Singapore Market Monitor - Maybank Kim Eng 2017-03-24: Essential Bites – What We Learnt

Singapore market monitor - Maybank Kim Eng 2017-03-24: Essential bites – what we learnt Singapore Stock Market Market Sentiment Market Outlook

Singapore market monitor - Essential bites – what we learnt

Invest ASEAN 2017 – post-conference takeaways 

  • In this report, we highlight some big-picture key messages from expert speakers at the conference that provide fodder for thought. 
  • At the micro level, our interaction with the Singapore-based company attendees (and some from other ASEAN countries too) suggest a mood of cautious optimism as most expect a better year compared to 2016. 
  • The key concerns echoed by a number of the attendees centre around margin pressure given the combination of higher competitive intensity and a bottoming of commodity prices that is likely to increase input costs.

The times they are a-changin’ 

  • The content from expert speakers at various plenary and industry track sessions point to a wave of change affecting many industry segments in the region. 
  • Nationalistic agendas within parts of ASEAN are rising, driven by the anti-globalisation trends in the West - Indonesia was mentioned as potentially considering measures to safeguard domestic economy and employment. 
  • The non-tariff stumbling blocks to ASEAN integration would likely rise in the auto, agri, metals and mining sectors. 
  • On the flipside, the momentum for integration, while slow, was still positive in Thailand and Vietnam while Malaysia was singled out for making good progress in developing the digital economy. 
  • On the trade front, US border tax has a high probability of being pushed through and, while RCEP would be positive, it would not accomplish what TPP possibly could have. 
  • In manufacturing, with 3D printing costs falling rapidly, widespread adoption could be a significant cost deflator across the value chain. 
  • In logistics, the highest growth is being witnessed in the perishables and pharma warehousing and transport space. 
  • And with an estimated > 1% of total retail sales in the region from e-commerce, the potential for e-retail channel growth could be as high as 10-fold in the coming decade.

Singapore firms cautiously positive 

  • While it is a bit tricky to aggregate the outlook of the attendees as they were spread across a disparate range of sectors, we came away with the overall impression that companies were more optimistic about 2017 than last year. 
  • Sound-bites include the belief that the government would not sell new hotel sites in the near term to manage the supply situation, credit spreads are tighter than a year ago despite rising SIBOR, business parks are seeing new demand from the back offices of banks and hope that the pick-up in economic data recently is sustainable.

Competition, margin protection the key concerns 

  • The challenge to protect margins cropped up frequently driven by a number of underlying factors. These include the risk of increase in debt funding costs from rising rates, the anticipated increase in input costs from a bottoming of commodity prices and an increase in competitive intensity across sectors given the tepid demand growth of the past 12-18 months.

Neel Sinha Maybank Kim Eng | http://www.maybank-ke.com.sg/ 2017-03-24