SGX Market Strategist, Equity & Fixed Income, Singapore Exchange Ltd (SGX)

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

Asia’s leading multi-asset exchange

Singapore Exchange Ltd (SGX)

Singapore Exchange is Asia’s leading and trusted market infrastructure, facilitating the exchange of capital and ideas to create value for people, businesses and economies. As a multi-asset exchange operating equity, fixed income and derivatives markets to the highest regulatory standards, SGX is a vertically integrated business that provides listing, trading, clearing, settlement, depository and data services.

With about 40% of listed companies and over 80% of listed bonds originating outside of Singapore as well as established linkages across the region and in Europe, SGX is Asia’s most international and connected exchange. Offering a full suite of derivatives products across Asian equity indices, commodities and currencies, SGX is the world’s most liquid international market for the benchmark equity indices of China, India, Japan and ASEAN.

As Asia’s pioneering central counterparty, SGX is globally recognised for its risk management and clearing capabilities, and was one of the first globally to adopt the Principles for Financial Market Infrastructure.

Headquartered in AAA-rated Singapore, SGX has over 800 employees including offices in Beijing, Chicago, Hong Kong, London, New York, Mumbai, San Francisco, Shanghai and Tokyo.

Equity Bottom-Up

<figure class="editor-figure mceNonEditable"><img src="https://api2.sgx.com/sites/default/files/2020-04/Capture.PNG" class="editor-image img-responsive"></figure>
<div class="content-caption">ganse</div>

For lubricant specialist Jacky Tan, intuition is indispensable when it comes to making decisions in a complex and rapidly changing environment. In particular, "Listen to your heart" and "Go with your gut" are his key axioms, as seeded by his father's counsel more than four decades ago. "I asked my dad for advice when I first started working, and he told me '要小心', which means 'be cautious," recalled the Chief Executive Officer of SGX-listed lubricant manufacturer and trader United Global Ltd. "In my younger years, I took it literally, always focusing on the facts, figures, and details. It was only much later that I realised what he was really referring to - I had overlooked the softer side of business transactions, which are human connections between people." This is especially crucial for deals and alliances. "You may be looking at absolutely fantastic numbers and huge profits at the beginning, but if somewhere down the road, you can't work with your chosen associate or partner, and the joint venture collapses, you end up with nothing," he added. The University of Canberra graduate with a Bachelor of Applied Science in Building spent eight years with two Indonesian mining and quarrying companies, before moving to Singapore when racially motivated riots erupted in the country in May 1998. Given his background in the mining industry - which consumed container loads of oils, greases and fluids for heavy equipment every month - Tan decided to enter the lubricants business. Together with his wife and father-in-law, Tan founded United Oil Company in 1999. He remembers the journey as one marked by a lot of sweat, some blood, and occasional tears. "We started as a small player in the market, and very few people knew who we were. For the business to break even, we needed to manufacture and sell at least 50 container loads of lubricant oils every month." This meant reaching out to potential customers through a dizzying volume of cold calls. "We were on the phone constantly, persuading potential clients, negotiating prices, dealing with rejections - that was our lowest point." Slowly, through sheer determination and hard work, things turned around. "Once customers realised that we strive to give them the best value and quality in terms of our products, and always delivering what we promised, the business took off." Building Bonds Tan focused on laying the foundation for United Oil's future - by forging a bond with clients through honesty and openness. "We created a reputation for ourselves as a reliable supplier, one who isn't greedy, but fair in terms of pricing," he noted. "And we are where we are today because of the support from our customers." Tan's make-or-break attitude also played a crucial role. "If we think that something is worth doing, then we die-die must try our best to make it work," he said with a grin. Aside from turning the small family-run outfit into a thriving business, Tan also dreamed of listing the company and diversifying its focus beyond lubricants. Thus, United Global Ltd - with United Oil Company, United Innovations Company and United Renewables Company as subsidiaries - was born. As a fitting culmination to decades of hard work, United Global was listed on Singapore Exchange's Catalist board in July 2016. The Group provides a wide range of lubricant products under in-house brands, such as "United Oil", "U Star Lube", "Bell1", "HydroPure" and "Ichiro", as well as lubricants for third-party brands. It is also involved in the trading of base oils, additives and lubricants. With an extensive network of distributors spanning more than 30 countries, United Global supplies lubricant products to the automotive, industrial and marine sectors. An ISO 9001-certified company, the Group has a blending capacity of 60,000 metric tonnes (MT) per annum in Singapore, and 80,000 MT in Indonesia. Meanwhile, United Global has put in place a three-pronged growth strategy. It plans to expand its existing lubricants business organically in the region, focusing on in-house brands and through partnerships that offer good synergies. It will continue to establish strategic alliances with its distributors, boosting its footprint in key overseas markets by tapping on their expertise and local knowledge, Tan said. &nbsp; The Group is also actively seeking opportunities to diversify revenue streams. They include its 2017 venture with Japan's M-TechX Group to make oil-absorbing, nano-fibre materials for a range of industrial and commercial applications. Other collaborations involve the marketing and distribution of the Group's lubricant products in Australia, China and Myanmar. Expanding Footprint Last September, Madrid-listed oil major Repsol acquired a 40% stake in Tan's United Oil Company subsidiary for up to US$46.5 million. By leveraging Repsol's international brand presence to boost production and distribution, United Global is well-positioned to tap new growth opportunities, he noted. "Repsol approached us in 2018 because as a listed company, we had strong corporate governance and a high level of transparency. Secondly, we had a good footprint in Indonesia, which was in line with Repsol's goal to expand in that market," he added. Indonesia, which accounted for nearly 40% of group revenue in 2018, will remain the Group's prime growth market. "Our ambition is to be among the top five lubricant suppliers in the country. Indonesia is expected to see some of the strongest demand for lubricants over the next decade as the government continues to roll out infrastructure projects." Apart from Southeast Asia's largest economy, two other markets - Vietnam and Malaysia - are also expected to enjoy exponential growth. &nbsp; "Our vision is to build a sustainable business, for the common good," Tan said. "Other opportunities out there include renewables and innovation, particularly in the area of new technologies." The 55-year-old has another personal goal - to continue growing United Global's market capitalisation. "When we first listed in 2016, my aim was to double our market cap in three years, but everyone laughed at me. In the end, I proved them wrong," Tan grinned. Today, United Global has a market value of more than S$140 million, compared with S$70 million when it listed in 2016. "My target - or rather my dream - is to double our market cap every three years, so that by the end of my 10-year tenure as CEO, we can see a 10-fold increase." Gung-Ho Optimism Meanwhile, challenges abound, not the least of which is the COVID-19 pandemic. &nbsp;"What keeps me awake at night? This is one," Tan admitted wryly. "Our supply chain has been impacted - we haven't been able to deliver our fuel products to China over the last few weeks, and are seeing very slow sales in the country, as well as Taiwan and Hong Kong," he added. "Although sales volumes have fallen by about 10% to 15%, orders are still trickling in. We are monitoring the situation closely. Given our geographical footprint in Asia Pacific, I reckon our risks are fairly well-spread out." At the end of day, when faced with circumstances beyond one's control, "you should plan what you can, and do what you can," he added. "There will be opportunities that pop up, even in tough market conditions, such as acquiring companies with strong fundamentals at good prices, or sealing synergistic partnerships." That "can-do" and "get-going" attitude is what characterises the father of three boys, aged 19 to 27. "I want to do the best that I can, as long as I am physically able. I push my limits to see how far I can go," he said with a smile. "The satisfaction I get from building a business from scratch, achieving my goals along the way, as well as helping my staff and customers - no words can really describe that experience," he added. A self-taught calligrapher who puts brush to paper whenever he needs to de-stress, Tan places a premium on doing good and giving back to society. "I always tell my kids, 'Never be complacent'," he said. "I hope each one of them will be a much better man than me - displaying my strengths and learning from my weaknesses." United Global Ltd Listed on SGX's Catalist board, United Global is an established, independent lubricant manufacturer with a wide range of high quality, well-engineered products under its in-house brand "United Oil", as well as a host of third-party brands. It is also engaged in the trading of base oils, additives and lubricants. Through its United Oil Company joint venture with Madrid-listed oil major Repsol, the Group manufactures a wide range of lubricants and specialty fluids for the automotive, industrial and marine industries, which are distributed throughout its extensive network covering more than 30 countries. An ISO 9001-certified company, the Group has a blending capacity of 60,000 MT per annum in Singapore, and 80,000 MT in Indonesia. The company website is: <a href="http://edm.sgx.com/a/hBejoGmB86%24MfB91mFsAAAAAAAY/link7" target="_blank" rel="noopener">www.unitedgloballimited.com/</a>. Click&nbsp;<a href="http://edm.sgx.com/a/hBejoGmB86%24MfB91mFsAAAAAAAY/link8" target="_blank" rel="noopener">here</a>&nbsp;for the company's StockFacts page. For the three months ended 31 December 2019 financial results, click&nbsp;<a href="http://edm.sgx.com/a/hBejoGmB86%24MfB91mFsAAAAAAAY/link9" target="_blank" rel="noopener">here</a>. For fourth quarter ended 31 Dec 2019 financial results, click&nbsp;<a href="http://edm.sgx.com/a/hBejoGmB86%24MfB91mFsAAAAAAAY/link10" target="_blank" rel="noopener">here</a>. &nbsp;
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ganse

For lubricant specialist Jacky Tan, intuition is indispensable when it comes to making decisions in a complex and rapidly changing environment.  In particular, "Listen to your heart" and "Go with your gut" are his key axioms, as seeded by his father's counsel more than four decades ago.  "I asked my dad for advice when I first started working, and he told me '要小心', which means 'be cautious," recalled the Chief Executive Officer of SGX-listed lubricant manufacturer and trader United Global Ltd.  "In my younger years, I took it literally, always focusing on the facts, figures, and details. It was only much later that I realised what he was really referring to - I had overlooked the softer side of business transactions, which are human connections between people."  This is especially crucial for deals and alliances. "You may be looking at absolutely fantastic numbers and huge profits at the beginning, but if somewhere down the road, you can't work with your chosen associate or partner, and the joint venture collapses, you end up with nothing," he added.  The University of Canberra graduate with a Bachelor of Applied Science in Building spent eight years with two Indonesian mining and quarrying companies, before moving to Singapore when racially motivated riots erupted in the country in May 1998.  Given his background in the mining industry - which consumed container loads of oils, greases and fluids for heavy equipment every month - Tan decided to enter the lubricants business. Together with his wife and father-in-law, Tan founded United Oil Company in 1999.  He remembers the journey as one marked by a lot of sweat, some blood, and occasional tears. "We started as a small player in the market, and very few people knew who we were. For the business to break even, we needed to manufacture and sell at least 50 container loads of lubricant oils every month."  This meant reaching out to potential customers through a dizzying volume of cold calls. "We were on the phone constantly, persuading potential clients, negotiating prices, dealing with rejections - that was our lowest point."  Slowly, through sheer determination and hard work, things turned around. "Once customers realised that we strive to give them the best value and quality in terms of our products, and always delivering what we promised, the business took off."  Building Bonds  Tan focused on laying the foundation for United Oil's future - by forging a bond with clients through honesty and openness. "We created a reputation for ourselves as a reliable supplier, one who isn't greedy, but fair in terms of pricing," he noted. "And we are where we are today because of the support from our customers."  Tan's make-or-break attitude also played a crucial role. "If we think that something is worth doing, then we die-die must try our best to make it work," he said with a grin.  Aside from turning the small family-run outfit into a thriving business, Tan also dreamed of listing the company and diversifying its focus beyond lubricants. Thus, United Global Ltd - with United Oil Company, United Innovations Company and United Renewables Company as subsidiaries - was born.  As a fitting culmination to decades of hard work, United Global was listed on Singapore Exchange's Catalist board in July 2016.  The Group provides a wide range of lubricant products under in-house brands, such as "United Oil", "U Star Lube", "Bell1", "HydroPure" and "Ichiro", as well as lubricants for third-party brands. It is also involved in the trading of base oils, additives and lubricants. With an extensive network of distributors spanning more than 30 countries, United Global supplies lubricant products to the automotive, industrial and marine sectors.  An ISO 9001-certified company, the Group has a blending capacity of 60,000 metric tonnes (MT) per annum in Singapore, and 80,000 MT in Indonesia.  Meanwhile, United Global has put in place a three-pronged growth strategy. It plans to expand its existing lubricants business organically in the region, focusing on in-house brands and through partnerships that offer good synergies. It will continue to establish strategic alliances with its distributors, boosting its footprint in key overseas markets by tapping on their expertise and local knowledge, Tan said. &nbsp;  The Group is also actively seeking opportunities to diversify revenue streams. They include its 2017 venture with Japan's M-TechX Group to make oil-absorbing, nano-fibre materials for a range of industrial and commercial applications. Other collaborations involve the marketing and distribution of the Group's lubricant products in Australia, China and Myanmar.  Expanding Footprint  Last September, Madrid-listed oil major Repsol acquired a 40% stake in Tan's United Oil Company subsidiary for up to US$46.5 million. By leveraging Repsol's international brand presence to boost production and distribution, United Global is well-positioned to tap new growth opportunities, he noted.  "Repsol approached us in 2018 because as a listed company, we had strong corporate governance and a high level of transparency. Secondly, we had a good footprint in Indonesia, which was in line with Repsol's goal to expand in that market," he added.  Indonesia, which accounted for nearly 40% of group revenue in 2018, will remain the Group's prime growth market. "Our ambition is to be among the top five lubricant suppliers in the country. Indonesia is expected to see some of the strongest demand for lubricants over the next decade as the government continues to roll out infrastructure projects."  Apart from Southeast Asia's largest economy, two other markets - Vietnam and Malaysia - are also expected to enjoy exponential growth. &nbsp;  "Our vision is to build a sustainable business, for the common good," Tan said. "Other opportunities out there include renewables and innovation, particularly in the area of new technologies."  The 55-year-old has another personal goal - to continue growing United Global's market capitalisation.  "When we first listed in 2016, my aim was to double our market cap in three years, but everyone laughed at me. In the end, I proved them wrong," Tan grinned.  Today, United Global has a market value of more than S$140 million, compared with S$70 million when it listed in 2016.  "My target - or rather my dream - is to double our market cap every three years, so that by the end of my 10-year tenure as CEO, we can see a 10-fold increase."  Gung-Ho Optimism  Meanwhile, challenges abound, not the least of which is the COVID-19 pandemic. &nbsp;"What keeps me awake at night? This is one," Tan admitted wryly.  "Our supply chain has been impacted - we haven't been able to deliver our fuel products to China over the last few weeks, and are seeing very slow sales in the country, as well as Taiwan and Hong Kong," he added.  "Although sales volumes have fallen by about 10% to 15%, orders are still trickling in. We are monitoring the situation closely. Given our geographical footprint in Asia Pacific, I reckon our risks are fairly well-spread out."  At the end of day, when faced with circumstances beyond one's control, "you should plan what you can, and do what you can," he added.  "There will be opportunities that pop up, even in tough market conditions, such as acquiring companies with strong fundamentals at good prices, or sealing synergistic partnerships."  That "can-do" and "get-going" attitude is what characterises the father of three boys, aged 19 to 27. "I want to do the best that I can, as long as I am physically able. I push my limits to see how far I can go," he said with a smile.  "The satisfaction I get from building a business from scratch, achieving my goals along the way, as well as helping my staff and customers - no words can really describe that experience," he added.  A self-taught calligrapher who puts brush to paper whenever he needs to de-stress, Tan places a premium on doing good and giving back to society.  "I always tell my kids, 'Never be complacent'," he said.  "I hope each one of them will be a much better man than me - displaying my strengths and learning from my weaknesses."  United Global Ltd  Listed on SGX's Catalist board, United Global is an established, independent lubricant manufacturer with a wide range of high quality, well-engineered products under its in-house brand "United Oil", as well as a host of third-party brands. It is also engaged in the trading of base oils, additives and lubricants. Through its United Oil Company joint venture with Madrid-listed oil major Repsol, the Group manufactures a wide range of lubricants and specialty fluids for the automotive, industrial and marine industries, which are distributed throughout its extensive network covering more than 30 countries. An ISO 9001-certified company, the Group has a blending capacity of 60,000 MT per annum in Singapore, and 80,000 MT in Indonesia.  The company website is: www.unitedgloballimited.com/.  Click&nbsp;here&nbsp;for the company's StockFacts page.  For the three months ended 31 December 2019 financial results, click&nbsp;here.  For fourth quarter ended 31 Dec 2019 financial results, click&nbsp;here.   &nbsp;




European Event-Driven Analyst

Jesus Rodriguez Aguilar

Credit

With the end of the cycle, precipitated by the coronavirus pandemic, central banks will step in and there is no risk of interest rates increasing anytime soon.
Redemptions and lack of liquidity have brought down bond prices, and have, therefore, created attractive entry points for some issuers. Prices may not be as extreme as two weeks ago, but still there are opportunities aplenty.
The European Central Bank will purchase sovereign and corporate debt at a pace never seen before. It will provide a strong support for investment grade issuers. However, the credit market remains fragmented. The activity on primary market has not recovered for riskier issuers.
I have compiled a list of bonds by Spanish issuers (or whose parent is Spanish) in a variety of sectors. Most are multinational companies and should be able to emerge less harmed by the looming crisis.
Please read on.
(All data have been sourced from Capital IQ)

With the end of the cycle, precipitated by the coronavirus pandemic, central banks will step in and there is no risk of interest rates increasing anytime soon.
Redemptions and lack of liquidity have brought down bond prices, and have, therefore, created attractive entry points for some issuers. Prices may not be as extreme as two weeks ago, but still there are opportunities aplenty.
The European Central Bank will purchase sovereign and corporate debt at a pace never seen before. It will provide a strong support for investment grade issuers. However, the credit market remains fragmented. The activity on primary market has not recovered for riskier issuers.
I have compiled a list of bonds by Spanish issuers (or whose parent is Spanish) in a variety of sectors. Most are multinational companies and should be able to emerge less harmed by the looming crisis.
Please read on.
(All data have been sourced from Capital IQ)

Event-Driven

The Spanish government prevents takeover bids on strategic listed Spanish companies where the bidder (or its parent) comes from outside the European Economic Area, and the CNMV bans net short positions.
<ul class="">
<li>When they cross a 10% threshold shareholding in companies acting in sectors considered strategic from companies or when as a result of stake acquisitions, control of the Board is obtained.</li>
<li>Or when the investors or trade buyers that take over more than 10% of a company or the control of the Board (in any sector) are state-controlled companies or sovereign funds.
</li>
<li>The aim is to avoid that Companies from outside the EEA could take advantage of the current valuations to take over listed Spanish companies acting in sectors considered strategic.</li>
<li>On 30 March, the decree related to foreign investments was refined:
<ul>
<li>Extended to companies domiciled in the EEA whose parent is domiciled in countries that do not belong to the EEA.</li>
</ul>
</li>
</ul>
Companies such as <a href="https://www.smartkarma.com/entities/iberdrola-sa" target="_blank" data-smartkarma-citation="entities:21276:1" rel="noopener">Iberdrola SA (IBE SM)</a> , <a href="https://www.smartkarma.com/entities/repsol-sa" target="_blank" data-smartkarma-citation="entities:21292:1" rel="noopener">Repsol SA (REP SM)</a> and <a href="https://www.smartkarma.com/entities/telefonica-sa" target="_blank" data-smartkarma-citation="entities:21299:1" rel="noopener">Telefonica SA (TEF SM)</a> are looking good value (read the report for metrics).

The Spanish government prevents takeover bids on strategic listed Spanish companies where the bidder (or its parent) comes from outside the European Economic Area, and the CNMV bans net short positions.

When they cross a 10% threshold shareholding in companies acting in sectors considered strategic from companies or when as a result of stake acquisitions, control of the Board is obtained.
Or when the investors or trade buyers that take over more than 10% of a company or the control of the Board (in any sector) are state-controlled companies or sovereign funds.

The aim is to avoid that Companies from outside the EEA could take advantage of the current valuations to take over listed Spanish companies acting in sectors considered strategic.
On 30 March, the decree related to foreign investments was refined:

Extended to companies domiciled in the EEA whose parent is domiciled in countries that do not belong to the EEA.



Companies such as Iberdrola SA (IBE SM) , Repsol SA (REP SM) and Telefonica SA (TEF SM) are looking good value (read the report for metrics).

Limits to Foreign Investments in Spanish Corporations During the Coronavirus Crisis

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

MSCI Emerging Markets Index / Technical Analysis

We continue to believe the weight of the evidence points to a new leg higher for global equities, a viewpoint that is supported by the several international markets that are breaking out to new highs or making bullish inflections since our previous Int’l Compass (10/31/19). While developments continue to lean bullish, global equities have rallied substantially since the start of October, making it perfectly reasonable to expect some consolidation of recent gains which would allow for a more meaningful move higher.

We continue to believe the weight of the evidence points to a new leg higher for global equities, a viewpoint that is supported by the several international markets that are breaking out to new highs or making bullish inflections since our previous Int’l Compass (10/31/19). While developments continue to lean bullish, global equities have rallied substantially since the start of October, making it perfectly reasonable to expect some consolidation of recent gains which would allow for a more meaningful move higher.

Global Equity Strategy: The Pause that Refreshes?

TSE Tokyo Price Index TOPIX / Technical Analysis

Despite EAFE’s YTD outperformance relative to EM, EAFE and EM returns have generally been equal since August, shown by the stalemate in the EAFE vs. EM ratio. The U.S. dollar (DXY) is currently trading near support within the 16-17 month uptrend channel. Technicals suggest the most likely scenario is for the DXY uptrend to continue and for support to hold -- which would likely result in EAFE reasserting as leadership.  In this publication we highlight attractive investment themes and individual ideas across developed markets, with special attention given to Japan, Germany, Sweden, Italy, Spain, and Switzerland.

Despite EAFE’s YTD outperformance relative to EM, EAFE and EM returns have generally been equal since August, shown by the stalemate in the EAFE vs. EM ratio. The U.S. dollar (DXY) is currently trading near support within the 16-17 month uptrend channel. Technicals suggest the most likely scenario is for the DXY uptrend to continue and for support to hold -- which would likely result in EAFE reasserting as leadership.  In this publication we highlight attractive investment themes and individual ideas across developed markets, with special attention given to Japan, Germany, Sweden, Italy, Spain, and Switzerland.

Developed Markets Strategy: Stick with Japan

Spain

Repsol S.A., through subsidiaries, explores for and produces crude oil and natural gas, refines petroleum, and transports petroleum products and liquefied petroleum gas (LPG).  The Company retails gasoline and other products through its chain of gasoline filling stations.  Repsol's petroleum reserves are in Spain, Latin America, Asia, North Africa, and the Middle East and United States.

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Repsol SA (REP SM)

United Global Pursues Regional Ambitions

For lubricant specialist Jacky Tan, intuition is indispensable when it comes to making decisions in a complex and rapidly changing...

Singapore Exchange Ltd (SGX)

Spanish Issuers' Credit Opportunities

With the end of the cycle, precipitated by the coronavirus pandemic, central banks will step in and there is no risk of interest rates increasing...

Jesus Rodriguez Aguilar

Limits to Foreign Investments in Spanish Corporations During the Coronavirus Crisis

The Spanish government prevents takeover bids on strategic listed Spanish companies where the bidder (or its parent) comes from outside the...

Jesus Rodriguez Aguilar

Global Equity Strategy: The Pause that Refreshes?

We continue to believe the weight of the evidence points to a new leg higher for global equities, a viewpoint that is supported by the several...

Vermilion Research

Developed Markets Strategy: Stick with Japan

Despite EAFE’s YTD outperformance relative to EM, EAFE and EM returns have generally been equal since August, shown by the stalemate in the EAFE...

Vermilion Research

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52-week Range

Market Cap (USDm)

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