SGX - Stock calls

Date	Analyst	Company	Last	Target	Call	Valuation
01/06/21	phillip	SGX	9.7	9.45	Accumulate
01/25/21	phillip	SGX	10.09	11.01	Accumulate	PER23x
01/25/21	Kim Eng	SGX	10.09	11.48	Buy	DCF & PER29x
01/25/21	DBS Vickers	SGX	10.09	10.2	Hold
01/25/21	CIMB	SGX	10.09	11.61	Add
01/25/21	DMG & Partners	SGX	10.09	11.6	Buy
01/25/21	Jefferies	SGX	10.09	10.5	Hold
01/25/21	Citi Research	SGX	10.09	9.2	Sell
03/12/21	CIMB	SGX	10.05	11.61	Add	PER25x FY22
04/13/21	Jefferies	SGX	9.96	11.3	Buy
04/14/21	Macquarie	SGX	10.16	11.5	Outperform	DDM
04/19/21	DMG & Partners	SGX	10.35	11.6	Buy
04/27/21	UOB Kay Hian	SGX	10.58	12.35	Buy	PER28x FY22
05/11/21	CIMB	SGX	10.26	11.61	Add
05/11/21	Citi Research	SGX	10.26	9.5	Sell
06/07/21	UOB Kay Hian	SGX	10.37	12.35	Buy
06/14/21	CIMB	SGX	10.55	11.61	Add	PER25x FY22
06/16/21	phillip	SGX	10.98	11.25	Accumulate	PER23x
06/23/21	DMG & Partners	SGX	11.02	12.3	Buy
07/07/21	Macquarie	SGX	11.18	11.76	Outperform	DCF
07/13/21	UOB Kay Hian	SGX	11.22	12.35	Buy
07/13/21	Citi Research	SGX	11.22	10	Sell
07/26/21	phillip	SGX	11.8	11.95	Neutral	PER25x FY21
07/26/21	CIMB	SGX	11.8	11.61	Add
07/27/21	Macquarie	SGX	11.9	13.35	Outperform	DDM, PER26x FY23
08/05/21	Lim & Tan	SGX	12.05	0	Hold
08/06/21	Kim Eng	SGX	11.33	11.48	Hold
08/06/21	UOB Kay Hian	SGX	11.33	11.65	Hold
08/06/21	DMG & Partners	SGX	11.33	11.1	Neutral
08/06/21	OCBC	SGX	11.33	11.3	Sell
08/10/21	Jefferies	SGX	11.33	11.2	Hold
08/11/21	Macquarie	SGX	11.04	12.8	Outperform	DDM
08/13/21	phillip	SGX	10.9	11.54	Neutral	PER25x FY22
08/24/21	phillip	SGX	10.29	10.78	Neutral	PER25x FY22
08/24/21	OCBC	SGX	10.29	10.2	Hold
08/24/21	Jefferies	SGX	10.29	10	Hold
08/31/21	UOB Kay Hian	SGX	10.09	11.65	Hold	DDM, PER30x FY22
09/03/21	Lim & Tan	SGX	10.08	0	Hold
09/08/21	CIMB	SGX	10.23	10.7	Hold
09/13/21	DMG & Partners	SGX	10.23	11.1	Neutral	PER25x FY22
09/14/21	Macquarie	SGX	10.03	12.8	Outperform
09/28/21	Lim & Tan	SGX	10.1	10.8	Accumulate
09/28/21	Kim Eng	SGX	10.1	12.27	Hold
11/02/21	Citi Research	SGX	9.82	9	Sell
11/02/21	UOB Kay Hian	SGX	9.82	11.65	Hold
11/02/21	DBS Vickers	SGX	9.82	10.2	Hold
11/25/21	Macquarie	SGX	9.29	12.8	Outperform	DDM
11/25/21	UOB Kay Hian	SGX	9.29	9.41	Hold	PER23.8x FY22
12/10/21	CIMB	SGX	9.45	10.4	Add	PER25x FY22
12/10/21	DMG & Partners	SGX	9.45	10.3	Neutral	PER23x FY22
12/17/21	Macquarie	SGX	9.35	12.8	Outperform	DDM
12/29/21	Lim & Tan	SGX	9.38	10.11	Accumulate
01/06/22	Jefferies	SGX	9.49	10.8	Buy
01/14/22	DBS Vickers	SGX	9.65	10.2	Hold	DDM
01/18/22	UOB Kay Hian	SGX	9.63	9.74	Hold	PER23.8x FY22
01/20/22	DMG & Partners	SGX	9.57	9.8	Neutral	PER23x FY22
02/07/22	CIMB	SGX	9.4	10.4	Add
02/07/22	Kim Eng	SGX	9.4	11.2	Buy
02/07/22	Citi Research	SGX	9.4	10.5	Buy
02/07/22	Jefferies	SGX	9.4	10.8	Buy
02/07/22	Lim & Tan	SGX	9.4	10	Accumulate
02/08/22	UOB Kay Hian	SGX	9.86	9.09	Hold
02/08/22	OCBC	SGX	9.86	10.4	Buy
02/14/22	phillip	SGX	9.75	10.78	Neutral	PER25x FY22
03/22/22	CIMB	SGX	9.8	10.4	Add
03/29/22	DMG & Partners	SGX	9.79	10	Neutral
03/30/22	UOB Kay Hian	SGX	9.82	9.33	Hold	PER23.7x FY22

Stock calls for 2 May 2022

Date	Analyst	Company	Last	Target	Call	Valuation
05/02/22	Kim Eng	DBS	33.92	41.22	Buy
05/02/22	DBS Vickers	Mapletree Logistics	1.79	2.05	Buy
05/02/22	Kim Eng	Mapletree Logistics	1.79	2.25	Buy
05/02/22	Kim Eng	OCBC	12.39	14.04	Buy
05/02/22	Kim Eng	UOB	29.99	34.62	Buy

Is the US FED going to hike its Fed rate by 50bp in May 2022?

The US FED had indicated that it would hike its fed rate by 50bp in May 2022 and the Fedwatch tool also projected the same rate hike.

Let's verify the forecast by analyzing the 3 Fed rates.

IORB: 0.4% vs 0.15% in March

Although the IORB (0.4%) is still within the current fed rate range of 0.25-0.5%, it has jumped by more than 2x in May compared to the last fed meeting.

EFFR: 0.33% vs 0.08% in March

Although the EFFR (0.33%) is still within the current fed rate range of 0.25-0.5%, it has jumped by more than 2x in May compared to the last fed meeting.

On RRP: 0.3% vs 0.05% in March (Fed is paying.)

On RP: No transaction at 0.5% vs 0.25% in March. (Fed is receiving.)

EFFR: 0.33%

IORB: 0.4%

When the EFFR (0.33%) is lesser than IORB (0.4%), it means that the US is still under the monetary easing condition.  The high cash of US$1.9T deposited with the US FED also shows that there is excess liquidity and the banks have nowhere to invest in other profitable investments.  Thus, we do not see any stress in the US financial system and the US FED will hike at least 50bp in May 2022 as stated because the Fed rates have increased by more than 2x since the last meeting.

Furthermore, the US Fed may also announce the timing of its asset sale because its deposit has crossed US$1.9T in a single day.

Will the US be heading for a soft or hard landing?

We believe that the US will be heading for a hard landing based on historical facts.  Why?

In order to control inflation (CPI), the fed funds effective rate must be above CPI so that the CPI can be controlled.  The current conundrum is the fed funds effective rate is way below the CPI and this means the inflation cannot be controlled by the low fed rate.

When the US inflation was around 15% in 1980, the fed rate was pushed up above 15% (above 19% at its peak) to control the inflation.

How high should the fed rate be when the US inflation was at 8.5%?

According to the calculation below, the fed rate must be above 10% to control the 8.5% inflation.

However, the FED is only projected to increase its fed rate to 2.5% by the end of 2022.

With the inclusion of the monthly sale ($95B) of the Fed assets in 2022, the fed rate is estimated to be around 3% by the end of the year and that is still below the core PCE price deflator (5.2%).

PCE: 6.6%

Core PCE: 5.2% (FED's preferred inflation indicator)

Therefore, there is a high probability that the US will be heading for a hard landing because the fed refuses to hike its rate high enough to contain the US inflation due to the upcoming mid-term presidential election in November 2022.

The chart below shows that the US economy has contracted by 1.4% and personal consumption has stagnated (below the median).  The US economy will enter into a recessionary phase if the high inflation is not contained soon.  However, any aggressive move to contain inflation will disrupt the financial market and cause a financial crisis to expedite a deep recession.

Baltic dry index - 2404

Related stock: Sembcorp Marine, Cosco & Pan ocean.

US rig count (weekly) - 698

 
Related stock: Sembcorp Marine & Cosco.