Welcome to the latest edition of top stock market highlights.
US inflation rate
Inflation seems to be accelerating again in the US with August’s latest reading.
Higher energy prices, along with increases in the prices of other goods, worked to push the consumer price index (CPI) up 0.6% for the month, registering its highest monthly increase for 2023 thus far.
On a year-on-year basis, the increase came in at 3.7%, slightly higher than the forecast of 3.6% by a panel of economists surveyed by Dow Jones.
Both numbers were higher than the 0.2% and 3.2% recorded back in July.
However, stripping out the volatile food and energy prices and focusing on core inflation alone, the numbers did not look so bad.
Core inflation increased by just 0.3% in August, just slightly above the 0.2% logged in July and was also a tad higher than estimates for a 0.2% rise.
These numbers will be digested by the US Federal Reserve to determine the path of interest rates moving forward.
The central bank had hiked interest rates by 5.25 percentage points since March last year in a bid to tame runaway inflation.
With officials looking for a longer-term approach to solving this perplexing inflation problem, investors are hoping that the central bank takes a cautious and calibrated approach to raising rates in the months ahead.
Temasek’s Advanced MedTech
There could be good news for Singapore Exchange Limited (SGX: S68), or SGX, soon.
Advanced MedTech Holdings Pte Ltd, or AMH, a medical device manufacturer, was reported to have selected the local bourse for a listing rather than gunning for one in the US.
AMH is backed by investment firm Temasek Holdings and had mulled a listing in the US earlier this year after an aborted plan to sell the company.
The medical device producer makes medical equipment focusing on urology devices and also offers contract manufacturing services.
Its products are distributed to patients in more than 100 countries.
The company has purchased stakes in other businesses over the years such as buying a majority stake in a Chinese urology and shock wave therapy device maker last year.
AMH also led a US$3 million Series A funding round for Davicare, a start-up that develops urological treatments that combine nutritional therapy with digital monitoring.
The healthcare company has reportedly picked Goldman Sachs (NYSE: GS), Morgan Stanley (NYSE: MS), and OCBC Ltd (SGX: O39) to work on a planned IPO.
A listing, should it take place, could be as early as the end of 2023 and value the firm at S$1 billion.
If the IPO happens, it will be a breath of fresh air for SGX as Singapore’s IPO market is on track for its worst showing since 2011 with only three listings year-to-date.
SGX listed companies’ quarterly profits
As of 31 August, a total of 82 SGX-listed companies had released their financial results for the quarter ending 30 June 2023 (2Q 2023).
This batch of companies reported a 16.7% year on year increase in net profits to S$7.1 billion, with slightly more than two-thirds (57) reporting profits.
Of these 57, 23 saw profits head higher while 26 experienced declining year on year profits.
The better showing was led by the three local banks DBS Group (SGX: D05), United Overseas Bank (SGX: U11) and OCBC.
Their combined net profit for 2Q 2023 totalled S$5.7 billion and made up 80.3% of the S$7.1 billion reported.
Singapore Airlines Limited (SGX: C6L) was just behind the trio of banks with a record quarterly net profit of S$734 million.
Many brokerages expect the banks to continue doing well as interest rates look poised to stay high.
However, funding costs may start creeping up as the banks offer higher interest rates on their bank accounts and fixed deposits.
The inflationary environment may also start pushing up expenses for the lenders.
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Disclosure: Royston Yang owns shares of Singapore Exchange Limited and DBS Group.