Singapore Market May 2021 Wrap Up - CGS-CIMB Research 2021-05-31: Singapore In 5

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Singapore Market May 2021 Wrap Up - Singapore In 5

• The FSSTI closed May at 3,164.28 points, down 1.68%, as Singapore tightens COVID-19 restrictions.
• GDP almost back to pre-COVID-19 level. Inflation at a seven-year high.
• We raise our end-2021F FSSTI target to 3,488, based on +0.5 standard deviation from 12-year mean of 15.3x P/E. Refer to Strategy Note: Singapore Strategy - CGS-CIMB Research 2021-05-31: Faith Arise for details.

GDP almost back to pre-pandemic levels

• The FSSTI closed May at 3,221.58pts, down 53.99 points m-o-m (-1.68%) as Singapore returned to a quasi-lockdown mode mid-May.
• The nation’s revised 1Q21 GDP expanded 1.3% y-o-y as all manufacturing sectors except biomedical strengthened; this reverses four quarters of y-o-y contractions, bringing GDP almost back to pre-COVID-19 levels of 4Q19. Headline inflation accelerated further in Apr to 2.1% y-o-y, a seven-year high (Mar: +1.3% y-o-y), driven by a rise in electricity tariffs, and transportation prices (COE and gas prices).
• April 2021 non-oil domestic exports (NODX) decelerated to 6% y-o-y, below our and Bloomberg consensus forecasts.
  • Electronics and non-electronics products exports rose 10.9% and 4.7% y-o-y respectively (Mar: +24.4% and +9.2% y-o-y), while
  • Pharma exports were a surprise miss, declining 40.9% y-o-y (Mar: +25.5% y-o-y).
• Apr private new home sales fell 2.6% m-o-m, according to Urban Redevelopment Authority (URA) data. According to Singapore Real Estate Exchange (SRX) data, the resale market saw a 7.9% m-o-m jump in volume, as prices rose across the board, with the Core Central Region (CCR), and Rest of Central Region (RCR) both gaining 1.2% m-o-m while Outside Central Region (OCR) prices rose 1.7% m-o-m.

Results season - positive surprises moderating

• The recently-concluded results season saw positive surprises again outnumber negative surprises for a second quarter, albeit at a lower multiple (19 above, 10 below, 32 in line). Key outperformers were banks and specialist material manufacturers; hospitality-related industries (SIA (SGX:C6L), Genting Singapore (SGX:G13), Frasers Property (SGX:TQ5)) underperformed.
• Most sectors traded within a tight band in May, with tech a clear outperformer, and consumer goods coming in slightly below.
• Index performers:
  • Yangzijiang Shipbuilding (SGX:BS6) (new orders),
  • Sembcorp Industries (SGX:U96) (shift to renewables), and
  • OCBC (SGX:O39) (good results)
• Underperformers:
  • Venture Corp (SGX:V03) (poor results amidst component shortage),
  • Ascendas REIT (SGX:A17U) (issuance of new units to fund acquisition) and
  • Mapletree Commercial Trust (SGX:N2IU) (new COVID-19 restrictions, tenant support).
• Good earnings results boosted The Hour Glass (SGX:AGS) (and lifted product demand); First Resources (SGX:EB5) was weighed down by weak results. iFAST (SGX:AIY) (potential China growth), Del Monte Pacific (SGX:D03) (IPO of subsidiary), Pacific Century (SGX:P15) and Thomson Medical (SGX:A50) rounded off the list of mid-large caps.
• Institutional investors were net buyers in May, moving into financials, industrials and telcos, while rotating out of tech, REITs and consumer non-cyclicals. Retail investors’ fund flows were negative, with selling in financials, industrials and telcos, while moving into REITs, tech, and consumer non-cyclicals. See
  • SGX Market Fund Flow Overview,
  • SGX Cumulative Fund Flow By Sector,
  • SGX Weekly Fund Flow By Sector.

Key corporate news in May 2021.

• Mapletree Industrial Trust (SGX:ME8U) to buy 29 US data centres for US$1.3bn; places out 190.3m new units.
• ESR-REIT (SGX:J91U) to raise S$150m for acquisitions, via placement and offer of new units.
• Mapletree North Asia Commercial Trust (SGX:RW0U) to buy HP Japan HQ for ¥38.8bn (S$467.3m).
• Frasers Logistics & Commercial Trust (SGX:BUOU) to acquire six properties in Europe for S$547.4m.

Research reports you should not miss

• We remain positive on S-REITs given their robust fundamentals and growth outlook, and see any weakness as an opportunity to accumulate S-REITs at attractive prices. See report: Singapore REITs - CGS-CIMB Research 2021-05-17: Opportunity To Bargain Hunt?

Straits Times Index - Technical perspective

• With a sharp recovery playing out over the past two weeks, the FSSTI pared most of its losses in May. At one point, the FSSTI was down more than 6% in May. Nevertheless, the rebound that followed since 17 May has ushered in an uptrend.
• Specifically, the breakout above the downtrend line of 3,145 points and 20-day moving average on 27 May signaled that the bulls are back in control.
• With the FSSTI still trading comfortably above the 20-day moving average, expect the ongoing bullish momentum to sustain to target the 3,280-3,380 points resistance area. The near-term support at 3,100-3,145 points should continue to keep the uptrend intact if a correction takes over instead. See chart in report attached below.

LIM Siew Khee CGS-CIMB Research | Jeremy NG Choon Heng CGS-CIMB Research | https://www.cgs-cimb.com 2021-05-31

SGX Stock Analyst Report ADD MAINTAIN ADD 1.630 SAME 1.630