Weekly Market Insights: Biden Agrees to Debt-Ceiling Deal

In recent weeks, the focus has been on the possibility of a debt-ceiling crisis, causing concerns among investors. While the outcome of the debt-ceiling deliberations in Washington remains uncertain, another topic has captured attention—the potential impact of artificial intelligence on the market.

What you need to know

As the deadline for resolving the debt-ceiling issue draws near, market volatility has intensified with each piece of news coming out of Washington. However, it’s important to note that these debt-ceiling crises are not uncommon, and historically, resolutions have been reached. Although the next few days may be uneasy, it is highly likely that some form of a deal will be reached. While Biden has agreed with the debt-ceiling deal, but still the negotiated deal needs to pass through both the House and the Senate, and there could likely emerge some objections that could still delay the signing until the 5 June.

Looking beyond the debt-ceiling debate, AI has emerged as a significant theme in the market. Companies like Nvidia and Microsoft, at the forefront of AI technology, have already witnessed the benefits reflected in their financial performance and stock prices. However, the impact of AI on non-tech companies is still a matter of speculation. And another question remains, which companies will benefit the most from this technological advancement?

Identifying the potential winners among non-tech firms will require time and careful analysis. It is worth considering companies that have successfully embraced past transformative trends such as online selling or cloud-based infrastructure. Factors like forward-thinking management and an experimental organisational culture often contribute to a company’s success.

What’s happening in Singapore

DBS has forecast a Return on Equity of above 17% during its investor presentation last week, with full-year net interest margin to be around 2.05% to 2.1%. It will also focus on two new stategic growth in cross-border, low-value payments as well as through its digital asset ecosystem. DBS expects these two initiatives could hit more than SGD 400m by 2025.

Sea’s 1Q23 net profit of USD88m missed the analyst’s estimates, mainly due to a USD118m goodwill impairment charge. However, Sea will likely generate a net profit this year due to more sustainable reinvestment, effective cost management and the broadening of its digital bank offerings across Southeast Asia.