October 11, 2019

World

Softbank backed Vir Biotechnology Prices IPO at Low end of Expected Range

Vir Biotechnology priced its initial public offering (IPO) at US$20 a share, at the bottom end of expectations, the latest underwhelming investment performance for a stock held by SoftBank’s Vision Fund.

The San Francisco-based Vir raised US$142.9 million, having previously set a price range of US$20-$22 per share. The IPO valued Vir, 21% owned by the Vision Fund, at US$2.2 billion.

Vir’s IPO compounds SoftBank’s high-profile setbacks of late on big bets such as Uber Technologies and WeWork. Uber is now worth around 35% less than its IPO price in May, while WeWork cancelled its planned IPO last week.

 

Euro Countries Form Budget to Deal with future Financial Shocks

Finance ministers from across the euro zone have overcome months of differences to finalize the framework for a shared financing mechanism, designed for deployment in the event of a future economic shock.

Euro zone countries will be required to pay capped contributions into the fund, and those under economic pressure could be permitted to slash their own contributions in half when necessary. The fund’s actual size and scope has yet to be determined, and will likely provoke further debate among European heads of government later in the year as they embark on discussions about the next half-decade of broader EU finances.

The development of an obligatory “rainy day” savings pot has long attracted support from certain member states, ever since the euro zone debt crisis threatened the very existence of the single currency several years ago and required wealthier states to disproportionately contribute to the underwriting of bail-outs for indebted economies like Greece.

 

Almost 1 in 5 Americans Hide Cash in their Homes Fearing a Recession

Based on their fears of a potential recession, 17% of Americans have started hiding cash in their home, according to a new poll from MetLife of over 8,000 U.S. adults over the age of 18. And 21% of respondents report they have become more conservative with their money.

Making these kinds of moves can prove costly. If you’re hiding cash in your home, you’re not able to take advantage of compound interest, which helps your money grow exponentially the longer you have it invested. Additionally, inflation eats away at the value of your money, thus leaving large amounts of cash lying around can make it harder to achieve your long-term financial goals.

About 41% of Americans say they check their investments more frequently because of talk about the potential for a market downturn, according to MetLife’s survey.

One of the biggest mistakes you can make — especially if you have a well-built portfolio — is panicking and selling off your investments. Building a balanced portfolio means spreading out your money by investing in different types of assets, such as stocks and bonds, in a variety of different sectors. This lowers the risk that your entire investment will be wiped out if something happens to one particular company or industry.

 

Future Meat Technologies, A Lab Grown Meat Start-Up, Raises US$14 Million in Series A Funding Round

Future Meat Technologies, a start-up that makes lab-grown meat, raised US$14 million in its Series A funding round. Future Meat plans to use the proceeds to expand research and development efforts and build a cultured meat manufacturing facility to begin production next year.

Cultured meat is made by putting stem cells from the fat or muscle of an animal into a culture medium that feeds the cells, allowing them to grow. The media is then put into a bioreactor to support the cells’ growth.

By recycling some parts of the media and using lower-cost nutrients, Future Meat is working to reduce the high costs of making lab-grown meat. Future Meat has managed to reduce production costs to US$150 per pound of chicken and US$200 per pound for beef. By 2022, Future Meat plans to launch a second line of entirely lab-grown meat that will cost less than $10 per pound.

U.S. Consumer Inflation Tame, Labour Market Still Tightening

U.S. consumer prices were unchanged in September and underlying inflation retreated, supporting expectations the Federal Reserve will cut interest rates in October for the third time this year amid risks to the economy from trade tensions.

A strong labor market could, however, complicate matters for the Fed amid divisions among officials on the appropriate response to the rising headwinds to growth. Other data on Thursday showed an unexpected decline in the number of Americans filing claims for unemployment benefits last week.

Layoffs remain low even as companies are becoming hesitant to hire more workers because of a slowing economy. The unemployment rate is near a 50-year low of 3.5%.

The longest economic expansion on record, now in its 11th year, is under threat from the 15-month-old U.S.-China trade war, slowing growth overseas and a likely disorderly exit from the European Union by Britain. The trade war has undermined business investment and helped to drive manufacturing into recession. Growth is also being restricted by the fading stimulus from last year’s US$1.5 trillion tax cut package.

 

Port of Los Angeles September Imports Fall

The Port of Los Angeles, the busiest for ocean trade with China, processed fewer containers of imported goods in September as the prolonged U.S.-China trade war whipsaws global supply chains.

Imports fell 2.9% to 402,320 TEUs, or 20-foot equivalent units, in September – the first decline at the Port of Los Angeles since February. Exports dropped 11% to 130,769 TEUs – the 11th consecutive monthly fall. TEU is a standardized maritime measurement for counting cargo containers.

Imports surged at the Port of Los Angeles and other major U.S. seaports in August after importers rushed in goods to avoid new 15% U.S. tariffs on Chinese-made consumer goods such as surfboards, smart watches, flat-screen TVs and shoes that started on Sept. 1.

More trade swings are expected as the list of tariff-targeted goods is expanded on Dec. 15 to cover about US$300 billion in imports. In addition, 25% tariffs on $250 billion worth of imports already imposed over the past year are set to rise to 30% on Oct. 15.

 

Toyota Unveils Revamped Hydrogen Sedan to Take On Tesla

Toyota Motor Corp unveiled a completely redesigned hydrogen-powered fuel cell sedan on Friday in its latest attempt to revive demand for the niche technology that it hopes will become mainstream.

Japan’s biggest automaker has been developing fuel-cell vehicles for more than two decades, but the technology has been eclipsed by the rapid rise of rival battery-powered electric vehicles promoted by the likes of Tesla Inc.

Ahead of the Tokyo Motor Show starting on Oct. 24, Toyota unveiled a prototype of the new hydrogen sedan built on the same platform as its luxury Lexus brand’s LS coupe. The new Mirai model boasts longer driving range than its predecessor and completely redesigned fuel cell stack and hydrogen tanks, the company said.

Its sporty redesign with longer wheelbase and lower-slung chassis is a marked departure from the first-generation Mirai, which looks like a bulked-up Prius hybrid.

The new car also has a 30% improvement in driving range over the previous iteration’s approximately 700 kilometers (435 miles), according to the company.

Toyota has sold fewer than 10,000 of the Mirai, a fuel cell sedan it touted as a game changer at its launch five years ago. By contrast, Tesla sold 25,000 of battery-powered Model S sedans in its first year and a half.

 

 

 

WeWork India Seeks New Backers After Talks with Local Bank Collapse

WeWork’s India franchise has seen talks with existing backer ICICI Bank on US$100 million in new funding break down since The We Company’s botched stock market launch and is in discussions on raising US$200 million from other investors, the venture’s chief shareholder Jitu Virwani said on Thursday.

Real estate mogul Virwani’s Embassy Group, backed by U.S. private equity fund Blackstone Group Inc, set up WeWork India two years ago and had been in talks to sell the bulk of the operation to the brand’s global parent The We Company.

Virwani said those discussions had been put on hold indefinitely and that Embassy was raising around 40 billion rupees (US$563.06 million) from sales of some its assets that it would invest in WeWork India if need be.

Investors have expressed concerns about its burgeoning losses as well as how well a business model that involves taking long-term leases and renting out spaces for the short term will weather a global downturn.

Embassy has so far pumped roughly 14 billion rupees into the Indian WeWork business, which includes 9 billion rupees from Embassy itself, 3 billion rupees from ICICI Bank, and 2 billion rupees from other investors such as Tata Capital.

 

U.S. Weekly Jobless Claims Unexpectedly Fall

The number of Americans filing applications for unemployment benefits unexpectedly fell last week, suggesting the labor market remains on solid footing even as hiring is slowing in tandem with a moderation in economic growth.

Initial claims for state unemployment benefits dropped 10,000 to a seasonally adjusted 210,000 for the week ended Oct. 5, the Labor Department said on Thursday. Data for the prior week was revised to show 1,000 more applications received than previously reported.

Economists polled by Reuters had forecast claims unchanged at 219,000 in the latest week. The Labor Department said only claims for Nebraska were estimated last week.

Claims had risen for three straight weeks. Some of the increase in claims could have been the result of an ongoing strike by about 50,000 workers at General Motors.

While striking workers are not eligible for unemployment benefits, the work stoppage has affected production, impacting non-striking employees at suppliers.

Despite the low layoffs, the labor market is slowing as demand for labor cools against the backdrop of a step down in economic growth.

Some of the loss in economic momentum is because of a 15-month trade war between the United States and China, which has weighed on business confidence and pushed manufacturing into recession. The fading stimulus from last year’s US$1.5 trillion tax cut package is also restraining growth.

 

Singapore

JP Morgan Targets Asia’s Growing Wealth with Singapore Trust Company

JPMorgan Chase & Co. has set up a trust company in Singapore, its first in Asia, to cater for a growing cadre of ultra-wealthy individuals in the region.

The move by the U.S. banking giant, which already has a Delaware trust company for U.S.-based clients and one in the Bahamas, comes amid a boom in family offices, or private investment vehicles, in Hong Kong and Singapore.

Several of JPMorgan’s European clients were also keen to book their trusts in Singapore, she added.

The Asia Pacific region had 814 billionaires at end-2017, accounting for 38% of the global billionaire population, with China minting two new billionaires every week, a report by UBS and PwC found last year.

Demand for trust companies is on the rise in Singapore, one of the world’s leading financial and legal centers, as newly wealthy families in Asia seek legal structures to park their assets and begin succession planning.

JPMorgan has set up its Singapore trust company, which had been in the works for some time, some three years after the private bank established its Asian booking center there.

 

CapitaLand Priced S$500 Million Fixed-Rate Perpetual Notes at 3.65 Percent

CapitaLand priced S$500 million fixed-rate perpetual notes at 3.65 percent, with the issue date set for 17 October, the property developer said in a filing to SGX Thursday.

The notes will be issued under the S$5 billion euro medium-term note program established in April.

The first reset date for the notes will be five years from the issue date, with the first reset distribution rate to be set at the prevailing five-year SGD swap offer rate, plus the initial spread of 2.20 percent.

At the next reset date, 10 years for the issue date, the distribution rate will reset to the prevailing five-year SGD swap offer rate, plus the initial spread, plus a step-up margin of 1.0 percent, the filing said.

The net proceeds will be used to refinance existing borrowings, financing investments and general corporate purposes. DBS Bank was appointed the sole global coordinator for the perpetual notes, while DBS Bank, OCBC and UOB were joint lead managers and joint bookrunners.

 

Q&M to Sell Partial Stake in Aidite (Qinhuangdao) Technology Co. Ltd

Q & M Dental Group has entered into a share transfer agreement with several parties, namely Suzhou Junlian Xinkang Venture Capital Partnership, Health Advance Limited, Schroder Adveq Asia Hong Kong I Limited and ASP Hero SPV Limited, for a partial disposal of 36.000% shares held in Aidite (Qinhuangdao).

Upon completion, the Group will receive approximately S$49 million in net proceeds from the sale, giving rise to an estimated gain on disposal of S$19 million after taking into account the associated costs of the proposed disposal.

Following the divestment, the Group will continue to retain approximately 12.3% of the registered capital of Aidite and such retention will allow the Group to participate in the future growth of Aidite. Following completion of the sale, QMAI will also enter into a joint venture agreement with the other shareholders of Aidite, including the buyers, to regulate their relationship in relation to Aidite.

 

SPH REIT Posts 2.1 Percent Rise in Q4 DPU to 1.46 S Cents.

SPH Reit on Thursday reported a 2.1 per cent rise in distribution per unit (DPU) to 1.46 Singapore cents for the fourth quarter ended Aug 31, up from 1.43 cents a year ago.

Gross revenue rose 10.2 per cent year-on-year to S$58.37 million on the back of contributions from The Rail Mall in Singapore and Figtree Grove Shopping Centre in Australia, which were acquired in June and December last year respectively. Meanwhile, net property income (NPI) was up 11.8 per cent to S$45.81 million. Income available for distribution clocked S$35.37 million or 2.3 per cent higher from the corresponding quarter a year ago.

For the full year ended Aug 31, gross revenue increased 7.9 per cent to S$228.64 million, thanks to contributions from the two malls acquired last year. NPI worked out to be 8.3 per cent higher at S$179.78 million, and income available for distribution edged up 1.9 per cent to S$145.03 million.

 

GCCP to Acquire Palm Oil Grower in RTO Deal

GCCP Resources has entered a non-binding Memorandum of Understanding (MoU) to fully acquire an Indonesian palm oil producer for S$220.3 million, resulting in a reverse takeover (RTO) of the Catalist-listed firm.

The target company is Arjuna Utama Sawit, which owns 53,000 hectares of oil palm plantations in Central Kalimantan, Indonesia. It harvests fresh fruit bunches and mills them into crude palm oil (CPO) and palm kernel (PK).

The S$220.3 million consideration will be paid via the issue of 3.67 billion shares of GCCP, at an issue price of S$0.06 to the vendors of the deal, Premier Palmoil Energy and Oilim Agriculture. All parties plan to retain GCCP’s limestone quarry business in the company post-RTO.

GCCP will also issue 55 million shares, representing 1.12 per cent of its enlarged share capital, at the same issue price to consultancy CO2 Capital as arranger fees.