obtained by Bloomberg News showed it sold one billion shares in a top-up placement at HK$23.70 each, the bottom of a range, to raise US$3.1 billion. That represents a 9.4 per cent discount to its last closing price of HK$26.15.


Hong Kong and China stocks slip after Xiaomi’s US$4 billion fundraising dents sentiment (SCMP)

Placements, or additional fundraising, by large cap stocks Xiaomi  and BYD affected market sentiment on Wednesday, adding pressure to the Hong Kong and China markets, said Kenny Wen, wealth management strategist at Everbright Sun Hung Kai. “Companies with high capital expenditure issue extra shares, especially when stock prices are at relatively high levels. The news will be negative for stock prices, at least in the short term. This will be one of the investment risks for short-term traders [to watch for],” he added.
 
Chinese electric carmaker BYD also announced in an overnight filing that it had submitted an application to the China Securities Regulatory Commission for the issuance of additional shares on the Hong Kong bourse. Its shares plunged 7.9 per cent, their biggest drop in three weeks. Other technology stocks dropped as well. Chinese food delivery company Meituan-Dianping fell 3.9 per cent, while JD.com declined 2.9 per cent.
The existing shares of WuXi Biologics, which is researching coronavirus drugs, fell 4.6 per cent, while new shares that emerged after a stock split last month slipped 1.5 per cent.
 
The shares of HSBC, Asia’s and Europe’s largest bank, bucked the trend, gaining 3.7 per cent to HK$42.50. The bank has gained by more than half in the past two months, as positive news about several Covid-19 vaccines has rekindled an appetite for old economy stocks that are likely to pick up once the pandemic recedes.

Singapore firms, households and banks need to stay vigilant amid uncertain outlook: MAS (CNA)

Singapore’s companies, households and banks have to stay vigilant and prudent given an uncertain outlook for the economy, said the Monetary Authority of Singapore (MAS) on Tuesday (Dec 1). While the system has been resilient amid the COVID-19 crisis so far, a protracted economic recovery bears the risk of financial stresses, the central bank cautioned in its annual financial stability review. The COVID-19 pandemic has dealt a heavy blow to the Singapore economy, which is expected to see its worst recession in history this year with a 6 to 6.5 per cent contraction.

The Ministry of Trade and Industry said last week that it expects a rebound in 2021, with growth of 4 to 6 per cent.


As debt defaults rise, China’s government bonds might be a safer bet for investors (CNBC)

  • Global investors should go for central, local government bonds, as well as quasi-sovereign financial bonds, Bo Zhuang, chief China economist at TS Lombard, told CNBC.
  • S&P Global Ratings said the next type of Chinese state-owned businesses that could come under greater pressure will be the so-called local government financing vehicles (LGFVs).
  • The note of caution comes as analysts issue warnings that China could see more bond defaults ahead.

House Passes China Stocks Delisting Bill; Threat Grows For Alibaba, JD.com, Nio (Investor’s Business Daily)

President Donald Trump, who has no desire to make nice with China in his final weeks, is expected to sign the Holding Foreign Companies Accountable Act, which cleared the Senate in May. China stocks have been under a cloud since Monday. Those allegations come at an especially sensitive time, as the U.S. decides how firm of a stand to take on Chinese accounting transparency. 

Under the Holding Foreign Companies Accountable bill, China stocks would face delisting within three years, unless their auditors come under supervision of the Public Company Accounting Oversight Board. Yet Beijing has made it illegal for Chinese auditors to submit to such scrutiny from an overseas regulator, seeing it as an impingement of national sovereignty. China’s hard line would seem to doom the U.S. listings of China stocks with a combined value of more than $2 trillion.


Warren Buffett’s favorite market indicator nears record high, signaling stocks are overvalued and a crash may be coming (Markets Insider)

  • Warren Buffett’s preferred market indicator is approaching a record high, suggesting stocks are overpriced and could tumble soon.
  • The “Buffett indicator” compares the total value of the stock market to quarterly GDP, gauging whether it’s overvalued or undervalued relative to the size of the economy.
  • The ratio climbed past 180% on Tuesday, not far off its peak of 187% in the second quarter, when GDP was 8% lower.
  • Buffett praised the gauge as “probably the best single measure of where valuations stand” and called it a “very strong warning signal” of a market crash.

Big Tech’s stock market reign may finally be about to end (CNN)

All you needed to do for the past few years to enjoy solid gains in the stock market was buy an S&P 500 or Nasdaq 100 index fund. That provided exposure to market darlings like the FAANG quintet of Facebook (FB), Amazon (AMZN), Apple (AAPL), Netflix (NFLX) and Google owner Alphabet (GOOGL) as well as Microsoft (MSFT).

After years of growth stocks outperforming the market, some strategists and fund managers think it could be time for value sectors like banks, health care, energy, retail and others that have been laggards to emerge as new market leaders. “We’re coming out of a multi-year period of extraordinary outperformance from big cap techs. Value stocks have been so inexpensive,” said Eric Kuby, chief investment officer with North Star Investment Management.
“A major rotation is going to take place. When valuations are so out of whack, there has to be a reversion,” Kuby added.

First day of SingapoRediscovers voucher redemption draws mixed response, some unable to get tickets for attractions (CNA)

The Singapore Tourism Board (STB) announced in September that every Singaporean aged 18 and above in 2020 will receive S$100 in vouchers in a bid to bolster the local tourism industry that has been battered by the COVID-19 pandemic.


Singapore residents willing to spend more on staycations, food delivery: Survey (Straits Times)

Singapore residents are willing to spend more on staycations and go for them more frequently, according to a survey conducted by the Singapore Management University’s (SMU) Institute of Service Excellence. Sixty-three per cent of the 450 participants surveyed said they would maintain or increase the frequency of staycations while 71 per cent said they would spend the same amount or more. This comes in spite of the concerns some of them had about the cost as well as how some hotels are used as coronavirus quarantine facilities.


New pact allows Singapore’s researchers to use world’s fastest supercomputer (Straits Times)

The world’s fastest supercomputer Fugaku, developed by Fujitsu, is available for use by Singapore researchers under an agreement between Singapore’s National Supercomputing Centre (NSCC) and two Japanese entities: Riken Centre for Computational Science and Research Organisation for Information Science and Technology (Rist).


UOB to set up electronic FX pricing and trade engine in Singapore (Business Times)

UOB on Monday said it will set up an electronic foreign exchange (FX) pricing and trading engine in Singapore, acting as the hub to service the bank’s client franchise. Lim Cheng Khai, executive director of the financial markets development department at MAS: “UOB’s establishment of its FX pricing and matching engine in Singapore, alongside the strong pool of global FX liquidity providers here, marks another important milestone in Singapore’s role as the global FX price discovery and liquidity centre in the Asian time zone.


Single platform to view all bank accounts, investments (New Paper)

Singaporeans with more than one bank account will soon be able to view all their funds and investments in one place online instead of having to visit each bank or its website. They can consent to share their consolidated personal financial data across seven banks and three agencies: the Central Provident Fund (CPF) Board, Housing Board and Inland Revenue Authority of Singapore. The Straits Times understands that the Singapore Financial Data Exchange (SGFinDex), an online platform that takes reference from “open banking” in Europe, will be announced soon.


Grab & Gojek could merge soon (Mothership)

Bloomberg reported on Dec. 2 that ride-hailing platforms Grab and Gojek have made “substantial progress” in working out a merger deal, which is looking to be the “biggest internet merger in Southeast Asia”. Bloomberg‘s sources said Grab and Gojek are ultimately hoping to merge with the aim of becoming a publicly-listed company. When Mothership contacted Grab for comment on the matter, a spokesperson said: “we dont comment on market speculations, so no comment on this”.


As a member of the Senate’s cybersecurity subcommittee, David Perdue has raised alarms that hackers from overseas pose a threat to U.S. computer networks. Citing a frightening report by a California-based company called FireEye, Mr. Perdue was among the senators who asked this spring that the National Guard prepare to protect against such data breaches.

Not only was the issue important to Mr. Perdue, so was FireEye, a federal contractor that provides malware detection and threat-intelligence services. Beginning in 2016, the senator bought and sold FireEye stock 61 times, at one point owning as much as $250,000 worth of shares in the company.


Fed sees more signs of activity slowing as optimism wanes (Straits Times)

The Fed’s “beige book” survey of economic conditions said four of 12 regions saw little or no growth, while four others saw activity begin to dip last month. While firms in most districts still have positive outlooks, “optimism has waned” amid “concerns over the recent pandemic wave, mandated restrictions (recent and prospective), and the looming expiration dates for unemployment benefits and for moratoriums on evictions and foreclosures,” the report said.


Australia Economy Set for Rapid Recovery After Exiting Recession (Bloomberg)

Australia’s recovery is poised to accelerate as cashed up households — joined by Victorians released from Covid-19 lockdown — fuel a spending boom, after the economy exited its first recession in three decades. Gross domestic product advanced 3.3% in the three months through September, exceeding estimates, as consumption surged by the most in the 60-year history of the report, the Australian Bureau of Statistics said in Sydney Wednesday. The rebound came after the economy contracted 7% in the second quarter.


U.S. tops ‘unfathomable’ milestone of 100,000 Covid hospitalizations: ‘We’re all on edge’ (CNBC)

  • More than 100,000 people are currently in hospitals across the U.S. sick with Covid-19, as the pandemic pushes doctors, nurses and other health workers to their limits.
  • Dr. Janis Orlowski, chief health care officer at the Association of American Medical Colleges, said she doesn’t recall any disease sickening so many Americans all at once ever before.
  • “We’re running out of beds, and we’re also going to run out of staff,” said Dr. Megan Ranney, an emergency physician and director of the Brown-Lifespan Center for Digital Health.

DBS outlines 12 trade ideas for 2021 (CNBC)

The DBS report listed six trading themes for rates:

  • Steepening of the U.S. Treasury yield curve, with interest rate on the 10-year tenor likely to hit 1.3% in the latter part of 2021 — up from current levels of around 0.9%.
  • Betting on Singapore-dollar rates outperforming those of the U.S. dollar.
  • Expecting Indonesian government bonds to strengthen in value as they are now relatively cheap; DBS analysts see 6.5% as a “decent entry point” in the near term for the 10-year bond.
  • Flattening in the Indian government bond curve, with the difference in rates between the three-month and five-year segments inching toward 150 basis points by the end of 2021.
  • Favoring Chinese government bonds that may rebound in the near term as it feeds off the yuan’s strength, with a preference for the five- and seven-year tenors.
  • Widening 10-year yield spreads between Korean treasury bond and Thai government bond to as much as 70-80 basis points given potential elevated bond supply in South Korea.

The U.S. dollar has become “less over-valued,” which means it may depreciate more gradually in 2021, according to DBS. The bank has three ideas on how to trade currencies next year:

  • Expecting a basket of high-yielding Asian currencies — the Indonesian rupiah, Philippine peso and Indian rupee — to strengthen against the greenback.
  • Seeing value in the Philippine peso against the Swiss francs and Japanese yen. This strategy has generated stable spot returns of up to 2% and still appears provide “value,” the analysts said.
  • Predicting the British pound might weaken against the New Zealand dollar given the differing fundamentals between the two economies.

 


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