Singapore Market Apr 2020 Wrap Up - CGS-CIMB Research 2020-04-30: Singapore In 5

Singapore Strategy - CGS-CIMB Research | SGinvestors.io AEM HOLDINGS LTD (SGX:AWX)

Singapore Market Apr 2020 Wrap Up - Singapore In 5

  • FSSTI ended Apr at 2,622.18 pts (+5.68% m-o-m).
  • Prime Minister said that circuit breaker can be eased with progressive restart of economy if the number of new COVID cases comes down.
  • Our end-CY20F FSSTI target of 2,050 pts is on 9.5x CY21F market P/E.
  • Our technical analyst sees ongoing recovery capped at 2,670-2,700 pts.

COVID-19 impact yet to hit economic numbers

  • The FSSTI ended Apr at 2,622.18 pts, up 140.95 pts m-o-m (+5.68%), even as Singapore tightened its social distancing measures and extended them to 1 Jun (from 4 May previously), thanks to a 4.2% boost at the end of the month on the back of positive COVID-19 newsflow.
  • Strong IPI (+16.5% y-o-y, +28.3% m-o-m) and NODX (+17.6% y-o-y, +18.3% m-o-m) numbers for Mar 20, due to strong demand in the volatile biomed sector and the reopening of China’s economy, belie the true picture. The forward-looking SIPMM manufacturing PMI numbers are more sobering at 45.4 (Mar 20) versus 48.7 (Feb 20), implying a decrease in business confidence.
  • Our economist, who expects diminished demand from manufacturing and tourism, coupled with reduced consumption, has forecast Singapore GDP contracting by 6.8% for the full year.
  • 1Q20 property data from the Urban Redevelopment Authority (URA) showed a decline in transaction volume of 12% for private property on fewer launches, and a decrease of 7% for resale public housing. Overall property prices in 1Q20 fell 1.2% versus an increase of 0.5% in 4Q19.

Almost all sectors pull back; earnings season starts

Key corporate news

Technical perspective

  • Despite the 20% bounce off the Mar low of 2,208 pts to a high of 2,671 pts on 17 Apr, we believe this is a correction to the overall downtrend. The bearish price action on 21 Apr highlighted the downtrend remains in control, with the bearish close below the 20-day moving average and uptrend line.
  • The ongoing recovery would likely remain capped by the 2,670-2,700 pts resistance area, thereby forming a bearish formation, double top rejection.
  • In this bearish scenario, the downtrend would resume towards the 2,500 pts support area, followed by 2,300 pts.
  • See chart in attached PDF report.

LIM Siew Khee CGS-CIMB Research | https://www.cgs-cimb.com 2020-04-30
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