DBS GROUP HOLDINGS LTD (SGX:D05)
OVERSEA-CHINESE BANKING CORP (SGX:O39)
UNITED OVERSEAS BANK LTD (SGX:U11)
SINGAPORE AIRLINES LTD (SGX:C6L)
Singapore Market November 2020 Wrap Up - Singapore In 5
- The Straits Times Index (STI) closed Nov at 2805.95, up 15.5% m-o-m, amidst growing optimism on the global economy.
- Our rolled-forward end-CY21 FSSTI target is 3,068 (14.2x CY22F P/E, historical mean), factoring in a pickup in economic activities and low interest rates.
- Our Singapore stock top picks:
- Singapore Airlines (SGX:C6L),
- UOB (SGX:U11),
- DBS (SGX:D05),
- Keppel Corp (SGX:BN4),
- SingTel (SGX:Z74),
- Thai Beverage (SGX:Y92),
- CapitaLand (SGX:C31),
- Ascendas REIT (SGX:A17U),
- Frasers Centrepoint Trust (SGX:J69U),
- Frasers Logistics & Commercial Trust (SGX:BUOU),
- SBS Transit (SGX:S61),
- Boustead Singapore (SGX:F9D),
- Japfa (SGX:UD2),
- CSE Global (SGX:544),
- Koufu (SGX:VL6),
- UG Healthcare (SGX:8K7).
3Q20 GDP contracts less severely than expected; optimism growing
- The Straits Times Index (STI) closed November 2020 at 2805.95, up 382.11 or 15.8% m-o-m, amidst growing optimism on the global economy – US voters limited Trump’s presidency to a single term, and news of two potential viable COVID-19 vaccines.
- Singapore’s GDP contracted at a slower rate of 5.8% y-o-y in 3Q20, against the government’s advance estimates of -7.0% y-o-y, bolstered by export-oriented biomed and electronics segments which offset weaker service and construction segments.
- Oct NODX, however, contracted for the first time since May 2020 (-3.1% y-o-y) as Huawei sanctions and lockdowns in regional trading partners hurt Singapore exports.
- Property sales declined further, down 51.7% m-o-m in Oct, due to a government clampdown on the re-issuing of options to purchases by developers, amidst few new project launches. See
Strong earnings season; market EPS upgrade
- All sectors gained ground in Oct, with consumer, telcos and property leading the pack. The prospects of viable vaccines against COVID-19 and a de-escalation of hostile US trade policies were major factors in stock movements.
- Amongst index stocks, SATS (SGX:S58), Singapore Airlines (SGX:C6L), Genting Singapore (SGX:G13) gained the most, while Yangzijiang Shipbuilding (SGX:BS6), Mapletree Industrial Trust (SGX:ME8U), Keppel DC REIT (SGX:AJBU) underperformed.
- In the mid-large cap space, Hi-P International (SGX:H17), SATS (SGX:S58) and Sembcorp Marine (SGX:S51) outperformed while Riverstone (SGX:AP4), Sheng Siong (SGX:OV8), and Yangzijiang Shipbuilding (SGX:BS6) brought up the rear.
- A slew of late positive earnings surprises brought the 3Q20 results season to close on a positive note, and we upgraded market EPS for the first time this year - see report:
- In Oct, m-o-m institutional fund flows were finally positive for the first time in 2020, with a big move into financial services and to a much smaller extent, into industrials and consumer. Funds exited tech, telcos, property, REITs and healthcare.
- Retail investors took profit in Oct, given the recent sharp run-up, exiting financial services, industrials and consumer, while moving into REITs, telcos and tech.
- See
Key corporate news
- CapitaLand Retail China Trust (SGX:AU8U) raises capital via a non-renounceable preferential offering (56 for every 1,000, 69m new units) at S$1.17, and placement of 205.3m new units at S$1.195.
- A consortium led by Sunningdale Tech (SGX:BHQ)’s chairman offered to take Sunningdale Tech private at S$1.55 per share.
- Cortina Holdings (SGX:C41) to acquire privately-held Sincere Watch for S$84.5m.
Research reports that you should not miss
- We raise Singapore banks - DBS (SGX:D05), OCBC (SGX:O39) and UOB (SGX:U11)'s target prices, pegging them to pre-pandemic valuations, in view of clearer asset quality visibility and positive newsflow. See
- Singapore Banks - CGS-CIMB Research 2020-11-27: An Injection Of Confidence.
- DBS Group - CGS-CIMB Research 2020-11-27: Pricing In An Accelerated Recovery.
- OCBC - CGS-CIMB Research 2020-11-27: Looking Forward To More Normal Scenarios.
- UOB - CGS-CIMB Research 2020-11-27: Looking Past Asset Quality Negativity.
- Singapore Airlines (SGX:C6L) has been upgraded to ADD (from Hold) as we believe downside surprises are capped, as its aircraft assets have already been impaired and its capital raising completed. See
Technical perspective
- Since the bullish crossover signal between the 20-day and 60-day moving average was triggered on 9 Nov (see Fig1 in PDF report attached below), the Straits Times Index (STI) has been trending higher with surging momentum.
- The breakout above multiple key resistance levels have also effectively turned the trend bullish. However, in the next couple of weeks, the STI could enter a correction phase as the bullish momentum appears overstretched.
- The 15.8% rally in Nov has driven the STI’s Relative Strength Index (RSI) to an extreme overbought high of 83. Historically, the STI tends to enter into a period of correction when the RSI exceeds the 70 overbought level. Therefore, we expect the ongoing correction to take the STI down to the 2,635 – 2,700 support level before the uptrend resumes.
- The next leg higher into the uptrend will likely see the FSSTI aiming for the 3,000 – 3,044 resistance.
Recent reports on our Singapore stock picks:
- Singapore Stock Picks - CGS-CIMB Research 2020-11-17: Go With The Flow, Don’t Fight The Market.
- Singapore Airlines - CGS-CIMB Research 2020-11-16: Upgrading SIA To ADD On Improving Risk-Reward.
- DBS Group - CGS-CIMB Research 2020-11-27: Pricing In An Accelerated Recovery.
- UOB - CGS-CIMB Research 2020-11-27: Looking Past Asset Quality Negativity.
- Keppel Corporation - CGS-CIMB Research 2020-10-29: Looking Forward To 100-Day Plan Outcome.
- SingTel - CGS-CIMB Research 2020-11-12: 1HFY21 Some Positives Amid Weak Results.
- CapitaLand - CGS-CIMB Research 2020-11-04: Signs Of Recovery.
- Ascendas REIT - CGS-CIMB Research 2020-11-10: Acquisitions Galore.
- Frasers Centrepoint Trust - CGS-CIMB Research 2020-11-03: Warding Off COVID-19 Impact.
- Frasers Logistics & Commercial Trust - CGS-CIMB Research 2020-11-06: Stable Performance.
- SBS Transit 3Q20 Update - CGS-CIMB Research 2020-11-12: Wheels In Motion.
- Boustead Singapore - CGS-CIMB Research 2020-11-17: Firing On All Cylinders.
- Japfa - CGS-CIMB Research 2020-10-30: Indonesia Poultry & Dairy Beats Expectations.
- CSE Global - CGS-CIMB Research 2020-11-09: 3Q20 Systems Intact.
- UG Healthcare - CGS-CIMB Research 2020-11-06: A Strong Start To The Year.
LIM Siew Khee
CGS-CIMB Research
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Jeremy NG Choon Heng
CGS-CIMB Research
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https://www.cgs-cimb.com
2020-11-30
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