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.
