Skip to content
Alpha Edge Investing

Alpha Edge Investing

"Investors operate with limited funds and limited intelligence, they don’t need to know everything. As long as they understand better than others, they have an edge.” – George Soros

  • Home
  • Earnings Updates/ Corporate Actions
  • Research – Equities
  • Research – Fixed Income/ Bonds
  • Research – Unit Trust/ ETF
  • News
  • My Opinions/ Views
  • Others
  • About Me
  • Contact
  • Disclaimer
  • Community and Support Forums
  • Toggle search form

Maybank: Singapore Economics

Posted on September 19, 2022September 19, 2022 By alanyeo No Comments on Maybank: Singapore Economics
Exports Improve But Electronics Contract; Rising Risk of Technical Recession
NODX Grew in Aug from Year Ago, But Falls from Previous Month

Non-oil domestic exports (NODX) growth picked up pace in August, partly due to last year’s low base for non-electronics products including pharmaceuticals. NODX rose by +11.4% in August (vs. +7% in Jul), boosted by the surge in non-electronics (+16.9% vs. +6.1% in Jul) which offset the decline in electronics (-4.5% vs. +10.3% in Jul).

Real NODX (2018 prices) rebounded by +4.8% (vs. -1.8% in Jul), the first positive print in 7 months. On a seasonally adjusted basis, however, NODX fell by -3.9% from the previous month (vs. +1.4% in Jul), the steepest decline since Apr 2021 (see Fig 5).

Non-oil re-exports (NORX) – a proxy for wholesale trade services – moderated to +15% (vs. +24.6% in Jul) with softer growth in both non-electronics (+29.3% vs. +46.2% in Jul) and electronics (+5.2% vs. +8.4% in Jul). Top 3 contributors to NORX growth were Indonesia (+50%), US (+28.1%), and Malaysia (+23.1%).

Chip Exports Slide into Contraction

Electronics exports (-4.5%) contracted for the first time since Nov 2020, weighed down by integrated circuits (-6.6% vs. +18.5% in Jul), disk media products (-21.3%), parts of PCs (-23.5%), and consumer electronics (-17.1%). Other major chipmakers including South Korea and Taiwan are seeing chip exports fall and manufacturing PMIs in negative territory due to slowing global demand (see Fig 6). Non- electronics exports (+16.9%) was driven by structures of ships & boats, pharmaceuticals (+68.8% vs. +9% in Jul), and food preparations (+44.5%).

The sharp decline in electronics exports raises the risk of a “technical recession” – defined as two consecutive quarters of negative quarter-on-quarter GDP growth. Correlation between exports and manufacturing is far higher for electronics (at 0.6) than pharma (0.3) (see Figures 7 & 8). The recovery in headline export growth may not translate into a recovery in manufacturing in August (out on 26 Sep), as electronics output will likely contract and the improvement in volatile pharma exports may not show up in output. Electronics accounts for around 23% of total NODX and 40% of total manufacturing.

NODX Strong to US & EU, Contracting to China, HK & Taiwan

NODX to US (+60% vs. +10.9% in Jul) accelerated on the back of structures of ships & boats, food preparations (+89.9%), and measuring instruments (+53.4%). NODX to EU (+57.3% vs. +22.9% in Jul) jumped, driven by pharma (+303%), telecomm equipment (+170%), and specialised machinery +16.9%). NODX to ASEAN markets including Indonesia (+26.3% vs. +22.8% in Jul) and Thailand (+16% vs. +0.1% in Jul) improved while NODX to Malaysia (+6.9% vs. +29.9% in Jul) eased due to the decline in electronics (-8.8% vs. +37% in Jul). But NODX to China (-18.2% vs. -21.3% in Jul), Taiwan (-24.5% vs. +24.4% in Jul), and Hong Kong (-31% vs. -3.8% in Jul) contracted and dampened growth.

Maintain 2022 NODX Forecast at 5%-6%; GDP Growth at +2.8%

We expect NODX growth to ease and even turn negative in the coming months, as electronics exports will likely contract further with slowing global growth. We maintain our 2022 NODX growth forecast at 5%-6% (8M22: +9.9%), and 2023 forecast at between -2% and +1%.

We maintain our 2022 GDP growth forecast at +2.8%, below MTI’s latest forecast range of 3%-4%. We see rising risks of a “technical recession” as electronics manufacturing stagnates and contracts in the coming months while trade-related services such as wholesale trade and water transport weaken. The reopening tailwind is dissipating and will not be strong enough to offset the global headwinds from rising interest rates and inflation.

Despite the deteriorating growth outlook, we expect the MAS to tighten monetary policy in October to counter the intensifying core inflation pressures (+4.8% in July), by re-centering the S$NEER to the prevailing level (currently about 1.5% above mid-point). We are expecting the MAS to maintain the current slope of the appreciation bias, given the deteriorating growth outlook and rising recession risk.

SGP-EconsClick here to Download Full Report in PDF

Share this:

  • Click to share on Twitter (Opens in new window)
  • Click to share on Facebook (Opens in new window)
  • Click to share on LinkedIn (Opens in new window)
  • Click to share on Telegram (Opens in new window)
  • Click to share on WhatsApp (Opens in new window)
Research - Equities Tags:Singapore economics, Singapore Macro

Post navigation

Previous Post: DBS: Singapore Equity Picks – Guarding our performance 19 Sep 2022
Next Post: Better late than never! Tighter financial Condition Slowing Growth

Related Posts

Maybank: Singapore Economics Research - Equities
DBS: Singapore Retail Real Estate Research - Equities
CIMB: Singapore Economics Update Research - Equities
UOBKH: Singapore Monthly Review and Outlook Research - Equities
PhillipCapital: Phillip 4Q22 Singapore Strategy Hibernating for winter Research - Equities
Edge: MAS double tightening of upward re-centring and slope steepening ‘likely’ in Oct – Citi News
Bloomberg: Singapore dollar may become rare global winner as MAS tightens News
DBS: Singapore Macro Chartbook Research - Equities
UOBKH: Singapore Strategy Research - Equities
CIMB: Singapore Strategy Research - Equities
CIMB: Singapore Economics Update Research - Equities
OIR: Singapore Residential Sector Research - Equities

Leave a Reply

You must be logged in to post a comment.

Login

Log In
Register Lost Password
Get new posts by email
Chat on WhatsApp
  • Earnings Updates/ Corporate Actions
  • My Opinions/ Views
  • News
  • Others
  • Research – Equities
  • Research – Fixed Income/ Bonds
  • Research – Unit Trusts/ ETF

Copyright © 2023 Alpha Edge Investing.

Powered by PressBook Grid Blogs theme