Dec wrap-up: Singapore in 5
? FSSTI closed the year at 3,123.68pts.
? NODX continues to surpass expectations; property cooling measures enacted amidst strong housing demand.
? We keep our end-2022F FSSTI target at 3,506pts (-0.5 s.d. from historical mean).
A year-end lift
The FSST closed Dec at 3,123.68pts, up 82.39pts mom (+2.7%). The Omicron variant of Covid-19, although more transmissible, seems less severe compared to the Delta variant. Nov 21 NODX rose for the 12th consecutive month, up 24.2% yoy (+17.8% yoy in Oct), beating both our and consensus estimates for the third consecutive month. Electronics NODX grew 29.2% yoy in Nov (+14.9% in Oct), driven by integrated circuits (+41.8% yoy), PCs (+54.3% yoy) and disk media products (+19.4%). Non-electronic NODX also accelerated, up 22.7% yoy in Nov (+18.8% yoy in Oct), underpinned by growth in specialised machinery (+74.4% yoy), petrochemicals (+66% yoy) and primary chemicals (+80.6% yoy). According to Urban Redevelopment Authority (URA) data, Nov 21 new home sales rose 70% mom and 100% yoy due to a new residential project launch. In the resale market, condo prices were up 1.17% mom and 10% yoy, rising across the board in all three area classifications (CCR, OCR and RCR), according to Singapore Real Estate Exchange (SRX). This was mirrored in HDB flat prices, which also rose 1.3% mom and 13.8% yoy.
New property cooling measures, consisting of the raising of Additional Buyers’ Stamp Duty and tightening of the Total Debt Service Ratio (TSDR), were announced on 16 Dec. This is unsurprising as both new and resale home prices have been growing steadily for the past 16 months and talk of cooling measures were not about if, but when. Although these new measures are targeted at investor demand and not owner-occupied demand (2nd and subsequent properties), we nevertheless expect near-term demand to be affected.
Sector performance & movers
Most sectors traded within a narrow range, with only Financials and Utilities slightly outperforming the rest. Index movers (FSSTI) for Dec were DBS, SCI (project w ins) and UOB while underperformers were DFI (China associate), HKL (sluggish office and retail demand) and CICT. For mid-large caps, the outperformers were CTN, MAGIC and DELM (strong results) while underperformers were AZTECH, DFI and NANO (plant and equipment costs). In the preceding four weeks, institutional investors were net sellers,
paring holdings of Non-Consumer Cyclicals, Healthcare, Industrials, REITs and Telcos while buying Consumer Cyclicals and Financials. Retail investors were buyers for all four weeks, favouring REITs, Industrials, Financials, and Consumer Non-cyclicals.
Corporate news
KOUFU’s founding shareholders offer S$0.77 per share to take the company private. ST flags A$304m of exposure, interest and penalties from Australian tax case loss. CICT places 127.6m new units at S$1.96 to partially finance the proposed acquisition of two office buildings in Sydney. MAGIC and MCT propose to merge via trust scheme, forming Mapletree Pan Asia Commercial Trust.
Technical perspective
With the key support at the 3,000-3,050 area holding up over the past ten months, the recent rebound off the 3,050 support in Dec suggests the uptrend remains firmly intact. Notably, the recovery resulted in the FSSTI closing above the 200-day moving average and 3,100 level at the end of the year, showing some further signs of strength. Moreover, looking at the big picture reveals a triple bottom formation, signalling the high likelihood of the uptrend resuming. Therefore, expect the FSSTI to trend higher to target the 3,250 resistance followed by the 3,380 resistance. On the other hand, if the weakness reappears, expect the support at the 3,000-3,050 area to hold and turn the FSSTI back into the uptrend.