Weekly Review with SIAS: OCBC's offer for Great Eastern in focus

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By Beansprout • 18 Jun 2024 • 0 min read

We share about OCBC's offer for Great Eastern, as well as Keppel Infrastructure Trust's prospects in the latest Weekly Market Review.

Weekly Market Review 18 June
In this article

What happened?

In this week's Weekly Market Review in partnership with Securities Investors Association Singapore (SIAS), we discuss the growing upward trend in the global equity market and also share more about the following:

  • OCBC's offer for Great Eastern  
  • Keppel Infrastructure Trust 

Watch the video to learn more about what we are looking out  for this week.

Weekly Market Review

1:41 - Macro Update

  • US stocks saw a positive week, with the S&P 500 reaching a record high above 5400 after a 1.6% gain. Tech stocks led the gains, with NASDAQ up 3.2%, while the Dow Jones was down 0.5%. The STI had slight losses, now below 3300, missing out on the S&P 500 rally.
  • The key news was the CPI data, indicating US inflation trends. May's CPI data was below market expectations, with core CPI declining from above 5% last year to 3.4% in May 2024.
  • US bond yields declined slightly after the CPI data announcement. The two-year bond yield showed a small decrease, reflecting expectations of possible Fed rate cuts this year.
  • The CME FedWatch tool shows that investors now anticipate the first rate cut in September and another in December, reversing last week's expectation of only one rate cut this year.

4:36 - Singapore market updates

STI Top Performers 18June

STI Top performers:

STI Worst Performers 18June

STI Worst performers:

5:36 - OCBC's Offer for Great Eastern  

  • OCBC has made an offer for Great Eastern (GE) shares at $25.60 per share. 
  • The rationale for the transaction is to solidify OCBC's wealth management position, aiming to become Asia's leading wealth management player. OCBC believes this will optimise capital allocation, deploying it in a business that generates greater returns.
  • The offer price of $25.60 per share represents a premium over GE's share price on a volume-weighted average basis over the past one, three, six, and twelve months.
  • The implied multiple of the offer on a price-to-embedded value (EV) basis is 0.7 times. On a price-to-book value basis, the offer price represents 1.54 times, which is a premium compared to historical values.
  • Ernst & Young, the independent financial advisor (IFA), reported that the offer is not fair but reasonable. They advised the independent directors to recommend that shareholders accept the offer. The independent directors of GE concurred with this assessment.
  • Shareholders wishing to accept the offer must submit acceptance forms by 5:30 PM on July 12. OCBC has stated that the offer price is final and will not extend the offer beyond the final closing date.

Related links:

14:15 - Keppel Infrastructure Trust Update

  • KIT invests in infrastructure assets in developed markets that provide stable cash flows. It manages about $8.8 billion in assets following a recent acquisition in Australia.
  • The majority of KIT's assets are in developed markets, with Singapore representing 20%. It also has significant exposure in Saudi Arabia, Australia, New Zealand, and Europe.
  • Energy transition assets form the bulk of KIT's portfolio and generate cash flow for distribution to unit holders.
  • Over the past two years, KIT has seen stronger earnings, measured by EBITDA, due to better performance from existing assets and new acquisitions.
  • Distributions per unit have been increasing over the past three years. 

Learn more about Keppel Infrastructure Trust.

18:45 - Technical Analysis

STI Technical Analysis

  • The STI pulled back since touching the 3350 level, which was reached on June 3rd at 3,355 points.
  • The index retraced to the lower bound of the Bollinger Band, around the 3,300 level, which acts as a support level. 
  • Key support is around the 50-day moving average at 3,285 and the 100-day moving average at 3,250. 
  • The MACD shows negative momentum, suggesting no immediate rush to enter the market. The RSI reading suggests potential long-term uptrend continuation if it stays above the 50-point mark.

Dow Jones Technical Analysis

  • The Dow Jones experienced fluctuations due to economic data and policy expectations. 
  • The 100-day moving average around 38,025 points provides a key support level, with the 200-day moving average at 37,399 points offering a more attractive entry point.
  • The MACD is negative and the RSI is slightly below the neutral mark, indicating limited momentum and potential sideways movement.

S&P 500 Technical Analysis

  • The S&P 500 reached new record highs but experienced a pullback before rebounding strongly.
  • Consider entry points at the 20-day and 50-day moving averages to avoid chasing the rally.
  • The MACD remains strong, suggesting continued uptrend, while the RSI indicates overbought conditions, hinting at a potential retracement.

NASDAQ Composite Technical Analysis

  • The NASDAQ Composite has shown significant performance, with strong moves in tech stocks like Nvidia and Adobe.
  • Key entry points are around the 20-day moving average at 17,149 or the 50-day moving average.
  • The index is currently at the upper bound of the Bollinger Band, suggesting a potential pullback. It is prudent to wait for a retracement to these moving averages before entering.

What to look out for this week

  • Tuesday, 18 June: US retail sales data
  • Wednesday, 19 June: SIAS webinar on introduction to bonds
  • Thursday, 20 June: Singapore 6-months T-bill auction, SIAS Dialogue with OCBC for Great Eastern Holdings Shareholders

Get the full list of Singapore stocks, REITs and ETFs with upcoming dividend payments with our dividend calendar.

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