Singapore’s earnings season drops down a gear following the previous week’s frenzy of real estate investment trust announcements. The highlight could be the stable of Jardine companies that are pencilled in for results towards the end of the week. It could provide some useful insights into the situations in Hong Kong, mainland China and southeast Asia.
The market is not expecting anything spectacular from the Jardine group of companies. It will be an achievement if they can manage to just hold their heads above water. The Jardine conglomerate includes Jardine Strategic (SGX: J37), Jardine Matheson (SGX: J37), Dairy Farm International (SGX: D01), Jardine Cycle & Carriage (SGX: C07) and Hongkong Land (SGX: H78).
In April, Jardine warned that profits for the first half profits will be significantly reduced compared with the prior year. It added that across the group, several actions have been taken to manage costs and preserve cash. These include the reduction, suspension or deferral of non-essential operating and capital expenditure.
Staying with conglomerates, industrial and property titan Keppel Corporation (SGX: BN4) warned that the COVID-19 pandemic had severely reduced global demand for oil. It said that this would result in material impairments of its Offshore & Marine business.
Singapore Exchange (SGX: S68) said that its priority amid the COVID-19 pandemic would be to keep SGX’s markets relevant, resilient, and fully accessible to serve the heightened demand from market participants for risk management. The market will be keen to hear about the steps that SGX will take to offset the loss of the licence for MSCI derivative products.
Turning to economic matters, the US Fed is expected to keep interest rates on hold at 0.25%. Of greater interest, though, will be the advanced look at the rate of economic contraction in America. It is expected to shrink by nearly a third in the second quarter.
Meanwhile, the Eurozone economy could have contracted almost 15% in the second quarter. In the first quarter, GDP shrunk 3.1%. The European Commission expects the bloc’s economy to shrink by a record 8.7% this year, before rebounding 6.1% in 2021.
China could say that manufacturing and non-manufacturing continue to expand in July. But worryingly, industrial profit for June could have fallen by 17%.
And finally, Singapore bank lending is expected to be resilient in June. In May, it dipped from S$689.7 billion the previous month to S$695.3 billion, as consumer loans and lending to businesses declined. But lending could have bounced back to S$687.1 billion last month.
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Disclosure: David Kuo does not own any of the shares mentioned.