Weekly recap: Taking shelter in safe assets as tensions rise

Many investors have been feeling jittery following the outbreak of the Israel-Hamas conflict.

This has led to many investors looking for safe assets, including Singapore government bonds. 

It was hence not a surprise that the cut-off yield on the 1-year Singapore T-bill fell to 3.7% in the latest auction this week. 

We find out whether the yield on the upcoming 6-month T-bill auction on 26 October might fall further. 

If you are looking for the best savings account in Singapore to park your emergency cash, we compare which account will allow you to earn the highest interest rate. 

🛢 TENSIONS RISE

What happened? 

The Israel-Hamas conflict escalated with press reports that Israel may be preparing for a ground invasion of Gaza.

What does this mean?

Oil prices surged as rising geopolitical tensions led to concerns that there might be potential disruptions of supply. 

However, investors appear to believe that the Middle east conflict will remain contained for now. 

Brent crude prices remain below its recent peak of about $95 per barrel. Likewise, the volatility index VIX has stood at 20 as of 19 October 2023, significantly below the level after the Russian invasion of Ukraine in February 2022.  

Why should I care? 

There has been a flight to safety following the outbreak of the Middle East conflict, with an uplift in US government bonds, the US dollar, and gold.

We analyse the potential implications of the Israel-Hamas conflict, what they may mean for investors.

💡 THE BIG IMPORTANT STORY

ST Engineering shares hit a 1-year high. More upside from greater defence spending?

ST Engineering’s share price recently hit a 1-year high with renewed spotlight on the global defence industry.

🚗 WHAT'S MOVING

• Keppel Corp reported that its net profit in the first nine months of 2023 was higher compared to the previous year, with strong performance from its infrastructure and connectivity segments. Click here for Keppel Corp share price and analysis.
• Keppel DC REIT reported a distribution per unit of 2.492 cents for the third quarter, a 3.6% decline from the previous year. While net property income (NPI) rose slightly by 0.8%, its distributable income was impacted by higher finance costs. Click here for Keppel DC REIT share price and analysis.
• Tesla (TSLA) reported a bigger than expected drop in third quarter earnings, as previously announced price cuts impacted its profits. 
• Netflix added a stronger than expected 8.76 million customers in the third quarter, driven by a strong programming slate an its crackdown on password sharing. The company will be raising prices for some customers in the US, UK and France, a sign of management’s confidence in the future. 
• Nvidia (NVDA) led losses amongst chipmakers after the US announced new restrictions that would curb the sale of advanced AI chips to China. 

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

🤓 WHAT WE’RE LOOKING OUT FOR THIS WEEK

• Monday, 23 Oct: Singapore CPI data
• Tuesday, 24 Oct: Mapletree Logistics Trust earnings
• Wednesday, 25 Oct: Mapletree Industrial Trust, Frasers Centrepoint Trust earnings
• Thursday, 26 Oct: Singapore 6-month T-bill auction, UOB, Mapletree Pan Asia Commercial Trust, CapitaLand Integrated Commercial Trust, Wilmar earnings
• Friday, 27 Oct: CapitaLand Ascendas REIT earnings

Source: Bloomberg, SGX 

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