MONTHLY REVIEW AND OUTLOOK
REVIEW: The FSSTI gained 4.0% mom in Jan 22 to 3,249.59. For Jan 22, the index was lifted mainly by the Finance (+8.7% mom), Shipyard (+6.1% mom) and Plantation (+3.6% mom) sectors, but was dragged by the Healthcare (-6.6%), REITs (-5.8% mom) and Technology (-3.9% mom) sectors.
Singapore’s industrial production expanded 15.6% yoy (+4.3% mom seasonally adjusted) in Dec 21, surprising market estimates for a milder growth of 12.0% yoy (+0.9% mom). Excluding biomedical manufacturing, industrial production rose 5.0% yoy. Accounting for the latest data, Singapore’s industrial production grew 13.2% for the whole of 2021.
Given the strong manufacturing showing in 4Q21, Singapore’s 4Q21 and 2021 GDP growth may likely be revised higher. Full-year GDP growth is expected to be upgraded to 7.3% (from MTI’s advance estimates of 7.2%) in 2021, while 4Q21 GDP growth may be adjusted upwards to 6.2% yoy (from 5.9% yoy).
For 2022, we keep to our view that Singapore’s manufacturing prognosis remains favourable especially given the strong numbers seen to-date. Our outlook is for full-year manufacturing to grow by an average of 4.0% in 2022. This suggests that despite the high-base growth rate seen in 2021, global trade activity is expected to stay buoyant in the new year.
STRATEGY: Our top large-cap picks are Yangzijiang, Thai Beverage, SingTel, Aztech, Frasers Centerpoint Trust and Ascendas REIT. As for the small/mid-cap sector, our top picks are BRC Asia and Civmec.