What's Trending: What You Need to Know About the SG Market in 2023Author: SGX What you need to know about the SG market#whatstrending feat. Beansprout Ever wondered what is currently driving the local and regional markets? #whatstrending is a new series addressing some of the most trending questions/topics on the markets for investors. Designed to be educational, expect to get factual information on what is driving sectors and stocks listed on SGX, featuring insights from professionals in the community. Today, we hear more from Beansprout, a MAS-licensed investment advisory platform offering expert insights on Singapore stocks, REITs, ETFs and bonds. Gerald Wong, founder and CEO, shares his thoughts on market developments. Q: How’s the economic environment as we step into the new year? From Gerald, founder and CEO of Beansprout: The global economic outlook remains challenging in 2023. The International Monetary Fund (IMF) expects global growth to slow to 2.7% in 2023 from 3.2% in 2022. It is also noteworthy that the IMF chief expects one-third of the world’s economies to be in recession. Locally, the Ministry of Trade and Industry (MTI) expects Singapore’s economy to grow by 0.5% to 2.5% this year. This is a slower pace of growth compared to the 3.8% expansion in 2022. The good news is that we have seen some easing of inflation, with consumer prices in the US coming down in December from the previous month. Likewise, we have seen consumer price inflation in Singapore easing in December 2022. With price pressures abating, central banks are slowing down the pace of interest rate hikes. The Fed raised interest rates by 0.25% on 1 February, after 0.50% in December 2022 and four consecutive hikes of 0.75% earlier last year.  Q: What are key developments affecting the Singapore market to look out for? From Gerald, founder and CEO of Beansprout: China has relaxed its Covid-19 measures at a faster pace than what most investors were expecting. Together with various measures to support the property sector, it would seem like Chinese authorities are prioritising growth once again. This could provide a much-needed boost to the global economy. Economists are expecting a slower pace of interest rate increases by the US Federal Reserve (Fed) this year. Some are even expecting the Fed to start cutting interest rates before the end of the year. We could start to see lower interest rates in Singapore too if rates in the US were to start falling. This could affect investor sentiment toward the interest-rate sensitive sectors, such as real estate investment trusts (REITs). Companies may also choose to undertake corporate action to improve their returns with the slowing global growth. As a result, there could be more mergers and acquisitions (M&A) activity amongst Singapore-listed corporates, continuing a trend that we have seen over the past year.  For more insights on Singapore stocks, REITs, ETFs and bonds, visit growbeansprout.com. STI Posts 3.5% Gain in January, Led by REITs & China OutlookAuthor: SGX
Jan 2023 Market Highlights Finishing Jan at 3,365.67, the STI gained 3.5% on the month, formed a nine-month high on 30 Jan, with a close to 200-point trading range, that more than doubled the less than 90-point range seen in Dec. Mean reversion saw internet and semiconductor industries lead the global stock market in Jan. In Singapore the Technology Sector booked the most net fund inflows for the month, after seeing the most net fund outflows in 2022. The close to 40 traded stocks of Singapore’s Technology sector booked S$49 million in net fund inflows for the month, led by inflows to STI constituent Venture Corporation, followed by UMS Holdings, Frencken Group, and ISDN Holdings. The Lion-OCBC Securities Hang Seng Tech ETF also ranked as the most traded SGX-listed ETF in Jan, and the Shares Asia High Yield Bond ETF with 54% country allocation to China, HK and Macau recorded S$58 million in net inflows for month of Jan, following outflows of S$146 million seen in 4Q22.  The recent string of business-friendly policies adopted by China, also saw the global Consumer Cyclicals and Basic Material Sectors outpace in Jan. Singapore’s Consumer Cyclical booked the third highest inflows after Utilities, while the overall Singapore stock market booked net fund outflows in the vicinity of S$300 million.  In Jan, expectations for the US Federal Reserve at the 1 Feb FOMC also anchored to a 25bps hike rather than a 50bps hike, which saw 10-yr UST yields decline from 3.88% to 3.53%, while the USD/SGD depreciated from 1.34 to 1.31. Markets remain highly sensitive to interest rate outlooks, taking cues from Federal Reserve official speaking and media engagements, and inflation gauges between FOMCs. The slightly less hawkish outlook for the US Fed Funds rate coincided with the mean reversion of sector performances extending to REITs, which saw the S-REIT Sector outpace the STI in Jan. Within the STI, Keppel DC REIT led the Index over Jan, following its ranking among the three biggest STI decliners in 2022 and 2021. Mapletree Pan Asia Commercial Trust, Frasers Logistics & Commercial Trust, Mapletree Logistics Trust, and Mapletree Industrial Trust also ranked among the seven strongest STI constituents for the month. Keppel DC REIT reported on 31 Jan that its FY22 (ended 31 Dec) distributable income grew 7.7% from FY21, while maintaining its continued pursuit of data centre growth opportunities with its disciplined capital management approach. In 2022, Keppel DC REIT was among the 18 S-REITs that announced acquisitions, expanding its presence in London, one of the top global data centre hubs and in Guangdong, one of China’s most established data centre markets. On 31 Jan, the IMF estimated that global growth at 3.4% in 2022, would decelerate to 2.9% in 2023, then pick up to 3.1% in 2024. Both growth rates for 2022 and 2023 were slightly upwardly revised by 0.2%, on greater-than-expected resilience in Europe in 2022 and the outlook for emerging and developing economies in 2023. However, weighed by dampening global demand, global trade volume projections were revised slightly downwards to 2.4% in 2023 and 3.4% in 2024, with average oil prices expected to decline 16% in 2023. However, at the same time, global inflation was revised slightly upwards to 6.6% in 2023 and 4.3% in 2024, with pre-pandemic levels around 3.5% and 2022 inflation at 8.8%. The report emphasised that despite the “expected decline in the price of oil, upside risks to the inflation outlook remain primarily because core inflation remains stubbornly high across most regions, labor markets are still tight, energy prices remain pressured by Russia’s ongoing war in Ukraine, and supply chain disruptions may reappear”, which means global financial stability risks remain elevated.
Singapore’s Most Traded Stocks in Jan 2023 For the month of Jan, Singapore’s 100 most traded stocks saw a combined S$1.1 billion in daily trading turnover, while contributing the bulk of the near S$300 million in net fund outflows. The 100 stocks averaged 5% total returns, following on from the same 100 stocks generating 9% average total returns in 2022. Eight of the 100 stocks which represented the Technology Sector averaged 11% total returns in Jan, following 36% declines in total return in 2022. With 70% revenue exposure to China back in 2021, ISDN Holdings led the performance of the eight technology stocks with a 39% total return in Jan. The Telecommunications Sector led the net fund outflows of the 100 stocks and broader Singapore stock market, with Singapore Telecommunications booking the highest net fund outflows of S$181 million, after it booked the highest net fund inflows, in the vicinity of S$840 million in 2022. STI stocks that were listed for trading for the entire 2022 that saw the biggest moves up in Jan turnover rankings included Genting Singapore, DFI Retail Group Holdings and Thai Beverage PCL.
Non-STI stocks that were listed for trading for the entire 2022, among the 100 trades stocks in Jan that also saw the biggest moves up in month’s turnover rankings included China Aviation Oil (Singapore) Corporation, TOTM Technologies and Tianjin Pharmaceutical Da Ren Tang Group Corporation:
There were also 23 primary listed companies that bought back their shares in Jan for a total consideration of S$25.5 million, which was down from the S$52.9 million in consideration in Jan 2022. Leading the buyback consideration tally (and avg price paid per share) were Oversea-Chinese Banking Corporation (S$12.59), Best World International (S$2.04), HRnetGroup (S$0.802), Singapore Technologies Engineering (S$3.39) and First Resources (S$1.41). The 100 most traded SGX-listed stocks in Jan are tabled below.
Note ^ on SGX Watchlist. Source: SGX, Refinitiv, Bloomberg (Data as of 31 Jan 2023). Note Fund Flows takes account of trades in the ‘Buying-in Market’ and ‘Unit Share Market’. Technology Sector Led Global Stocks in JanuaryAuthor: SGX
The Worldwide Semiconductor Trade statistics maintained back on 29 Nov that global semiconductor billings would contract by 4.1% in 2023, following 4.4% growth in 2022 and 26.2% growth in 2022. Since these estimates have been published, China has pressed ahead with pro-growth and business friendly policies, appointed its former ambassador to the United States as its new Foreign Minister, while also seeing some moderate growth tailwinds for December. This has seen the global stock market led by the Technology Sector and Semiconductor Industry over the past four weeks, after these segments led declines in 2022. The forward-looking, mean reversion has also been supported by expectations that the US Federal Reserve will hike rates by 25bps on 1 February and 22 March, with the 25bps hike on 8 March currently expected to be the peak/terminal rate before the FOMC pivots with no change to rates on 3 May. The outlook for global inflation, however, is driven by both supply and demand factors which remain relatively fluid, and Singapore, South Korea and Taiwan’s exports have been registering YoY declines in recent months. As maintained by Deloitte’s 2023 technology industry outlook a “major challenge now for technology companies is how to weather a potential economic slowdown by trimming costs, increasing efficiency, and growing revenues”. The outlook added that “beleaguered by softening consumer spending, lower product demand, and falling market capitalisation, tech companies’ C-suites are feeling the urgency to increase margins and grow revenues” and “beyond workforce adjustments, approaches may include making business processes more efficient, relying more heavily on intelligent automation, modernizing legacy architectures, and considering strategic mergers and acquisitions. For the first four weeks the former developments have seen 14 stocks of Singapore’s Technology Sector average daily turnover exceed S$50,000. These 14 stocks have averaged 10% gains over the past four weeks, while booking S$42 million of net fund inflows, outpacing the STI, and contrary to the broader Singapore stock market which has booked net fund outflows. This follows average declines of 27% in total return in 2022 on S$327 million of net fund outflows for the 14 stocks. The 14 stocks are tabled below.
Source: Bloomberg, Refinitiv, SGX. Data as of 27 Jan 2023. STI constituent Venture Corporation maintains the highest market capitalisation and average daily turnover of the above tabled stocks. It will be releasing its FY22 results after the 24 February close. For its 9MFY22 (ended 30 Sep) revenue increased 28.0% YoY to S$2,818.7 million, while net profit rose 24.9% YoY to S$271.7 million with all technology domains contributing to the robust 9MFY22 performance. Venture Corporation also noted its Malaysian entities delivered the most impressive contributions to the Group’s overall performance and that beyond FY22, the science and technology market segments may continue to see volatility if geopolitical tensions, COVID-19 lockdowns, and other headwinds remain unabated. Venture Corporation generated a decline of 3% in total return in 2022, and an 8% price gain over the first four weeks of 2023. At 4.1%, Venture Corporation’s dividend yield is marginally above its 5-year average dividend yield of 4.0%. ISDN Holdings was the strongest performing of the above tabled stocks over the past four weeks. ISDN Holdings which reported 70% of its FY21 (ended 31 Dec) revenue to China, reported 1HFY22 revenue and 3QFY22 revenue declined 12% and 10% respectively YoY with the company flagging back in April that the COVID-19 measures in China were disrupting its supply chain and workforce similarly to other multinational businesses operating in China. The share price declined from 72.5 cents at the end of 2021 to 36.5 cents at the end of October 2022, with the re-opening measures of the past 13 weeks seeing the ISDN Holdings share price since return to 57.0 cents on 27 January. At 2.5%, ISDN Holding’s dividend yield is trading above its 5-year average dividend yield of 2.2%. ISDN Holdings also announced on 3 January that its first mini hydropower plant, Lau Biang 1, has received its commercial operation date as of 31 December 2022, with investor presentation slides available here. REIT Watch - S-Reits’ Upcoming 2022 Report CardsAuthor: SGX  Source: Company announcements extracted as of 27 Jan 2023 before market opens. List above is based on trusts that have announced. For more updated earnings schedule, visit www.sgxacademy.com/eco-cal. Five S-Reits have released their financial results or business updates for the latest reporting period, of which Suntec Reit announced its full year results. Another 26 S-Reits and property trusts have also confirmed the dates of their releases in the coming weeks. Sabana Industrial Reit, originally scheduled to announce its FY2022 financial results on 26 Jan, has postponed the release as the Reit manager is clarifying certain matters in relation to the voluntary conditional cash partial offer by Volare Group for 10 per cent of the issued units in the Reit. Paragon Reit, previously named SPH Reit, has changed it financial year end from Aug 31 to Dec 31. In its upcoming financial release, for which it has yet to confirm the release date, the Reit is expected to report a 16-month period from Sep 1, 2021 to Dec 31, 2022. As the sector continues to face headwinds such as dampening economic expectations, rising interest rates and inflationary pressures, the sector’s operational efficiency and growth prospects (for example occupancy rates, rental reversion and ability to acquire new yield-accretive assets) as well as balance sheet resilience (for example gearing ratio and debt profile) will be placed under scrutiny. Suntec Reit reported 24 per cent year-on-year growth in net property income (NPI), which in turn saw distributable income grow 3.4 per cent on a full year basis. Second half FY22 distribution per unit (DPU) dipped 9.7 per cent to 3.674 cents due to higher financing costs. However, full year DPU grew 2.5 per cent to 8.884 cents due to higher NPI contribution and a capital distribution of S$23.0 million. To manage rising rates and weaker currencies, the Reit has increased its fixed interest rate borrowings from 53 per cent at end-FY21 to 66 per cent at end-FY22 and foreign currency income hedge from 45 per cent at end-FY21 to 60 per cent at end-FY22. REIT Watch is a weekly column on The Business Times, read the original version A-Sonic & Singapore Shipping Directors Continue AcquisitionsAuthor: SGX  FOR the three trading sessions that spanned Jan 20 to 26, the Straits Times Index (STI) gained 3.1 per cent. Institutions were net sellers of Singapore stocks with S$157 million of net outflow. Large caps OCBC, DBS, UOB, Singapore Telecommunications and Wilmar International led the net institutional outflow for the three sessions. Meanwhile, Mapletree Logistics Trust, Singapore Technologies Engineering, CapitaLand Integrated Commercial Trust, SATS and UMS Holdings led the net institutional inflow for the three sessions. This followed Mapletree Logistics Trust reporting after the close of Jan 19 that its gross revenue for Q3 FY22/23 (ended Dec 31) rose by 8 per cent year on year (yoy) to S$180.2 million, mainly due to accretive acquisitions completed in Q1FY22/23 and FY21/22. In tandem with higher gross revenue, its net property income increased by 7.3 per cent yoy to S$157.2 million. Share buybacks There were eight primary-listed companies conducting share buybacks over the three trading sessions through to Jan 26, with a total consideration of S$1.9 million. OCBC again led the consideration tally, buying back 100,000 shares at S$12.64 per share. The bank has bought back 0.4 per cent of its issued shares (excluding treasury shares) on the current mandate. SIA Engineering also bought back 71,500 shares at an average price of S$2.47 per share while Thakral Corporation bought back 282,400 shares at an average price of S$0.62 per share. Director and substantial shareholder transactions The three trading sessions saw close to 30 changes to director interests and substantial shareholdings filed for 19 primary-listed stocks. This included four company director acquisitions with no disposals filed, while substantial shareholders filed one acquisition and three disposals. The preceding five sessions spanning Jan 13 to 19, had seen relatively more filings as discussed below. A-Sonic Aerospace Between Jan 12 and 26, A-Sonic Aerospace CEO Janet LC Tan acquired 63,000 shares for a consideration of S$45,941 at an average price of S$0.73 per share. This took her direct interest in the company from 61.07 per cent to 61.14 per cent. Tan has gradually increased her total interest in A-Sonic Aerospace from 53.35 per cent at the end of 2018. With more than 20 years of extensive experience in the aviation industry, she is also the promoter founder of the company. Singapore Shipping Corporation Between Jan 12 and 25, Singapore Shipping Corporation executive chairman Ow Chio Kiat acquired 75,800 shares at an average price of S$0.25 per share, and consideration of S$18,746. He maintains a 42.65 per cent total interest in the company. With a career spanning 60 years, Ow also serves as the executive chairman of Stamford Land Corporation. He has gradually increased his total interest from 36.90 per cent in June 2014. Challenger Technologies On Jan 17, Digileap Capital acquired 9,182,500 shares of Challenger Technologies at S$0.50 per share. With a consideration of S$4,591,250, this increased the deemed interest of non-executive non-independent director Keith Tan Keng Soon from 15.15 per cent to 17.44 per cent. His preceding acquisition was on Sep 28, 2022, with 3,100 shares acquired at S$0.53 per share. Tan was appointed a non-executive non-independent director of the company on Nov 29, 2021. He is the chairman of the Dymon Asia Private Equity Investment Committee and a founding partner of Dymon Asia Capital. Prior to Dymon, he was a director at Abax Global Capital, a special situations hedge fund based in Hong Kong, where he originated, structured, and executed investment transactions across Asia. AnnAik On Jan 17, Low Kheng, the spouse of AnnAik executive chairman cum CEO, Ow Chin Seng, purchased 1,435,000 shares of the company for a consideration of S$100,450. At S$0.07 per share, the married deal increased Ow’s total interest in the manufacturer and distributor of stainless-steel products from 38.79 per cent to 39.78 per cent. Ow is primarily responsible for the business and strategic development of the group. With over 40 years of experience in the hardware and steel industry, he has been instrumental in the strategic direction and development of the group. AnnAik executive director cum chief operating officer Ng Kim Keang also acquired 1,462,500 shares at S$0.07 per share on Jan 17. With a consideration of S$102,375 this increased his direct interest in the company from 2.87 per cent to 3.38 per cent. Ng joined the company in January 2003 as financial controller and was promoted to executive director in January 2005 and chief operating officer in March 2015. He is currently responsible for managing the overall operations and the finance and accounting matters of the group. These were the first director acquisitions filed for the company since it reported its H1FY22 (ended Jun 30) financials on Aug 10, when AnnAik reported attributable profit of S$2.86 million, compared to S$1.23 million in H1FY21. This was attributed to the higher turnover and gross profit achieved in both the distribution and manufacturing of steel flanges divisions fuelled by a hike in steel prices and strong demand. In addition, the contribution of profit from its environmental division also contributed positively to the overall performance. This followed on from the group achieving an attributable profit in FY21 of S$3.09 million, compared to S$177,000 in FY20. Plato Capital Between Jan 12 and 17, Plato Capital chairman, non-Independent and non-executive director Lim Kian Onn acquired 123,200 shares at an average price of S$1.87 per share. With a consideration of S$229,786 this increased his deemed interest in the investment group from 73.46 per cent to 74.47 per cent. The shares were acquired by Cosima Investments, a company that is 100 per cent owned by Lim. His preceding acquisition was on Nov 22, with 3,100 shares acquired at S$1.23 per share, with his deemed interest in Plato Capital gradually growing from 65.13 per cent at the end of 2019. Lim founded the Libra Capital Group in 1994 and co-founded the ECM Libra Group in 2002. The holding company of the ECM Libra Group, ECM Libra Group is listed on the Main Market of Bursa Malaysia Securities. For its H1FY22 (ended Jun 30) Plato Capital reported a net attributable loss of S$0.25 million compared to a net loss of S$1.04 million in H1FY21. On Jan 10, Plato Capital announced that its 70 per cent owned subsidiary Positive Carry received a non-binding offer (subject to a due diligence by the potential third party purchaser) for all the shares owned by TYK Capital. The indicative and tentative cash consideration for the offer is RM120 million (S$36.49 million). The group noted that with the 70 per cent ownership, Plato Capital’s portion of the consideration for the potential disposal is an indicative and tentative amount of RM84 million. Accrelist On Jan 17, Accrelist executive chairman and managing director Terence Tea Yeok Kian acquired 1,082,000 shares at an average price of S$0.05 per share. With a consideration of S$53,812, it increased his total interest in the Catalist-listed investment holding company from 22.51 per cent to 22.87 per cent. This followed his acquisition of 846,600 shares between Nov 30 and Dec 12, also at an average price of S$0.05 per share. Tea is responsible for the overall growth of the group, leading its strategic direction, including acquiring and nurturing new businesses. On Jan 13, Accrelist reported H1FY23 (ended Sep 30) revenue of S$50.7 million, a decrease of S$60.9 million from S$120.6 million in 1HFY22. This was mainly attributed to the decline in the electronic component distribution business unit (EBU) revenue on the sharp decline in the demand of smartphones in China, coupled with the global shortage in microcontroller units. Accrelist noted that its H1FY23 group gross profit margin did improve to 14 per cent from 7.7 per cent in H1FY22 through the EBU’s greater cost containment efforts in view of rising logistics and transportation costs and the ability to capitalise margin on chip shortages as official distributors. Serial System On Jan 13, Serial System substantial shareholder Sam Goi Seng Hui acquired 300,000 shares at S$0.08 per share. With a consideration of S$24,900, this increased his total interest in Serial System above the 17 per cent threshold, from 16.99 per cent to 17.03 per cent. Serial System is a leading distributor of electronic components and consumer products in Asia. It has one of the largest distribution networks in Asia, with 21 offices and 13 warehouses throughout Asia-Pacific. It also has a wide customer base of more than 5,000, spanning a diverse range of industries such as consumer electronics, household appliances, industrial, telecommunications, electronic manufacturing services, security and surveillance, automotive and medical. Inside Insights is a weekly column on The Business Times, read the original version. S-Reits’ Upcoming 2022 Report CardsAuthor: SGX Source: Company announcements extracted as of 27 Jan 2023 before market opens. List above is based on trusts that have announced. For more updated earnings schedule, visit www.sgxacademy.com/eco-cal. Five S-Reits have released their financial results or business updates for the latest reporting period, of which Suntec Reit announced its full year results. Another 26 S-Reits and property trusts have also confirmed the dates of their releases in the coming weeks. Sabana Industrial Reit, originally scheduled to announce its FY2022 financial results on 26 Jan, has postponed the release as the Reit manager is clarifying certain matters in relation to the voluntary conditional cash partial offer by Volare Group for 10 per cent of the issued units in the Reit. Paragon Reit, previously named SPH Reit, has changed it financial year end from Aug 31 to Dec 31. In its upcoming financial release, for which it has yet to confirm the release date, the Reit is expected to report a 16-month period from Sep 1, 2021 to Dec 31, 2022. As the sector continues to face headwinds such as dampening economic expectations, rising interest rates and inflationary pressures, the sector’s operational efficiency and growth prospects (for example occupancy rates, rental reversion and ability to acquire new yield-accretive assets) as well as balance sheet resilience (for example gearing ratio and debt profile) will be placed under scrutiny. Suntec Reit reported 24 per cent year-on-year growth in net property income (NPI), which in turn saw distributable income grow 3.4 per cent on a full year basis. Second half FY22 distribution per unit (DPU) dipped 9.7 per cent to 3.674 cents due to higher financing costs. However, full year DPU grew 2.5 per cent to 8.884 cents due to higher NPI contribution and a capital distribution of S$23.0 million. To manage rising rates and weaker currencies, the Reit has increased its fixed interest rate borrowings from 53 per cent at end-FY21 to 66 per cent at end-FY22 and foreign currency income hedge from 45 per cent at end-FY21 to 60 per cent at end-FY22. REIT Watch is a weekly column on The Business Times, read the original version
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