Halister News

(Bloomberg) -- Singapore’s sovereign yield curve bear-steepens as the biggest outflow from South Korea’s govt bonds since at least 2014 spurs concern global funds will shift focus away from Asia.

• Selloff of Singapore’s bonds accelerates as Treasuries extend declines into London session after U.S. 10-year yield broke 200- DMA
• Foreign investors sold more than 2t won ($1.7b) of Korean Treasuries on Tuesday, according to data from finance ministry
• Caution may be creeping in as markets head into 4Q, says UOB rates strategist Victor Yong
  • Report of large liquidation in Korean treasury bonds fans concern over portfolio rebalancing from Asia but not a “disruptive” exit
  • Related to that is improvement in sentiment toward U.S., driven by a possible Fed rate hike, balance-sheet compression and tax reforms
  • Sees Singapore’s 10-year yield rising to 2.35% by year-end
  • UOB expects Monetary Authority of Singapore to tighten currency policy in April 2018, which should provide a buffer from any U.S. rate increases
• Yield changes on the day:
  • 5s: +5bps to 1.72%
  • 10s: +5bps to 2.23%
  • 20s: +9bps to 2.54%
  • 30s: +8bps to 2.58%
  • NOTE: Yield changes are computed by comparing current prices with Wednesday’s closes released by MAS

To contact the reporter on this story: Masaki Kondo in Singapore at mkondo3@bloomberg.net

--SHAJI MATHEW

(Bloomberg) -- Turkey’s automotive exporters seen offering good value following stocks’ over-reaction to Wednesday’s 40% hike in annual vehicle taxes, HSBC analysts including Cenk Orcan writes in report.

• Says, for an average vehicle ownership, taxes would now equate to ~2% of the new vehicle purchase price, up from 1.5%
  • “This should have very limited impact on overall Turkish vehicle sales and it could be an opportunity to build exposure in exporters”
• Prefers Tofas to Ford Otosan due to its stronger operating margins, continued market share gains and still lagging share price YTD
• Ford Oto’s exposure to the imported car market in Turkey seen creating “margin volatility from time to time” and pulls its defensiveness one notch below Tofas’ at times of weaker lira
  • That said, Ford Oto’s medium-term growth outlook is better than Tofas’ from a capacity perspective and its dividend yield is superior
• Tofas raised to buy from hold, PT raised to 36 liras
• Ford Oto maintained at hold, PT raised to 49 liras
• Dogus Oto maintained at hold, PT raised to 9.35 liras from 9.10 liras
• Turk Traktor maintained at hold, PT cut to 83.70 liras from 90 liras

To contact the reporter on this story: Tugce Ozsoy in Istanbul at tozsoy1@bloomberg.net To contact the editors responsible for this story: Celeste Perri at cperri@bloomberg.net Angela Cullen

--DEREK WALLBANK