Singapore Market June 2021 Wrap Up - CGS-CIMB Research 2021-06-30: Singapore In 5

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Singapore Market June 2021 Wrap Up - Singapore In 5

• FSSTI closed Jun 2021 at 3,130.46 points (-1.08% m-o-m), as Singapore exits ‘Heightened Alert’.
• Economic growth steady, core inflation up. Property market remains strong.
• We keep our end-2021 FSSTI target at 3,488 points, based on 0.5 standard deviation above 12-year mean of 15.3x P/E.
• Top picks:
  • Ascendas REIT (SGX:A17U),
  • Frasers Logistics & Commercial Trust (SGX:BUOU),
  • SATS (SGX:S58), UOB (SGX:U11),
  • ComfortDelGro (SGX:C52),
  • SPH (SGX:T39),
  • Keppel Corp (SGX:BN4),
  • UOL Group (SGX:U14),
  • Yangzijiang Shipbuilding (SGX:BS6),
  • CSE Global (SGX:544),
  • Grand Venture Technology (SGX:JLB),
  • Aztech (SGX:8AZ),
  • Q&M Dental (SGX:QC7), and
  • Japfa (SGX:UD2).

Economic data still positive; property market continues its run in June 2021

• The FSSTI closed Jun at 3,130.46 points, down 33.82 points (-1.08% m-o-m), as Singapore exited ‘Heightened Alert’ COVID-19 measures mid-month. Global markets, however, got a boost as the US looks to pass a massive US$1 trillion infrastructure plan.
• May 2021 non-oil domestic exports (NODX) rose 8.8% y-o-y, but down 0.1% m-o-m seasonally adjusted (SA). Electronic exports rose 11% y-o-y, driven by integrated circuits, diodes & transistors, and telecommunication equipment. Non-electronic exports grew 8.1% y-o-y, thanks to expansion in specialised machinery, and petrochemicals & chemicals. Manufacturing rose 30% y-o-y, and 7.2% m-o-m SA, with growth across all clusters, especially electronics, precision engineering, and biomedical manufacturing.
• Headline inflation for May was +2.4% y-o-y, excluding private transport and accommodation costs; core CPI was a much lower +0.8% y-o-y.
• According to Urban Redevelopment Authority (URA) data, May 2021 home sales fell 29.7% m-o-m (due to “Heightened Alert’ COVID-19 restrictions), but up 83% y-o-y. Singapore Real Estate Exchange’s (SRX) May data show HDB resale prices rose 0.9% m-o-m, while prices of resale condos rose 0.3% m-o-m. Rents also rose 7.7% y-o-y for condos, and 7.9% y-o-y for HDBs in May. See also report: Property Development & Inventory - CGS-CIMB Research 2021-06-10: Increasing Residential Land Supply

Market performance: sectors & fund flows

• Most sectors closed Jun slightly negative, with the exception of Oil & Gas and REITs.
• Index outperformers in a relatively tepid month include
  • SGX (SGX:S68) (increased market turnover),
  • Mapletree Logistics Trust (SGX:M44U) (acquisition), and
  • Mapletree Commercial Trust (SGX:N2IU) (loosening of ‘Heightened Alert’ curbs)
• Index underperformers in June include
  • Wilmar International (SGX:F34) (weaker soya bean and CPO prices),
  • City Developments (SGX:C09) and
  • Yangzijiang Shipbuilding (SGX:BS6) (profit-taking).
• In the mid-large cap space, outperformers were
  • Golden Energy & Resources (SGX:AUE) (positive media coverage),
  • The Hour Glass (SGX:AGS) (insider transaction), and
  • Cromwell REIT (SGX:CWBU) (new substantial shareholder).
• Mid caps losers were
  • Sembcorp Marine (SGX:S51),
  • Riverstone (SGX:AP4) (COVID-19 restrictions at factories) and
  • Sunpower Group (SGX:5GD) (profit-taking).
• Institutional investors were sellers through the preceding four weeks. Other than small inflows into REITs and Consumer Cyclicals, all other sectors were sold down, with outflows particularly heavy in Financials, Telcos, and Industrials.
• Retail investors, in contrast, were buyers, picking up Consumer Non-cyclicals, Industrials, Telcos and Financials, while selling Consumer Cyclicals. See
  • SGX Market Fund Flow Overview,
  • SGX Cumulative Fund Flow By Sector,
  • SGX Weekly Fund Flow By Sector.

Key corporate news

• Sembcorp Marine (SGX:S51) to explore merger with Keppel Corporation (SGX:BN4)’s offshore & marine arm; has concurrently announced another S$1.5bn rights issue at S$0.08 per share. See
  • Sembcorp Marine's announcements,
  • Keppel Corporation's announcements, and
  • report: Offshore & Marine - CGS-CIMB Research 2021-06-26: Keppel Exit To Create Mega Yard For Sembcorp Marine.
• CapitaLand (SGX:C31) to divest partial stakes in China projects, expects to yield net proceeds of S$2bn. See
  • CapitaLand's announcements.
• Dutech (SGX:CZ4)'s CEO offers S$0.40 per share to take the company private. See
  • Dutech's announcements.

Research reports that you should not miss

• We initiate coverage on Kimly (SGX:1D0) with an ADD; we expect Kimly to maintain its lead in coffee shop market share in Singapore, boosted by a rise in delivery services. See
  • Kimly - CGS-CIMB Research 2021-06-18: Delightful Flavours; Initiate Coverage With ADD
• We also take a deep-dive into SPH (SGX:T39)'s next step following its divestment of its media division. See
  • Singapore Press Holdings - CGS-CIMB Research 2021-06-17: What's Next For SPH?

Technical Perspective

• The FSSTI continued to trade sluggishly in Jun, falling 1.08% m-o-m. Nevertheless, with the weakness leading to a retest of the 3,100 support, the relentless buying pressure near the 3,100 level recently suggesting that the uptrend remains firmly intact.
• Notably, the sharp bullish reversal on 30 Jun formed a significant bullish price action, signalling the resumption of the uptrend.
• In fact, that the FSSTI also bounced off the uptrend line at the same time was another sign of strength. Therefore, we expect the FSSTI to trend higher to target the 3,280 resistance over the coming weeks.
• If any weakness reappears, the near-term support at 3,060-3,100 points will likely act as a floor, keeping the uptrend intact.

LIM Siew Khee CGS-CIMB Research | Jeremy NG Choon Heng CGS-CIMB Research | https://www.cgs-cimb.com 2021-06-30

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