Top Stock Market Highlights of the Week: Singapore’s Inflation Rate, US Federal Reserve, Grab Holdings and Ant Group

Welcome to the latest edition of top stock market highlights.

Singapore’s core inflation

There is good news for investors who are tracking Singapore’s inflation rate.

Core inflation has been on a steady downtrend since the beginning of this year.

After hitting a 14-year high of 5.5% in both January and February, core inflation cooled to 5% in the following two months before dropping to 4.7% in May.

June saw a further decline in core inflation to 4.2%.

The main reason for the fall was lower inflation for food and services.

Overall inflation also dropped to 4.5% last month, down from 5.1% in May, led by a decline in private transport inflation.

June also saw all sectors record a year-on-year inflation decline, and both the Monetary Authority of Singapore and the Ministry for Trade and Industry expect core inflation to moderate further in the remainder of 2023.

For this year, core inflation is projected to end up between 3.5% and 4.5%.

The US Federal Reserve

The US Federal Reserve has gone ahead and raised interest rates to their highest level in more than 22 years.

The central bank raised rates by a quarter of a percentage point which was widely anticipated as inflation remained above its 2% target level.

The benchmark overnight interest rate now stands between 5.25% and 5.5%.

Its stance remains the same for future rate hikes – the committee will assess additional information, watch incoming data and study the impact of rate hikes on the economy before deciding on a course of action.

The Federal Reserve could raise rates again at its September meeting if there was a need, and Chairman Jerome Powell has once again reiterated that rates will not be cut this year.

Despite the repeated increases in interest rates, the US economy remains on a firm footing with a low 3.6% unemployment rate and healthy job gains.

Based on these economic data, economists at the Federal Reserve are no longer predicting an impending recession.

Grab Holdings (NASDAQ: GRAB)

Grab, the ride-hailing and food delivery giant, is acquiring Trans-Cab.

Trans-Cab is Singapore’s third-largest taxi operator with a fleet of around 2,200 taxis and 300 private-hire vehicles.

The largest taxi company is still ComfortDelGro Corporation (SGX: C52), or CDG, with 8,800 taxis covering 60% of the market while SMRT Taxis (now rebranded as “Strides”) is a distant second with 2,500 taxis after buying over Premier Taxis earlier this year.

The purchase price was undisclosed but is believed to be more than S$100 million.

The deal, which must be approved by the authorities, also includes Trans-Cab’s vehicle workshop and fuel pump operations.

Assuming regulatory permission is granted, the transaction should be completed by the fourth quarter of this year.

Grab plans to launch an app that will be integrated with the mobile display units within Trans-Cab taxis to allow cab drivers to manage earnings and receive bookings from Grab’s platform and Trans-Cab’s existing call centre.

According to filings with the Accounting and Corporate Regulatory Authority, Trans-Cab reported a net profit of around S$8.7 million in 2021 on the back of revenue of S$81.1 million.

This purchase will cement Grab’s foothold in the taxi and private-hire car market and strengthen its presence here, pitting it against the market leader CDG.

Ant Group

Ant Group, an affiliated company of Alibaba Group (NYSE: BABA), is making another try for an IPO.

It has been more than two years since the fintech group’s first attempt at an IPO was suspended by the Shanghai Stock Exchange.

CEO Jack Ma is planning a restructuring of the firm to break off some of its non-core operations.

It will exclude its blockchain, database management services, and international businesses from the main entity.

The main entity will then apply for a financial services licence in China.

Once the restructuring is complete and the licence is granted, Ant Group can proceed with a public listing in Hong Kong.

These are still early days, so check back here for more updates on the fintech in the coming months.

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Disclosure: Royston Yang does not own shares in any of the companies mentioned.

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