Welcome to this week’s edition of top stock market highlights.
Trump’s steel and aluminium tariffs
In the latest salvo in the ongoing US trade war, US President Donald Trump has ordered a 25% tariff on steel and aluminium imports.
His latest attempt is to protect important US industries by hitting some of the countries’ closest allies.
These tariffs will apply to all US imports of steel and aluminium, including from both Canada and Mexico, the US’s top two foreign suppliers of these metals.
No exemptions will be made for trading partners.
These efforts are made to crack down on countries such as Russia and China that are attempting to circumvent existing duties.
These new tariffs were authorised under Section 232 of the Trade Expansion Act, which provides broad authority to the President to impose trade restrictions on grounds of domestic security.
A senior official reiterated that these tariffs were necessary as steel and aluminium exporters abused several exceptions in the previous 2018 policy, which in turn hurt US producers.
These tariffs are sure to spark further retaliation from the US’s trading partners as this trade war seems to be in its infancy.
Paragon REIT (SGX: SK6U)
Another company could be been taken off the market soon as a wave of privatisations hits the Singapore Exchange.
This time, it’s Paragon REIT, a retail REIT with a portfolio of three assets across Singapore (2) and Australia (1).
Times Properties, a wholly-owned subsidiary of Cuscaden Peak Investments, made an offer to privatise the REIT by way of a trust scheme of arrangement.
The offer price is set at S$0.98 per unit which values the retail REIT at S$2.8 billion.
Cuscaden Peak is part of the Temasek stable and acquired a 61% stake in Paragon REIT (which used to be called SPH REIT) back in 2022.
This offer price represents a 10.1% premium to the REIT’s last transaction price of S$0.89.
Among the reasons given for the privatisation was the low free float of the REIT, its low trading liquidity, and the REIT being too heavily reliant on its key mall, Paragon, which accounts for 72% of the portfolio’s value.
However, this mall has seen increased competition from upcoming retail malls in Orchard as well as existing malls that have undergone major upgrades.
Some of these competitors include voco Orchard, Forum The Shopping Mall, and Tanglin Shopping Centre.
The offeror believes that a major asset enhancement initiative (AEI) is overdue for Paragon and is necessary for the mall to maintain its long-term competitiveness.
Paragon’s last major AEI was back in 2009 for S$82 million.
This proposed AEI could take three to four years to complete and will be significant, thus introducing execution risks and risks around costs and timing.
An estimation of the amount needed will be between S$300 million to S$600 million, and the offeror believes that privatising the REIT is a better option for unitholders.
If the AEI had gone ahead, unitholders could potentially suffer a 21.4% to 64% plunge in 2024’s adjusted DPU of S$0.0452.
Apple (NASDAQ: AAPL) and Alibaba (SGX: HBBD)
Two technology giants, Apple and Alibaba, are collaborating to roll out artificial intelligence (AI) features for iPhone users in China.
This partnership could pave the way for Apple to successfully roll out its iPhones in China where it has been losing market share to rivals such as Huawei.
Apple previously selected Baidu (HKSE: 9888) as its main partner but the Chinese company failed to satisfy Apple’s requirements for Apple Intelligence.
The world’s most valuable company also evaluated models developed by Tencent (HKSE: 0700), ByteDance, Alibaba, and DeepSeek.
DeepSeek was passed on as the startup lacked the manpower and experience to manage a large customer.
Both Apple and Alibaba have submitted the AI features they co-developed for approval by the Chinese cyberspace regulator.
Investors will be hoping that iPhone sales can rebound strongly in the Middle Kingdom and contribute to increased sales and profits for the trillion-dollar company.
The reason for Apple to go with Alibaba was partly because the latter has a treasure trove of data on user shopping and payment habits, thus enabling Apple to better train its AI data and deliver more personalised services.
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Disclosure: Royston Yang owns shares of Apple.
