Weekly Market Insights: MAS Likely to Tighten Policy

Last week, OPEC+ surprised the market with production cuts that could fan inflation fears. As the US reports consumer prices on Wednesday, the Fed’s options may be limited, likely driving another interest rate hike and putting pressure on US stocks. Investors may seek refuge in defensive Singapore, as the MAS is expected to tighten policy in their upcoming mid-April meeting, leading to SGD appreciation.

What you need to know

While uncertainty looms, the banking sector may offer relative safety. With smaller securities holdings, ambiguity around mark-to-market losses is reduced. Additionally, the sector has low dependence on alternative Tier-1 instruments, sticky funding, and high liquidity levels, improving P&L and balance sheet visibility.

What’s happening

In a move towards the future, OCBC has stepped into the metaverse, becoming the first Singapore bank to offer a virtual banking experience. Occupying nine plots of virtual land, OCBCx65Chulia is open to the public, including non-OCBC customers. Users can explore the platform and learn more about the bank’s latest products and services. The space also provides an additional touchpoint to help the bank reach out to a younger audience.

As consumers worldwide put off spending on electronics during a period of soaring inflation, investors are uncertain about how the popularity of iPhones and mobile devices will hold up this year. Xiaomi’s smartphone shipments have already taken a hit, diving 26% in the fourth quarter. Meanwhile, manufacturers like Foxconn are re-examining their supply chain centred on China.

In other news, MLT has announced a deal to acquire eight logistics assets in Japan, South Korea, and Australia, as well as potential acquisition and divestment in Greater China for around SGD946m. The deal will be financed by a mix of debt and equity, resulting in DPU and NAV accretion while capping leverage below 40%.