Apr wrap-up: Singapore in 5
? The FSSTI closes Apr at 3,356.90pts, down 51.62pts mom (-1.51%).
? MAS tightens monetary policy, raises inflation rate forecast. Likewise, we
raise our inflation forecast for 2022F to 5.1% (from 3.2%).
? Our end-2022F FSSTI target remains unchanged at 3,475pts, based on a -1
s.d. forward P/E of 12.5x.
A slow burn; Inflation accelerates
The FSSTI closed Apr at 3,356.90pts, down 51.62pts mom (-1.51%). Prolonged global
tensions and the resulting cost-push inflation continued to affect market sentiment. Mar
22’s NODX was surprisingly strong despite global tensions, up +7.7% (vs. +9.4% in Feb),
beating both our and consensus estimates. Electronics NODX dipped slightly but still grew
+11.5% yoy in Mar 22 (vs. +11.6% yoy in Feb), due to strong growth in integrated circuits
(ICs). Non-electronic NODX, however, continued to decelerate, growing 6.8% yoy (vs.
+8.8% in Feb), as the petrochemical sub-segment took a hit due to disruptions in global
crude oil. As expected, the MAS tightened monetary policy in the scheduled Apr 22
revision. MAS also raised its outlook for inflation, projecting CPI growth to average between
4.5% and 5.5% yoy in 2022F vs. 2.5-3.5% projection in Jan 22., and core inflation at 2.5-
3.5% vs. 2.0-3.0% in Jan. Our in-house inflation estimate for 2022F has also been revised
upwards to 5.1% (from 3.2% previously), due to an increase in price assumptions for the
energy, food, transportation and accommodation components of the CPI. Private new
home sales, according to the Urban Redevelopment Agency (URA), rose 20.7% mom in
Mar22, despite a small number of new launches, due to the relaxation of Safe Distancing
Measures. Private and HDB resale prices, however, continued to rise, up 0.8% and 0.7%
respectively in Mar, according to the Singapore Real Estate Exchange (SRX).
Market, Sectors and Flows
Market traded range-bound in Apr, with Oil & Gas, Utilities, and Telcos outperforming while
Healthcare, Financials, and Technology lagged. Apr 22’s top index gainers were JCNC
(strong associate earnings), YZJSGD (spin-off of financial arm – YZJFH), and SCI. Poor
earnings dragged UOB and KDCREIT, while WIL saw profit-taking following Mar’s high.
In the mid-large cap space, GER (coal-miner) and FHT (privatisation possibility, relaxation
of local Covid-19 measures) outperformed. Biggest losers were IFAST (weaker trading),
JAP (higher feed cost) and DCREIT (higher electricity costs). Institutional investors were
net sellers for each of the preceding four weeks – Financials saw the bulk of the disposals,
followed by Consumer, REITs and Tech, while the other sectors saw marginal inflows.
Retail investors were net buyers, snapping up Financials, REITs and Tech, while selling off
Industrials and Property.
Corporate News
EXLP received an offer for S$1.93 per share from 3036 TT. ST’s Australia Tower Network
(ATN) to acquire Axicom, a telecommunications tower infrastructure provider, for A$3.6bn.
JAP to list its China dairy unit, AustAsia on the HKEX, and to distribute-in-specie its entire
shareholding in AustAsia, as part of a capital reduction exercise. KEP’s O&M segment and
SMM to combine into a new entity.
Technical Perspective
With the FSSTI losing 4.13% in Apr, the index found support at 3,302.05 on 18 and 27 April
2022, forming a bullish double bottom reversal pattern. Mid-term trend remains largely
sideways and we believe that the major bullish trend is unlikely to return for now as the
index’s mid-term upside may be capped at 3,413.96, its immediate resistance level. After
which, the FSSTI will likely fall further and test the major support levels of 3,253.59-
3,264.10.