Top Stock Market Highlights: DBS Group, Sembcorp Marine, US Inflation and Buffett’s TSMC Stake

Welcome to the latest edition of top stock market highlights.

DBS Group (SGX: D05)

A week ago, DBS had just released a sparkling set of earnings for 2022 that saw its net profit scale new heights.

Singapore’s largest bank saw its total income boosted by higher net interest income resulting from a surge in interest rates.

But the lender isn’t stopping there.

The group is considering raising its shareholding in Shenzhen Rural Commercial Bank (SRCB) either before or after SRCB heads for an initial public offering.

As a recap, DBS purchased a 13% stake in the Chinese bank for S$1.1 billion in 2021 to expand its presence in emerging markets.

The stake in SRCB provides DBS with greater access to the Greater Bay Area and the supply chains within the region which CEO Piyush Gupta believes will become an “economic powerhouse” in the decades ahead.

Meanwhile, the DBS Digital Exchange (DDEx) has reported an 80% year on year surge in the amount of Bitcoin traded through the platform in 2022.

Ether, another popular cryptocurrency, saw its trading volumes soar by 65% year on year over the same period.

DBS launched DDEx back in late 2020 and it remains a members-only exchange that serves corporate and institutional investors, accredited investors, and family offices.

The good news is that DDEx managed to double its membership base last year to 1,200 participants, and prospects seem bright for the exchange to continue onboarding new members.

Sembcorp Marine (SGX: S51) and Keppel Corporation Limited (SGX: BN4)

In other news, Sembcorp Marine (SMM) received overwhelming support for its proposed merger with the Offshore and Marine (O&M) division of Keppel Corporation.

At the extraordinary general meeting convened to approve this deal, over 95% of the votes cast were in favour of the merger.

With this approval signed and sealed, it paves the way for the two oil and gas giants to combine into a stronger, well-capitalised entity to weather the challenges plaguing the industry.

The enlarged entity is also well-positioned to bid for projects in the renewable and traditional energy segments.

However, the same set of risks still applies to the new entity.

There will be restructuring and integration issues related to merging Keppel’s O&M division with SMM.

Cost inflation may be another bugbear that the new entity needs to deal with.

The picture for the enlarged SMM will look clearer once the rig giant releases its first set of financial statements post-merger.

US inflation data

The latest inflation data from the US seems to indicate that high inflation is not going away anytime soon.

The US Consumer Price Index (CPI) saw a month-on-month increase in January, moving up by 0.5 per cent, with higher rental and food costs being the main culprits.

On a year-on-year basis, prices were 6.4% higher.

Although this level was slightly lower than the 6.5% logged in December 2022, it was still above economists’ expectations of 6.2%.

Because of this number, investors are now concerned that the US Federal Reserve could hike interest rates more than originally projected.

There are rumblings for a 0.5 percentage point increase that may seep into the central bank’s decision-making sentiment and spark off a stronger attempt to rein in inflation.

Warren Buffett and TSMC (NYSE: TSM)

Elsewhere, there was a sense of disquiet among investors when news broke that Warren Buffett had reduced in his ownership of Taiwan Semiconductor Manufacturing Company or TSMC.

The savvy investor’s company, Berkshire Hathaway (NYSE: BRK.B), had previously taken close to a US$5 billion stake in the world’s most advanced microchip manufacturer back in November last year.

After just a quarter, Buffett’s holding company sold off 86% of its stake.

Assuming the sale was made at the average price during the period, it would have netted the investment firm a cool US$3.7 billion.

Warren Buffett is known for making long-term bets, so this action may run contrary to what investors are used to seeing.

Last month, TSMC announced a robust set of earnings with net revenue climbing 33.5% year on year to US$75.9 billion.

However, in light of weaker demand within the technology industry, TSMC has slashed its capital spending budget by 10% to US$36 billion, down from US$40 billion previously.

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Disclosure: Royston Yang owns shares of DBS Group.

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