Singapore Market Feb 2021 Wrap Up - CGS-CIMB Research 2021-02-26: Singapore In 5

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Singapore Market Feb 2021 Wrap Up - Singapore In 5

  • The FSSTI closed Feb 21, at 2,949.04 points, up 1.6% m-o-m.
  • The economy contracted less than expected, while NODX expanded. The Budget is to support job retention, reskilling and growth.
  • We keep our end-21F FSSTI target of 3,068 points, based on 14.2x forward P/E. There could be a potential revision following the results round-up.

Better-than-expected data, SG Budget 2021 to support job growth

  • The FSSTI closed Feb 21 at 2,949.04 points, up 46.5 points m-o-m (1.6%), as trading remained range-bound due to lack of catalysts.
  • Budget 2021 saw the job support scheme extended to still-affected sectors; six months for aviation, aerospace and tourism; and three for retail, arts, and marine and offshore. Additional grants were made to the Jobs Growth Incentive scheme to facilitate training and job placement for locals (200k jobs, 35k traineeships).
  • Singapore’s economy contracted by 2.4% in 4Q20 (advance estimate - 3.8%) with upward revisions to
    • Manufacturing (-1.4% q-o-q seasonally adjusted vs advance estimate -2.1% );
    • Construction (+55.6% q-o-q seasonally adjusted vs advance estimate +34.4%) and
    • Services (+4.1% q-o-q seasonally adjusted vs advance estimate +2.4% ).
  • Jan 21 NODX expanded 12.8% y-o-y (+6.8% y-o-y in Dec), above ours’ and consensus estimates, on the back of
    • Electronics (+13.5% y-o-y),
    • Specialised Machinery (+53.2% y-o-y),
    • Petrochemicals (+10.1% y-o-y), and
    • Non-monetary Gold (+70.9% y-o-y).
  • Private home sales in Jan 21 rose by 32% m-o-m, due to
    • simultaneous launches of big projects,
    • talk of new cooling measures spurring investors to buy pre-emptively.
  • The resale market also saw increased activity, with volume up 8.6% m-o-m and prices rising 1.2% m-o-m.

More positive earnings surprises

Key corporate news

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Straits Times Index - Technical perspective

  • After 5 weeks of trading in a correction phase, the recent rebound off the cluster of support at the 60-day moving average and 2,870 support showed some signs of life.
  • More importantly, the bullish breakout above the downtrend line and 20-day moving average on 24 Feb 2021 should kickstart the next higher leg.
  • In addition, the follow-through on 26 Feb 2021 also broke above the 3-week range showed further signs of strength (highlighted in blue in Fig1 in report attached below). Therefore, expect the FSSTI to trend higher to target the 3,100 – 3,150 resistance level over the coming weeks.
  • The near-term support at 2,870 should continue to keep the uptrend intact if a correction takes over.

LIM Siew Khee CGS-CIMB Research | https://www.cgs-cimb.com 2021-02-26
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