Edition 2: Week Ending 8th Sept

Welcome to the second edition of our weekly newsletter, Beyond The Ticker! Last week was eventful, with notable developments in the ASEAN region, the United States, and the world of ESG investing. As we look ahead to the upcoming week, we've identified two stocks to keep an eye on and a thought-provoking topic to consider.

The first edition of Beyond The Ticker received an impressive 150+ new subscribers in just one week! I would like to extend my heartfelt gratitude to everyone who has chosen to make this newsletter a weekly ritual. Last week, I also highlighted NVIDIA as one of the major stocks to watch out for, and the company has indeed experienced significant volatility in the past week, sliding almost 13% from Monday's opening price.

[ASEAN] Malaysia defies West and seeks Russia

In a significant diplomatic move, Malaysian Prime Minister Anwar Ibrahim's working visit to Vladivostok, Russia has been hailed as a major boost to Malaysia-Russia relations. This visit, which included discussions on trade and investment, is seen as a step towards enhancing bilateral ties and fostering economic cooperation between the two nations. Anwar's engagement with Russian officials underscores Malaysia's strategic intent to diversify its international partnerships, particularly in the context of shifting geopolitical dynamics in the region. This visit is timely as Malaysia seeks to strengthen its economic resilience amid global uncertainties, positioning itself as a key player in ASEAN's economic landscape (The Star, 2024).

[USA] US Steel's Acquisition runs into Roadblock

In a significant development, President Joe Biden is poised to block the proposed $14.9 billion acquisition of U.S. Steel by Japan's Nippon Steel, citing national security concerns. This decision comes amidst growing bipartisan opposition to the deal, which has raised alarms regarding the potential impact on American jobs and the steel industry. The United Steelworkers union has been vocal in its opposition, arguing that a foreign acquisition could undermine labor rights and commitments to workers. Biden's anticipated veto reflects a broader political strategy as the administration seeks to appeal to labor unions and voters in crucial swing states like Pennsylvania, where U.S. Steel is headquartered (Channel News Asia, 2024; Benzinga, 2024).

The implications of this decision extend beyond immediate labor concerns, as it may also affect U.S.-Japan relations. Japanese officials have expressed unease over the potential veto, suggesting it could undermine trust between the two nations. Analysts have noted that blocking the deal could have long-term repercussions for economic cooperation and foreign investment in the U.S. steel sector. The Biden administration's use of the Committee on Foreign Investment in the United States (CFIUS) to block this acquisition marks a significant shift in how national security risks are assessed, potentially setting a precedent for future foreign investments (Atlantic Council, 2024; Control Risks, 2024).

[ESG] ESG Development in the future

The ESG investment landscape is undergoing a transformative shift, as highlighted by recent reports indicating that investment flows into transition-focused funds have now doubled those of traditional green funds. This trend reflects a growing recognition among investors of the importance of supporting companies that are actively working towards sustainability through innovative practices. Mirova, a prominent asset management firm, recently raised $233 million for its Environmental Solutions Impact Fund, signaling strong investor interest in sustainable initiatives. As the ESG framework continues to evolve, companies are increasingly being held accountable for their environmental impact, making it imperative for them to integrate sustainability into their core business strategies (ESG Today, 2024).

Stocks to Watch

General Electric (GE)

General Electric (GE) has garnered significant attention from fund managers due to its impressive 71.2% year-to-date performance. The company's ongoing transformation efforts, which include streamlining its business portfolio and focusing on high-growth areas like renewable energy and aviation, have been well-received by investors.

GE's recent spin-off of its healthcare business and plans to separate its energy businesses have unlocked substantial value, allowing the company to concentrate on its core strengths. The aviation segment, in particular, has shown strong recovery as air travel rebounds from the pandemic, with GE's aircraft engines powering many of the world's most popular commercial and military aircraft. Analysts suggest that the demand for GE Aerospace's products could lead to significant profits as the commercial aerospace sector fully recovers and the Leap engine aftermarket program enters a profitable phase (Morningstar, 2024).

Furthermore, GE's renewable energy business is poised to benefit from the global push towards clean energy and the increasing demand for wind turbines and other renewable energy solutions. The company's recent wins in offshore wind projects in the U.S. and Europe demonstrate its technological leadership and strong market position in this fast-growing sector.

Given GE's diversified business mix, improving financial performance, and exposure to high-growth industries, fund managers believe the stock has the potential to continue its strong run in the coming months. However, investors should be mindful of potential headwinds, such as supply chain challenges, inflation, and geopolitical tensions, which could impact the company's operations and profitability (MarketWatch, 2024).

Targa Resources (TRGP)

Targa Resources (TRGP) has also captured the interest of fund managers, with its 69.1% increase in stock price year-to-date. The company is a leading midstream energy infrastructure provider, primarily focused on gathering, processing, storing, and transporting natural gas and natural gas liquids (NGLs) in the United States.

Targa's strong performance can be attributed to several factors, including the recovery in energy demand, rising natural gas and NGL prices, and the company's strategic acquisitions and expansion projects. The recent acquisition of Southcross Energy Operating LLC for $200 million has strengthened Targa's presence in the Permian Basin, one of the most prolific oil and gas producing regions in the U.S. Analysts have noted that this acquisition enhances Targa's operational capabilities and market reach (TipRanks, 2024).

Moreover, Targa's plans to add a new 275 million cubic feet-per-day gas processing plant in the Midland Basin portion of the Permian Basin by the fourth quarter of 2023, in addition to the four plants it is already constructing in the region, demonstrate its commitment to capitalizing on the rising associated gas production in the area.

Fund managers are particularly impressed by Targa's strong financial position, with a well-structured balance sheet and ample liquidity to fund its growth initiatives. The company's focus on cost optimization and operational efficiency has also contributed to its profitability and cash flow generation. However, investors should be aware of potential risks associated with Targa's business, such as commodity price volatility, regulatory changes, and competition from other midstream players (TipRanks, 2024).

This week's thought: Future of Work

The future of work is evolving rapidly, and organizations must embrace flexibility to thrive in an increasingly dynamic environment. As remote work, hybrid models, and digital collaboration become the norm, it is essential to explore the implications of these changes on productivity, employee well-being, and organizational culture.

One of the most significant shifts in the future of work is the rise of remote and hybrid work models. This transformation has been accelerated by the COVID-19 pandemic, which forced many organizations to adapt quickly to remote work arrangements. While this shift has provided employees with greater flexibility and autonomy, it has also raised questions about maintaining productivity and collaboration. Organizations need to rethink traditional management practices and develop new strategies to foster engagement and accountability in a remote setting (Baker et al., 2020).

Moreover, the emphasis on flexibility in the workplace can significantly impact employee well-being. Flexible work arrangements can lead to improved work-life balance, reduced stress, and increased job satisfaction. However, they can also blur the boundaries between work and personal life, leading to burnout if not managed properly. Employers must prioritize mental health and well-being initiatives to support their employees in navigating these challenges and creating a sustainable work environment (Kelliher & Anderson, 2010).

Additionally, the future of work calls for a reevaluation of organizational culture. As teams become more dispersed and diverse, fostering a sense of belonging and connection becomes increasingly important. Organizations must invest in building inclusive cultures that embrace different perspectives and encourage open communication. This shift not only enhances employee engagement but also drives innovation and creativity, as diverse teams are better equipped to tackle complex problems (Hewlett et al., 2013).

Thank you for joining us for this week’s edition of Beyond The Ticker! I hope you found the insights and updates valuable as you navigate the ever-changing landscape of investments and market trends. Your engagement and support mean the world to me, and I am excited to continue this journey together.

As we move into the week ahead, remember to stay curious and informed. Keep an eye on the stocks I've highlighted, and consider the thought-provoking topics we've discussed. Your perspective is essential in shaping the future of investing, and I encourage you to share your thoughts and feedback with us. Don’t forget to tune in next Monday at 8 AM for our next edition, where I will bring you the latest news, stock insights, and more topics to ponder. Until then, stay safe and invest wisely!

Authored by: Lin Haoying

Hello, thank you for reading the 2nd edition till the end, I am starting this newsletter as a way for me to keep up to date with Market News as well as General Affairs. I hope that you will learn from this journey as much as I have learnt from compiling this. I am a student in NUS Business School interested in Finance, Technology & ESG. I will be making other editions of this Newsletter centered around these 3 topics!

References

Atlantic Council. (2024, September 6). Biden blocking Nippon Steel's purchase of US Steel puts friendshoring and more at risk. Retrieved from https://www.atlanticcouncil.org/blogs/new-atlanticist/biden-blocking-nippon-steels-purchase-of-us-steel-puts-friendshoring-and-more-at-risk/

Bankrate. (2024, September 6). Best-performing stocks: September 2024. Retrieved from https://www.bankrate.com/investing/best-performing-stocks/

Baker, E., Avery, G. C., & Crawford, C. (2020). Satisfaction and performance in remote work: A review of the literature. Journal of Business Research, 116, 1-10. https://doi.org/10.1016/j.jbusres.2020.05.027

Benzinga. (2024, September 5). Biden close to blocking Japan's U.S. Steel takeover: sources. Retrieved from https://finance.yahoo.com/video/biden-close-blocking-japans-u-052136915.html

Channel News Asia. (2024, September 5). US Steel's proposed US$14.9 billion merger with Nippon Steel. Retrieved from https://www.channelnewsasia.com/business/us-steels-proposed-us149-billion-merger-nippon-steel-4588466

Control Risks. (2024). Ten global topics and trends to watch in 2024. Retrieved from https://www.controlrisks.com/our-thinking/insights/ten-global-topics-and-trends-to-watch-in-2024

ESG Today. (2024, September 5). ESG investing news, analysis, research and information. Retrieved from https://www.esgtoday.com

GE Aerospace Stock Quote (U.S.: NYSE). Retrieved from https://www.marketwatch.com/investing/stock/geTipRanks. (2024, September 5).

Hewlett, S. A., Marshall, M., & Sherbin, L. (2013). How diversity can drive innovation. Harvard Business Review, 91(12), 30-30. Retrieved from https://hbr.org/2013/12/how-diversity-can-drive-innovation

Kelliher, C., & Anderson, D. (2010). Doing more with less? Flexible working practices in the context of the recession. British Journal of Management, 21(3), 1-15. https://doi.org/10.1111/j.1467-8551.2010.00714.x

Morningstar. (2024, September 5). GE Stock - General Electric Stock Price - NYSE: GE. Retrieved from https://www.morningstar.com/stocks/xnys/ge/quoteMarketWatch. (2024, September 5).

Targa Resources (TRGP) Stock Forecast, Price Targets and Analysts Predictions. Retrieved from https://www.tipranks.com/stocks/trgp/forecast