https://www.reuters.com/article/us-usa-treasury-securities/china-holdings-of-us-treasuries-in-april-skid-to-nearly-two-year-low-idUSKCN1TI2RA
China had sold US treasuries again. Why?
We've stated the rationale behind the selling in our previous posts.
http://sg-stock.blogspot.com/2019/05/china-has-started-to-sell-us-treasuries_18.html
The US treasuries sold off was not a retaliation against the US but to defend the RMB. This is the reason the RMB is unable to breach the $7 mark.
What are the repercussions for selling the US treasuries?
China will have to convert the USD abroad into RMB and remit it back to China. This will cause an influx of RMB in China and increase the money supply. As idling money will depreciate in value over time, the China central bank will make good use of the excess money by reducing the bank's required reserve ratio to stimulate its local consumption.
http://sg-stock.blogspot.com/2019/05/how-china-rrr-cut-will-impact-its.html
Thereafter, the excess money will flow into the stock markets, property markets, etc and boost inflation. Consequently, inflation will help to reduce the debt burdens in China.
Why is inflation able to reduce the debt pressure?
Inflation works in the same way as compound interest. It creates asset appreciation and causes wealth accumulation much faster than debt because debt is not subjected to the same effect. Therefore, inflation is able to reduce the debt pressure in China.
However, China cannot afford to sell all its US treasuries because overwhelming inflation will create an overheating economy and China has to manage the burgeoning inflation well or else it will have a bigger problem to resolve in the future. Fortunately, the worldwide economic situation has created an ideal environment in China for inflation to rear its head. Why?
The ECB has just stated its willingness to implement a QE policy with an interest rate cut recently.
https://www.economist.com/finance-and-economics/2019/06/18/donald-trump-takes-aim-at-mario-draghi-over-interest-rates
Furthermore, the US is also keen to reduce its own interest rates. Financially speaking, the money will usually flow to a higher interest rate country (China) from a lower interest rate country (EU,US). Thus, China doesn't need to do anything but to wait for the capital inflows from the EU and US when they reduce their interest rates. In conclusion, China just needs to sell enough US treasuries to maintain a stable RMB and the expected capital inflows will work its wonders in China.
Thursday, June 20, 2019
Wednesday, June 19, 2019
Sembcorp Industries - Stock calls
Date | Analyst | Company | Last | Target | Call | Valuation |
01/10/19 | DIR | Sembcorp Industries | 2.64 | 3.05 | Outperform | Sum of parts, cut from $3.26 |
01/15/19 | UOB Kay Hian | Sembcorp Industries | 2.63 | 3.2 | Buy | Sum of parts |
01/23/19 | CIMB | Sembcorp Industries | 2.69 | 3.49 | Add | |
02/01/19 | UOB Kay Hian | Sembcorp Industries | 2.59 | 3.2 | Buy | |
02/04/19 | DBS Vickers | Sembcorp Industries | 2.58 | 3.7 | Buy | |
02/21/19 | Lim & Tan | Sembcorp Industries | 2.66 | 0 | Hold | |
02/25/19 | DBS Vickers | Sembcorp Industries | 2.67 | 3.9 | Buy | RNAV (10% discount), PB1x |
03/13/19 | UOB Kay Hian | Sembcorp Industries | 2.57 | 2.8 | Hold | Sum of parts, Buy @ $2.35 |
03/18/19 | Lim & Tan | Sembcorp Industries | 2.52 | 0 | Hold | |
04/09/19 | DBS Vickers | Sembcorp Industries | 2.75 | 3.9 | Buy | |
05/16/19 | OCBC | Sembcorp Industries | 2.54 | 3.13 | Buy | Sum of parts |
05/16/19 | DBS Vickers | Sembcorp Industries | 2.54 | 3.9 | Buy | Sum of parts, PB1x |
05/16/19 | CIMB | Sembcorp Industries | 2.54 | 3.41 | Add | Sum of parts |
05/17/19 | phillip | Sembcorp Industries | 2.55 | 3.75 | Buy | Sum of parts |
06/04/19 | OCBC | Sembcorp Industries | 2.38 | 3.03 | Buy | Sum of parts |
SATS - Stock calls
Date | Analyst | Company | Last | Target | Call | Valuation | Remark |
01/04/19 | UOB Kay Hian | SATS | 4.59 | 5.6 | Buy | ||
01/11/19 | OCBC | SATS | 4.94 | 5.23 | Hold | DCF | |
02/08/19 | UOB Kay Hian | SATS | 4.8 | 5.6 | Buy | ||
02/14/19 | phillip | SATS | 4.98 | 5.47 | Accumulate | DCF, PER24.6x FY19 | |
02/14/19 | OCBC | SATS | 4.98 | 5.23 | Hold | ||
02/14/19 | CIMB | SATS | 4.98 | 5.46 | Add | PER20.3x | |
02/14/19 | Lim & Tan | SATS | 4.98 | 0 | Hold | ||
02/14/19 | DBS Vickers | SATS | 4.98 | 5.59 | Buy | DCF & PER22x FY19 | |
02/14/19 | Kim Eng | SATS | 4.98 | 5.8 | Buy | ||
02/15/19 | Citi Research | SATS | 5.08 | 6 | Buy | ||
03/26/19 | UOB Kay Hian | SATS | 5.06 | 5.6 | Buy | ||
04/15/19 | Kim Eng | SATS | 5.31 | 5.8 | Buy | ||
05/13/19 | UOB Kay Hian | SATS | 5.27 | 5.6 | Buy | ||
05/17/19 | OCBC | SATS | 5.22 | 5.35 | Hold | ||
05/21/19 | phillip | SATS | 5.08 | 5.47 | Accumulate | DCF, PER24x FY19 | |
05/21/19 | UOB Kay Hian | SATS | 5.08 | 5.05 | Hold | Buy @ 4.60 | |
05/21/19 | DBS Vickers | SATS | 5.08 | 5.44 | Buy | DCF & PER22x FY20 | |
06/03/19 | UOB Kay Hian | SATS | 5.07 | 5.05 | Hold | Buy @ $4.70 | |
06/06/19 | DBS Vickers | SATS | 5.04 | 5.44 | Buy | ||
06/12/19 | Kim Eng | SATS | 5.04 | 6.1 | Buy | DCF | |
06/17/19 | CIMB | SATS | 5.14 | 5.4 | Add | PER21.9x CY20 |
Sasseur - Stock calls
Date | Analyst | Company | Last | Target | Call | Valuation | Remark |
02/20/19 | Kim Eng | Sasseur | 0.74 | 0.9 | Buy | DDM | |
02/20/19 | DBS Vickers | Sasseur | 0.74 | 0.97 | Buy | DCF | |
04/03/19 | CIMB | Sasseur | 0.78 | 0.92 | Add |
Stock calls for 19 June 2019
Date | Analyst | Company | Last | Target | Call | Valuation |
06/19/19 | Phillip | A-Reit | 2.98 | 2.88 | Neutral | |
06/19/19 | Phillip | ART | 1.31 | 1.36 | Buy | |
06/19/19 | phillip | Cache Logistics | 0.79 | 0.75 | Neutral | |
06/19/19 | Phillip | CapitaCommercial | 2.11 | 1.93 | Neutral | |
06/19/19 | Phillip | Capitamall Trust | 2.57 | 2.21 | Neutral | |
06/19/19 | Phillip | CapitaRetail China | 1.55 | 1.66 | Accumulate | |
06/19/19 | phillip | Dasin Retail | 0.88 | 0.94 | Accumulate | |
06/19/19 | OCBC | DBS | 24.8 | 29.18 | Buy | Buy @ $27.50 or lower |
06/19/19 | phillip | EC World Reit | 0.775 | 0.87 | Buy | |
06/19/19 | OCBC | ESR-Reit | 0.53 | 0.56 | Buy | |
06/19/19 | Phillip | Frasers Centrepoint Trust | 2.61 | 2.36 | Neutral | |
06/19/19 | Phillip | Keppel DC Reit | 1.64 | 1.59 | Accumulate | |
06/19/19 | Phillip | Mapletree Industrial | 2.17 | 2.03 | Neutral | |
06/19/19 | UOB Kay Hian | SIA | 9.17 | 9.5 | Hold | Buy @ $8.60 |
President Trump is the man behind wall street.
Just a tweet from President Trump that he and President Xi would have an extended talk at G20 sent the stock markets rallying.
If the trade talk falls out between the US & China at G20, the stock markets will fall hard and fast too. How do we determine the progress?
If Trump is going to insist on his previous terms, the trade talk will fall out.
If Trump is going to discuss the Hong Kong extradition bill and protest with Xi, the trade talk will fall out.
If Trump is going to threaten Xi with additional tariffs, the trade talk will fall out too.
We just need to observe the discussing issues between Xi and Trump to predict the outcome of the trade talk.
If the trade talk falls out between the US & China at G20, the stock markets will fall hard and fast too. How do we determine the progress?
If Trump is going to insist on his previous terms, the trade talk will fall out.
If Trump is going to discuss the Hong Kong extradition bill and protest with Xi, the trade talk will fall out.
If Trump is going to threaten Xi with additional tariffs, the trade talk will fall out too.
We just need to observe the discussing issues between Xi and Trump to predict the outcome of the trade talk.
Tuesday, June 18, 2019
Sanli Env - Stock calls
Date | Analyst | Company | Last | Target | Call | Valuation |
05/06/19 | Tayrona | Sanli Env | 0.18 | 0.234 | Overweight |
Roxy-Pacific - Stock calls
Date | Analyst | Company | Last | Target | Call | Valuation |
01/17/19 | DBS Vickers | Roxy-Pacific | 0.405 | 0.39 | Hold | |
02/25/19 | OCBC | Roxy-Pacific | 0.415 | 0.41 | Hold | |
04/17/19 | OCBC | Roxy-Pacific | 0.4 | 0.41 | Hold | |
05/09/19 | OCBC | Roxy-Pacific | 0.405 | 0.41 | Hold | |
05/10/19 | DBS Vickers | Roxy-Pacific | 0.405 | 0.39 | Hold | RNAV (55% discount) |
Riverstone - Stock calls
Date | Analyst | Company | Last | Target | Call | Valuation |
02/27/19 | CIMB | Riverstone | 1.1 | 1.22 | Add | PER16.7x FY20 |
02/27/19 | DBS Vickers | Riverstone | 1.1 | 1.19 | Hold | PER16x FY19 |
05/14/19 | CIMB | Riverstone | 0.995 | 1.22 | Add | PER16.5x FY20 |
05/16/19 | DBS Vickers | Riverstone | 0.975 | 1.03 | Hold | PER16.8x FY19/20 |
Stock calls for 18 June 2019
Date | Analyst | Company | Last | Target | Call | Valuation |
06/18/19 | UOB Kay Hian | ARA Hospitality | 0.87 | 1.15 | Buy | |
06/18/19 | Macquarie | Capitaland | 3.42 | 4.1 | Outperform | RNAV (25% discount) |
06/18/19 | DMG & Partners | Comfortdelgro | 2.58 | 2.65 | Neutral | DCF & FCF |
06/18/19 | CIMB | ESR-Reit | 0.565 | 0.6 | Add | DDM |
06/18/19 | UOB Kay Hian | HMI | 0.635 | 0.73 | Buy | DCF |
The US is trying to nullify China patents now to win the trade war.
https://finance.yahoo.com/news/senator-rubio-targets-huawei-over-215937943.html
This will definitely open up a new battle frontier and it is bad for businesses.
If the US nullify China patents, China will retaliate by nullifying the US patents too. When these 2 countries don't recognize each other's patents, the whole world will be in chaos because nobody is protected with patents anymore.
It is best not to open the pandora's box because the repercussion is too severe.
This will definitely open up a new battle frontier and it is bad for businesses.
If the US nullify China patents, China will retaliate by nullifying the US patents too. When these 2 countries don't recognize each other's patents, the whole world will be in chaos because nobody is protected with patents anymore.
It is best not to open the pandora's box because the repercussion is too severe.
Monday, June 17, 2019
Raffles Medical - Stock calls
Date | Analyst | Company | Last | Target | Call | Valuation |
01/23/19 | phillip | Raffles Medical | 1.11 | 1.16 | Accumulate | |
02/20/19 | UOB Kay Hian | Raffles Medical | 1.12 | 1.3 | Buy | DCF |
02/26/19 | DMG & Partners | Raffles Medical | 1.12 | 1.02 | Neutral | DCF |
02/26/19 | OCBC | Raffles Medical | 1.12 | 1.25 | Buy | |
02/26/19 | DBS Vickers | Raffles Medical | 1.12 | 1.12 | Hold | Sum of parts, PER27x FY18/19 |
02/26/19 | phillip | Raffles Medical | 1.12 | 1.09 | Neutral | DCF |
04/30/19 | DMG & Partners | Raffles Medical | 1.07 | 1.02 | Neutral | |
05/02/19 | phillip | Raffles Medical | 1.08 | 1.09 | Neutral | DCF |
05/02/19 | DBS Vickers | Raffles Medical | 1.08 | 1.12 | Hold | Sum of parts |
05/14/19 | Kim Eng | Raffles Medical | 1.02 | 1.13 | Hold | DCF |
06/12/19 | CIMB | Raffles Medical | 1.02 | 1.1 | Hold |
Q & M - Stock calls
Date | Analyst | Company | Last | Target | Call | Valuation |
01/23/19 | phillip | Q & M | 0.495 | 0.513 | Neutral |
Propnex - Stock calls
Date | Analyst | Company | Last | Target | Call | Valuation |
02/27/19 | UOB Kay Hian | Propnex | 0.565 | 0.66 | Buy | |
04/01/19 | UOB Kay Hian | Propnex | 0.595 | 0.66 | Buy | |
05/16/19 | UOB Kay Hian | Propnex | 0.505 | 0.6 | Buy | DCF, PER10x FY19 |
06/03/19 | phillip | Propnex | 0.5 | 0.63 | Buy | DCF |
06/07/19 | CIMB | Propnex | 0.49 | 0.64 | Add |
Stock calls for 17 June 2019
Date | Analyst | Company | Last | Target | Call | Valuation |
06/17/19 | DMG & Partners | Cache Logistics | 0.77 | 0.83 | Buy | DDM |
06/17/19 | Kim Eng | DBS | 24.81 | 29.46 | Buy | |
06/17/19 | DBS Vickers | Keppel KBS | 0.75 | 0.9 | Buy | DCF |
06/17/19 | DBS Vickers | Manulife US Reit | 0.87 | 1 | Buy | DDM |
06/17/19 | Lim & Tan | Memtech | 1.33 | 1.35 | Accept offer | offer $1.35 |
06/17/19 | Kim Eng | OCBC | 10.78 | 11.07 | Hold | |
06/17/19 | CIMB | SATS | 5.14 | 5.4 | Add | PER21.9x CY20 |
06/17/19 | OCBC | Starhill | 0.755 | 0.8 | Buy | |
06/17/19 | Kim Eng | UOB | 24.99 | 28.97 | Buy |
The semiconductor is facing a collapse. - Part 4
https://sg.finance.yahoo.com/news/more-trouble-micron-china-unveils-160000815.html
We had stated previously that the semiconductor was facing a permanent slowdown outside China in 2018.
This prediction is materializing very fast because China feels the urgency to ramp up its semiconductor developments now. Many foreign semiconductor manufacturers will lose their China market shares in the future.
Singapore Nodx fell 15.9% in May 2019.
Year on year changes (YOY):
May 2019: -15.9%
April 2019: -10%
March 2019: -11.7%
February 2019: 4.9%
January 2019: -10.1%
December 2018: -8.5%
November 2018: -2.6%
October 2018: 8.3%
September 2018: 8.3%
August 2018: 5%
July 2018: 11.8% (Corrected)
June 2018: 1.1%
May 2018: 15.5%
April 2018: 11.8%
March 2018: -2.7%
February 2018: -5.9%
January 2018: 13%
December 2017: 3.1%
November 2017: 9.1%
October 2017: 20.9%
September 2017: -1.1%
August 2017: 16.7%
July 2017: 8.5%
June 2017: 8.2%
May 2017: -1.2%
Apr 2017: -0.7%
Mar 2017: 16.5%
Feb 2017: 21.1%
Jan 2017: 8.6%
May 2017: -1.2%
Apr 2017: -0.7%
Mar 2017: 16.5%
Feb 2017: 21.1%
Jan 2017: 8.6%
Saturday, June 15, 2019
Baltic dry index - 1062
Today, Thursday, June 13 2019, the Baltic Dry Index decreased by 18 points, reaching 1062 points.
Baltic Dry Index is compiled by the London-based Baltic Exchange and covers prices for transported cargo such as coal, grain and iron ore. The index is based on a daily survey of agents all over the world. Baltic Dry hit a temporary peak on May 20, 2008, when the index hit 11,793. The lowest level ever reached was on Wednesday the 10th of February 2016, when the index dropped to 290 points.
========================
Related stock: Sembcorp Marine, Cosco & Pan ocean.
Friday, June 14, 2019
Perennial Reit - Stock calls
Date | Analyst | Company | Last | Target | Call | Valuation |
02/14/19 | DBS Vickers | Perennial Reit | 0.645 | 0.83 | Buy | RNAV (55% discount) |
04/24/19 | DBS Vickers | Perennial Reit | 0.65 | 0.83 | Buy | RNAV (55% discount) |
05/13/19 | DBS Vickers | Perennial Reit | 0.64 | 0.83 | Buy | RNAV (55% discount) |
Penguin - Stock calls
Date | Analyst | Company | Last | Target | Call | Valuation |
04/26/19 | phillip | Penguin | 0.45 | 0.61 | Buy | PER5x FY19 (ex-cash) |
05/21/19 | phillip | Penguin | 0.44 | 0.61 | Buy | PER5x FY19 (ex-cash) |
05/27/19 | CIMB | Penguin | 0.445 | 0.72 | Add | PB1x FY19 |
Parkway Life - Stock calls
Date | Analyst | Company | Last | Target | Call | Valuation |
01/30/19 | DBS Vickers | Parkway Life | 2.8 | 3.1 | Buy | |
03/18/19 | UOB Kay Hian | Parkway Life | 2.88 | 3.25 | Buy | DDM |
04/01/19 | UOB Kay Hian | Parkway Life | 2.92 | 3.25 | Buy | DDM |
05/02/19 | UOB Kay Hian | Parkway Life | 2.89 | 3.25 | Buy |
Stock calls for 14 June 2019
Date | Analyst | Company | Last | Target | Call | Valuation |
06/14/19 | OCBC | CapitaRetail China | 1.5 | 1.38 | Hold | |
06/14/19 | Kim Eng | Sheng Siong | 1.09 | 0.95 | Sell | DCF |
06/14/19 | CIMB | Singtel | 3.35 | 3.5 | Add | Sum of parts |
06/14/19 | UOB Kay Hian | Tianjin Zhongxin | 0.885 | 1.7 | Buy |
The true picture of US economy.
We will use the economic process to analyze the US GDP situation.
In economic terminology, the process is depicted as follow:
CPI/PPI ----->> M1-M2 spread/3m-10y yield spread ----->> PMI ----->> GDP
CPI: Stagnant ( This showed that there is no overwhelming demand to support the US economy and the inventory rundown must continue to allow CPI to increase. Thus, there is a supply issue in the US which means that weak economic growth is expected in the future.)
As the US uses interest rates to manage inflation, we will use the 3m-10y yield spread to gauge the situation. This is not applicable to Singapore because we use the currency exchange rate to manage our inflation.
3-month Libor vs US 10-year yield spread:
The 10-year yield is below the 3-month Libor now which depicts a death cross occurrence (negative signal for technical analysis). Fundamentally speaking, this means there is a shortage of money supply which will curb business investments with the ensuing outcome of slower economic growth.
The US PMI has declined in May 2019.
The decline in May inventories under the PMI corroborated the aforesaid CPI situation whereby the continual inventories rundown must persist for CPI to rise since there is no overwhelming demand to deplete the inventories. Without the rundown, the CPI cannot rise to kickstart the change in the economic process.
With the weaknesses in CPI, 3m-10y yield spread and PMI, the next US GDP figure will be weak!
Thursday, June 13, 2019
Pacific Century - Stock calls
Date | Analyst | Company | Last | Target | Call | Valuation |
03/04/19 | Lim & Tan | Pacific Century | 0.385 | 0 | Buy |
PACC Offshore - Stock calls
Date | Analyst | Company | Last | Target | Call | Valuation |
02/26/19 | DBS Vickers | PACC Offshore | 0.183 | 0.2 | Hold | PB0.8x FY19 |
05/14/19 | DBS Vickers | PACC Offshore | 0.173 | 0.2 | Hold | PB0.8x FY19 |
Oxley - Stock calls
Date | Analyst | Company | Last | Target | Call | Valuation |
05/02/19 | DBS Vickers | Oxley | 0.325 | 0.68 | Buy | |
06/13/19 | DMG & Partners | Oxley | 0.31 | 0.41 | Buy | RNAV (45% discount) |
Stock calls for 13 June 2019
Date | Analyst | Company | Last | Target | Call | Valuation |
06/13/19 | UOB Kay Hian | CapitaCommercial | 2.05 | 2.16 | Buy | |
06/13/19 | UOB Kay Hian | DBS | 24.7 | 30.5 | Buy | |
06/13/19 | UOB Kay Hian | Fu Yu | 0.2 | 0.29 | Buy | |
06/13/19 | CIMB | HRnetGroup | 0.72 | 1.01 | Add | |
06/13/19 | UOB Kay Hian | Koufu | 0.675 | 0.95 | Buy | |
06/13/19 | UOB Kay Hian | OCBC | 10.8 | 14.62 | Buy | |
06/13/19 | DMG & Partners | Oxley | 0.31 | 0.41 | Buy | RNAV (45% discount) |
06/13/19 | UOB Kay Hian | Singtel | 3.32 | 3.58 | Buy | DCF |
06/13/19 | Kim Eng | Singtel | 3.32 | 3.48 | Hold | Sum of parts |
06/13/19 | OCBC | ST Engineering | 4.09 | 4.38 | Buy | |
06/13/19 | UOB Kay Hian | ST Engineering | 4.09 | 4.7 | Buy | |
06/13/19 | UOB Kay Hian | Wilmar | 3.41 | 3.9 | Buy |
Huawei is evoking its patent rights now. Yeah!
https://sg.finance.yahoo.com/news/huawei-asks-verizon-pay-over-160423853.html
We've stated before that many companies would be infringing Huawei's patents if they want to build 5G technology. Huawei is evoking its patent rights now in the face of the US-China trade war.
http://sg-stock.blogspot.com/2019/03/huawei-won-fight-in-europe-against-us.html
We've stated before that many companies would be infringing Huawei's patents if they want to build 5G technology. Huawei is evoking its patent rights now in the face of the US-China trade war.
http://sg-stock.blogspot.com/2019/03/huawei-won-fight-in-europe-against-us.html
Wednesday, June 12, 2019
Oxley - Stock calls
Date | Analyst | Company | Last | Target | Call | Valuation |
05/02/19 | DBS Vickers | Oxley | 0.325 | 0.68 | Buy |
Overseas Education - Stock calls
Date | Analyst | Company | Last | Target | Call | Valuation |
04/23/19 | UOB Kay Hian | Overseas Edu | 0.33 | 0.46 | Buy | EV/Ebitda10.4x |
05/08/19 | UOB Kay Hian | Overseas Edu | 0.3 | 0.46 | Buy | EV/Ebitda10.4x |
05/08/19 | Lim & Tan | Overseas Edu | 0.3 | 0.48 | Buy | DDM & DCF |
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