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Sunday, February 28, 2021

Hot news! China has just rolled out a single dose vaccine!

https://www.globaltimes.cn/page/202102/1216709.shtml

This is definitely great news as China's single-dose vaccine can be further strengthened with a booster to prolong the immunity period to 2 years.

This longer immunity period is very important as it can facilitate travelling and people don't have to take annual vaccinations for overseas trips.

Friday, February 26, 2021

The US 7-year treasury bond sale was a flop!


TREASURY $62B 7-YEAR NOTE AUCTION RESULTS: 
DRAWS 1.195%
BID-TO-COVER: 2.04 Vs 2.30 PRIOR
Overseas Buyer: 38.06% Vs 64.10% PRIOR

We had already expressed our concern about the US treasury bond sales previously because the US had lost China and the EU as its buyers.


This latest bond sale shows that foreigners are no longer interested to purchase US bonds.

The US is facing rising rates pressure in 2021. - Part 2

The US 10-year yield has breached 1.5% in Feb 2021 and is above the level in last Feb.

We did warn about the rising rates pressure last week.


For those who don't understand the bond structure, the bond price and yield have an inverse relationship because of the bond calculation method.

Bond Yield: 1.5% (The 10-year yield has been trending up.)

Bond price: $133.98 (The 10-year bond price has been trending down.)

In another perspective, the rises in bond yields can be viewed as an indication of impending inflation.  We had been projecting the 2021 US inflation in October 2020.

Some prominent economists are corroborating our projection now.

https://sg.finance.yahoo.com/news/bank-englands-haldane-warns-inflation-120928077.html


https://sg.finance.yahoo.com/news/rates-may-rise-sooner-tame-124318828.html


Moreover, some commodities' prices have also been trending up, particularly the copper prices since copper is a ubiquitous industrial metal.  Thus, this will provide the oomph to a rise in the producer price index.




The spikes in bond yields had just caused some significant falls in the US stock markets recently.  Therefore, we need to watch out for the movements in bond yields and inflation.  A good indication of such a movement will be the 10-year breakeven inflation rate.



* 10-year breakeven inflation rate = (10-year nominal Treasury yield) - (10-year TIPS yield)


As we can see from the aforementioned chart, the 10-year breakeven inflation rate has been on an upward trend since 2020.  This shows the market expectation of future CPI inflation.

Top Glove - Stock calls

Date

Analyst

Company

Last

Target

Call

Valuation

03/20/20

Kim Eng

Top Glove

1.9

2.08

Buy

Ringgit target $6.32, PER30x CY21

03/20/20

UOB Kay Hian

Top Glove

1.9

1.99

Hold

Ringgit target $6.05, Buy @ $5.50

03/20/20

CIMB

Top Glove

1.9

2.24

Add

Ringgit target $6.80

03/27/20

DBS Vickers

Top Glove

2.02

1.99

Hold

Ringgit target $6.05

05/14/20

CIMB

Top Glove

3.08

3.41

Add

Ringgit target $10.40, PER32x CY21

05/14/20

Kim Eng

Top Glove

3.08

3.59

Buy

Ringgit target $10.95, PER30x CY21

05/27/20

CIMB

Top Glove

4.42

5.37

Add

Ringgit target $15.50, PER36.8x CY21

05/27/20

UOB Kay Hian

Top Glove

4.42

6.05

Buy

Ringgit target $17.50

05/29/20

Kim Eng

Top Glove

4.62

6.52

Buy

Ringgit target $20, PER23x CY21

06/10/20

Kim Eng

Top Glove

5.7

6.52

Buy

Ringgit target $20, PER23x CY21

06/10/20

CIMB

Top Glove

5.7

8.14

Add

Ringgit target $25, PER22x CY21

06/12/20

Kim Eng

Top Glove

5.56

7.13

Buy

Ringgit target $21.9, PER23x CY21

06/12/20

UOB Kay Hian

Top Glove

5.56

7.13

Buy

Ringgit target $25.69

07/07/20

Aminvestment

Top Glove

6.5

8.37

Buy


07/21/20

UOB Kay Hian

Top Glove

8.15

7.14

Buy

Ringgit target $21.90

07/22/20

Kim Eng

Top Glove

8.24

9.32

Buy

Ringgit target $28.60, PER16x

07/29/20

UOB Kay Hian

Top Glove

8.65

11.97

Buy

PER16x FY21, Ringgit target $36.90

09/14/20

Kim Eng

Top Glove

2.58

3.14

Buy

Ringgit Target $9.53 (ex-2 for 1 bonus), PER9x FY21

09/18/20

CIMB

Top Glove

2.63

3.29

Add

Ringgit target $10, PER17x CY22

09/18/20

UOB Kay Hian

Top Glove

2.63

4.05

Buy

Ringgit target $12.30

10/07/20

UOB Kay Hian

Top Glove

2.83

4.03

Buy

Ringgit target $12.30

10/07/20

CIMB

Top Glove

2.83

3.28

Add

Ringgit target $10, PER17x CY22

10/09/20

Kim Eng

Top Glove

2.87

3.13

Buy

Ringgit Target $9.53 (ex-2 for 1 bonus), PER9x CY21

11/06/20

UOB Kay Hian

Top Glove

2.73

4.01

Buy

Ringgit target $12.30

12/10/20

Kim Eng

Top Glove

2.27

2.85

Buy

DCF, Ringgit target $8.65

12/10/20

UOB Kay Hian

Top Glove

2.27

4.05

Buy

Ringgit target $12.30

12/15/20

CIMB

Top Glove

2.19

2.93

Add

PER16x CY22, Ringgit target $8.90

01/11/21

CIMB

Top Glove

2.11

2.93

Add

PER16x CY22

01/13/21

Aminvestment

Top Glove

2.18

2.13

Hold

Ringgit target $6.50

Tiong Woon - Stock calls

Date

Analyst

Company

Last

Target

Call

Valuation

07/09/20

Lim & Tan

Tiong Woon

0.375

0

Accumulate


10/28/20

Lim & Tan

Tiong Woon

0.4

0

Neutral


Tianjin Zhongxin - Stock calls

Date

Analyst

Company

Last

Target

Call

Valuation

04/20/20

Lim & Tan

Tianjin Zhongxin

0.67

0

Accumulate


04/21/20

UOB Kay Hian

Tianjin Zhongxin

0.715

1.35

Buy

PER10.5x FY20

08/19/20

UOB Kay Hian

Tianjin Zhongxin

0.87

1.25

Buy

PER9.9x FY20