Singapore Market August 2020 Wrap Up - CGS-CIMB Research 2020-08-31: Singapore In 5


Singapore Market August 2020 Wrap Up - Singapore In 5

Grim economic data, budding shoots of recovery seen

  • The FSSTI closed Aug flat at 2,532.51 pts, up by a marginal 2.7 pts m-o-m, amid grim economic data and poor visibility regarding the COVID-19 outbreak.
  • The government committed an additional S$8bn for job retention and creation, extending the wage subsidy (JSS) for another seven months till Mar 2021.
  • 2Q20 GDP contracted 13.2% y-o-y, below our and consensus forecasts, due to weaker manufacturing (-0.7% y-o-y) and construction (- 59.3% y-o-y) activities. The circuit breaker exacted a heavy toll on transport (-39.4% y-o-y), retail trade and business services (-13.4%), while concerns over job security weighed on consumption (private consumption: -28.8% y-o-y).
  • NODX rose 6% y-o-y in Jul 20, above consensus expectations of 4.2% y-o-y; however, volume of total trade fell 8.9% y-o-y, as total exports and imports fell. Non-electronics exports increased 6.9% as pharma offset the fall in petrochem demand.
  • 1H20 private home prices (URA data) fell 0.6%; dragged by declines in the Outside Central Region (-2.2%) and Rest of Central Region (-0.3%), while the Core Central Region managed a small 0.4% increase. Primary home sales for Jul 20 were 8.2% higher m-o-m, but down 8.4% y-o-y, with 1,142 units sold.

2Q20 results: A season to forget

Key corporate news

Technical perspective

  • The FSSTI traded pretty much flat in Aug, leaving the ongoing long-term downtrend in control. As mentioned previously in Jul, the bearish break below the uptrend line or neckline (orange highlight, see chart in PDF report attached below) has validated the head and shoulders pattern, signaling further downside. Further signs of weakness were highlighted by the bearish rejection near the 20- and 60-day moving average in Aug, effectively forming new lower high (LH) points. Therefore, with the downtrend still intact and the bearish momentum gaining strength, there is a high likelihood of seeing a break below the 2,500 support in the coming weeks.
  • More importantly, a break below the 2,500 support would likely kickstart the next wave of sell-offs, with the bears targeting the 2,300-2,400 support area.
  • As for the upside, the 2,600 resistance area will likely act as the ceiling in the near term.

LIM Siew Khee CGS-CIMB Research | Jeremy NG Choon Heng CGS-CIMB Research | 2020-08-31
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