Amazon Lost US$1 Trillion in Market Value | 10 November 2022 | Daily Morning Note

The Daily Morning Note is a round-up of local and global business headlines that you need to know to get ahead of your day.

Amazon.com is the world’s first public company to lose a trillion dollars in market value. Shares in the e-commerce and cloud company fell 4.3 per cent on Wednesday, pushing its market value to about US$879 billion from a record close at US$1.88 trillion on July 2021.


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Key takeaways

Summary

The Straits Times Index added 0.6 per cent or 19.67 points to close at 3,165.50 on Wednesday, tracking a rally on Wall Street as major US indices gained for the third consecutive day.

Singapore News

Inflight caterer and ground handler SATS on Wednesday reported a net loss of S$9.9 million for its second quarter, reversing a year-ago profit of S$6.8 million, as operating expenses rose and lower government grants were received. Excluding the effect of reliefs, net loss for the three months ended Sep 30 would have been S$19.7 million, an improvement from the S$30.1 million net loss excluding reliefs in the year-ago period, the company said in a bourse filing.

Singtel’s first half net profit rose 23% to S$1.17 billion, boosted by a net exceptional gain from the Group’s partial divestment of its stake in Airtel compared to a net exceptional loss the previous year. Operating revenue was down 5% to S$7.26 billion due to adverse currency effects and the absence of revenue from NBN migration and Amobee.

Mainboard-Listed telco StarHub reported on Wednesday a 32 per cent year-on-year decline in net profit for the third quarter, even as total revenue rose 14.2 per cent. Net profit for the three months ending Sep 30, 2022 fell toS$27.4 million from S$40.2 million in the year-ago period. The net profit for the third quarter was also 12.3 per cent lower than the net profit of S$31.2million it reported for Q2 FY 2022.

US News

Tesla chief executive officer Elon Musk sold at least US$3.95 billion of the electric-vehicle maker’s shares just days after closing his buyout of Twitter. Musk unloaded 19.5 million shares, according to regulatory filings, his first disposals since August. The documents didn’t indicate that the transactions were pre-planned.

Roblox Corp on Wednesday missed Wall Street estimates for quarterly revenue by a wide margin after the video games developer changed its accounting practices. The company's revenue grew 2% to $517.7 million in the third quarter ended Sept. 30, lower than analysts' expectation of $686.3million. Roblox changed the period of estimated paying user life to 28 months from 25 months, resulting in a $111 million decrease in revenue during the reporting quarter.

Electric vehicle maker Rivian Automotive on Wednesday reaffirmed its 25,000-vehicle production target for 2022, but said it plans to spend less to do it as the company reported third-quarter revenue that fell short of Wall Street’s expectations. Rivian cut its guidance for 2022 capital expenditures: It now expects its full-year capital expenditures to total about$1.75 billion, down from the $2 billion it guided to after the second quarter, as it shifts some planned spending to next year.

In our recommendation section...

Analyst Darren Chan maintains his buy recommendation on Prime US Reit with a target price ofUS$0.88. It was last done at US$0.48.

 

He says: PRIME is our top pick in the US office sector for greater tenant exposure to STEM/TAMI sectors. Catalysts include improved leasing and a greater return to office. The current share price implies FY22e/FY23e DPU yield of 14.6/14.8%.

And on US interest rates, analyst Shawn Sng says in his FOMC meeting update: Recent incoming data such as total PCE prices rising by 6.2% YoY and core PCE prices up by 5.1% YoY in September, has signalled the Fed to suggest that the interest rate peak will be higher than what was previously expected in its earlier meeting.

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PRIME US REIT – Strong      leasing momentum
     
     Recommendation:      Buy (Maintained), Last done: US$0.48
     
     TP: US$0.88,      Analyst: Darren Chan

         
  • 9M22 distributable income (+9.2% YoY) was in line, forming 73% of our FY22e estimate.
               
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  • Leasing activity in 3Q22 was close to the previous 2 quarters combined (246.2k vs 1H22 257.5k sq ft), with positive rental reversions of 10.1%. Occupancy remained stable at 89.6%.
               
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  • No change in our forecasts. Maintain BUY, DDM-TP (COE 10.55%) unchanged at US$0.88. PRIME is our top pick in the US office sector for greater tenant exposure to STEM/TAMI sectors. Catalysts include improved leasing and a greater return to office. The current share price implies FY22e/FY23e DPU yield of 14.6/14.8%.
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Phillip Macro Update: Key      Points for November FOMC Meeting

         
  • Interest rates – The U.S Federal Reserve (Fed) has increased its benchmark interest rate by another 75bps to a range of 3.75% - 4%. This will be the 4th consecutive ¾ percentage point hike this year and for this November’s meeting, there was no dot plot graph being provided.
               
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  • Guidance – In terms of guidance, Chairman Jerome Powell did not give any clear indication in this meeting. He pointed out that there could be a possibility of a slowdown, either at the December meeting or the following one in January next year.
               
  •      
  • Higher-than-expected rates – With recent incoming data such as total PCE prices rising by 6.2% YoY and core PCE prices up by 5.1% YoY in September. This has signalled the Fed to suggest that the interest rate peak will be higher than what was previously expected in its earlier meeting.
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