A quarter to remember: Weekly recap and what to watch in the week ahead

The tech-heavy NASDAQ index rose by 17% in the first quarter of 2023, the largest quarterly gain since the Covid bounce in the second quarter of 2020. 

Looking at the headline numbers, you might not realise that this was a period which saw three bank failures in the US and two interest rate hikes by the Fed. 

Capping an eventful start to the year, we also saw Alibaba announcing its split into six business groups. 

Clearly, investors are looking ahead to expect that the ongoing restructuring by tech companies and potential Fed rate cuts could mean better days ahead. 

This improvement in risk appetite also translated to lower demand for a safe haven asset like the Singapore government bond, where the cut-off yield on the latest 6-month T-bill rose to 3.85% p.a. as applications fell sharply.

On the other hand, more investors are locking in higher interest rates on the SSB with more applications in the latest issuance. 

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⚡️ Alibaba breaks up

What happened? 

Alibaba announced that it would split into six separate business groups. 

What does this mean?

The Chinese e-commerce giant’s restructuring will allow each business to act independently. This will include the potential to raise outside funding and go public. 

Following the announcement, Bloomberg reported that Alibaba’s logistics arm has started preparation with banks for its Hong Kong IPO, paving way for the first of Alibaba’s six business units to go public.

Zooming out, this could serve as a reference for the overhaul of China’s tech sector, which has been under greater regulatory scrutiny in recent years. 

Why should I care? 

Alibaba’s share price gained close to 17% following the announcement, lifting the broader Chinese tech sector. 

Read further analysis on why the restructuring could help to unlock value. 

🚗 WHAT'S MOVING

• UBS is bringing back Sergio Ermotti as chief executive officer to tap on his extensive restructuring experience and oversee the acquisition of Credit Suisse. 

• Mapletree Logistics Trust announced the acquisition of eight logistics properties in Japan, Australia and South Korea for S$914 million. MLT will fund these acquisitions through debt as well as placement of new units, including a proposed equity fund raising through private placement to raise S$200 million. 

• Sembcorp Marine and its consortium partner GE Renewable Energy’s Grid Solutions have secured contracts worth about six billion euros to supply electrical transmission systems for three mega offshore wind farm projects.

• Yangzijiang Shipbuilding has entered into a share purchase agreement to acquire an office block at 39 Robinson Road for S$399 million or S$2,357 psf.

Source: Bloomberg, CNBC, Financial Times, Business Times, Edge Singapore

💡 THE BIG IMPORTANT STORY

T-bill yield rebounds to 3.85% p.a. What drove the recovery?

There was a sharp decline in applications for the latest T-bill auction on 30 March.

🤓 WHAT WE’RE LOOKING OUT FOR THIS WEEK

• Monday, 3 April: OPEC+ virtual meeting
• Friday, 7 April: Singapore Public Holiday (Good Friday), US nonfarm payrolls report

Source: Bloomberg, SGX 

🍭 THAT’S INTERESTING

Singapore’s Changi Airport faced issues with its immigration clearance system on Friday 31 March, leading to an advisory by the Immigration and Checkpoints Authority (ICA) for travellers to “postpone all non-essential travel, where applicable”. The world’s top-rated airport later said that technical issues led to the disruption. The glitch came two days after DBS suffered a 10-hour outage on its online banking platforms. 

Source: Straits Times, ChannelNewsAsia, Bloomberg