Welcome to this week’s edition of top stock market highlights.
US wholesale inflation
It seems that high inflation is not so easily banished in the US despite interest rates being hiked sharply over the past 18 months.
The US’s Producer Price Index (PPI) climbed 2.2% year on year for September, increasing slightly from the 2% logged in August.
Excluding food and energy, core inflation rose 2.7% year on year in September.
Wholesale prices measure the change in the prices of goods and services before they reach consumers, and these came in higher than economists’ forecasts.
The US Federal Reserve will study inflation data closely to decide if more interest rate increases are needed in the months ahead.
Officials agree on one thing – rates will need to remain elevated until policymakers are convinced that inflation will head down to the 2% level.
Investors who were hoping that the US central bank would give some indication as to when it will cut rates will be disappointed.
Officials there avoid making any commitment to a preset rate path and have reiterated time and again that they will carefully study the economic data before arriving at any decision.
Country Garden (HKSE: 2007)
Chinese developers continue to face tough conditions, with Country Garden being next in line to warn that it could face its first-ever default.
The developer has hired financial advisors and looks headed for one of the country’s largest restructurings.
This news came after its peer, China Evergrande (HKSE: 3333), missed its second bond payment due at the end of September.
Country Garden has US$11 billion of offshore notes outstanding and has not made a payment of HK$470 million that was due.
In addition, it also failed to pay US$55.4 million of interest on two of its bonds.
One of China’s largest property developers, Country Garden has more than 3,000 housing projects in various provinces and employs around 70,000 staff.
It is also one of the country’s most heavily-indebted developers with S$259 billion of total liabilities.
The financial advisors that were engaged will evaluate Country Garden’s capital structure and liquidity and formulate a “holistic solution”.
CapitaLand Ascott Trust (SGX: HMN)
CapitaLand Ascott Trust, or CLAS, entered into purchase agreements to acquire three properties.
It will purchase The Cavendish London for around S$201.3 million, Temple Bar Dublin Hotel for S$103.7 million, and Ascott Kuningan Jakarta for S$52.8 million.
Once completed, the companies holding these assets will enter into separate management agreements with Ascott, a unit of CapitaLand Investment Limited (SGX: 9CI), which will provide management services.
The Cavendish London comprises 230 units with a gross floor area (GFA) of 10,900 square metres (sqm) while Temple Bar Dublin has 136 units taking up GFA of around 7,800 sqm.
As for Ascott Kuningan Jakarta, the property has 185 units with a GFA of 18,900 sqm.
Elsewhere, CLAS is also renewing three master lease agreements for three properties in France.
The existing agreements expire on 31 December this year and have been renewed with Citadines, a unit of Ascott.
The renewed agreements will commence on 1 January 2024 and run for 12 years.
Creative Technology Ltd (SGX: C76)
Creative Technology has given notice that it has incurred three consecutive years of pre-tax losses.
However, the technology company has avoided being placed on the Singapore Exchange’s watch list as its six-month average market capitalisation was S$110.3 million.
Mainboard-listed companies that fail to maintain a daily average market capitalisation of at least S$40 million over the last six months and recorded three unbroken years of pre-tax losses will be placed on the watch list.
For its recent fiscal 2023 (FY2023) ending 30 June 2023, Creative Technology saw net sales dip by 8% year on year to US$56.2 million.
Its net loss widened by 52% year on year to US$16.7 million.
Last month, the group announced a strategic partnership with Skyworth Group Ltd (HKSE: 0751) to bring its Super X-Fi Spatial Holographic Audio technology into the latter’s product line-up.
Creative Technology’s Super X-Fi technology creates the immersive listening sensation of a high-end multi-speaker system, thereby revolutionising the audio experience for users.
This collaboration melds audio and visual technologies to deliver innovative solutions that enhance consumers’ entertainment.
The partnership also opens doors for Creative Technology to bring its cutting-edge technology to a wider array of customer electronics and personal computing platforms.
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Disclosure: Royston Yang does not own shares in any of the companies mentioned.