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Simons Trading Research

Author: simonsg   |   Latest post: Thu, 14 Nov 2019, 4:47 PM

 

March 2019 - Singapore in 5 Minutes

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  • The FSSTI closed flat at 3,212.88 pts in Mar 2019 amidst US-China trade tensions, even as China’s economy improves, US Fed benchmark rate stays constant.
  • Expect the FSSTI to be volatile, impacted by global developments and spillover effects. We keep our end-2019F index target at 3,110.
  • Top stock picks: CAPITALAND LIMITED (SGX:C31), CITY DEVELOPMENTS LIMITED (SGX:C09), COMFORTDELGRO CORPORATION LTD (SGX:C52), GENTING SINGAPORE LIMITED (SGX:G13), SINGAPORE TECH ENGINEERING LTD (SGX:S63), DBS GROUP HOLDINGS LTD (SGX:D05) and KEPPEL CORPORATION LIMITED (SGX:BN4).

Market Flat M-o-m

  • The FSSTI closed flat m-o-m in Mar 2019 at 3,212.88 pts, as China’s economy showed signs of recovering while sentiment was also buoyed by the US Fed keeping its benchmark rate constant at 2.5%. Trade tensions between US-China, however, continue to weigh on investor sentiment.
  • Singapore industrial output rose 0.7% y-o-y in Feb on the back of gains in biomedical, and slower declines in the electronics and precision engineering sectors. Feb monthly property sales were higher m-o-m (4.4%) and y-o-y (18.5%), with the bulk of sales coming from launches in the non-central districts.

Institutions Net Sold; Retail Buyers, CD Top Gainer

  • Among the key FTSE indices, REITs, developers, technology, consumer goods, and financials were positive. Utilities, industrials, and healthcare were underperformers.
  • Institutions were net sellers for the month, with the bulk of the outflows coming from telcos, consumer discretionary, and financials. Retail investors were moderate buyers, moving out of REITs and into telcos, financials and consumer discretionary. (See SGX Market Fund Flow Overview, SGX Cumulative Fund Flow By Sector, SGX Weekly Fund Flow By Sector.) 
  • The index's top gainer in Mar was COMFORTDELGRO CORPORATION LTD (SGX:C52), which gained 7.5% m-o-m; cab bookings rose as its ride-hailing competitors stopped aggressive price competition. DAIRY FARM INT'L HOLDINGS LTD (SGX:D01) retreated amidst restructuring changes to its food division, and its parent JARDINE MATHESON HLDGS LTD (SGX:J36). (See The Straits Times Index Constituents Performance In March 2019.) 
  • Big share price movement under our coverage were JAPFA LTD. (SGX:UD2) and BEST WORLD INTERNATIONAL LTD (SGX:CGN), down 15% and 11.5% m-o-m, respectively, due to the potential effects of African swine fever in Vietnam for Japfa and for Best World, the appointment of PwC to examine its China franchise model.

Key Corporate News: Quality Yield Play in Demand

  • Restructuring at HYFLUX LTD (SGX:600) hit another snag as ‘rescuer’ Salim-Medco issued a statement that it does not back Hyflux's proposed restructuring plans.
  • Unlike the woes surrounding Hyflux bonds, SINGAPORE AIRLINES LTD (SGX:C6L)’s 3.03% five-year bonds received overwhelming demand from both institutional and retail investors, leading to the issue being upsized to S$750m, from S$500m.
  • SINGAPORE TECH ENGINEERING LTD (ST Engineering, SGX:S63) made a €250m (S$383m) cash offer for Newtec Group NV, a Belgium-based satellite equipment maker, to expand its presence in the satcom sector. ST Engineering also announced that all anti-trust approvals have been obtained for its MRAS acquisition, now pending the usual clearance from the Committee on Foreign Investment in the US (CFIUS). Subject to this, the proposed acquisition will be closed in 2Q19, it said.

Technical Perspective – One Month Outlook

  • FSSTI's recent failure to break above the 3,270 resistance level suggests that its long-term trend remains bearish. Key level to watch out next is the 3,153 support.
  • If the bears were to break below the 3,153 support area, we expect a sharper sell-off to begin with the bears targeting the 3,100 support level, followed by 3,000.

Source: CGS-CIMB Research - 01 Apr 2019

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