REVIEW: The FSSTI dropped 2.8% mom in Sep 22 to 3130.24. For the month, the index was brought down by losses in the technology (-10.2% mom) and aviation (-7.3% mom) sectors but lifted by a gain in the telecommunications (0.6% mom) sector.
Singapore’s manufacturing in the electronics segment continues to fall for the second straight month, with the Purchasing Managers’ Index (PMI) dropping 0.2pt from 49.6 in August to 49.4. This contraction is attributed to the drop in key indices of new orders, new exports, factory output and a fall in employment index for the first time in 22 months. Meanwhile, overall PMI slid 0.1pt to 49.9 in September after 26 months of continuous expansion. This is mainly due to inflationary pressures and qualitative tightening, as well as geopolitical uncertainties surrounding the Russo-Ukrainian war.
September numbers are consistent with August’s non-oil domestic exports (NODX) and industrial output (IP) data. PMI, albeit dampened by aggressive global monetary policy tightening amid persistent inflation, remains in expansion due to positive outlook in nonelectronic shipments.
STRATEGY: Some of our top large-cap picks are DBS, CapitaLand Invest, Genting SP, Sembcorp Industries, SIA Engineering, Lendlease REIT and Yangzijiang Shipbuilding. As for the small/mid-cap sector, our top picks are Civmec, Nanofilm and Raffles Medical.
