• Recent weeks have seen more evidence that the Singapore economy is sequentially and gradually recovering from record that lows in economic activity observed in 2Q20 that were attributed to stringent circuit breaker measures to contain COVID-19 infections.

• Over the first two weeks of 4Q20, STI Heavyweights DBS, OCBC and UOB were recipient to S$217 million in net institutional inflows, with the trio averaging 5% gains. Key bank sector themes include domestic and external economic drivers, ability to generate income, tier 1 capital to risk-weighted assets & NPLs.

• Of Singapore’s 100 most traded stocks in 2020, healthcare supply stocks have again started 4Q20 as the strongest contingent of stocks, with Medtecs International, UG Healthcare, iX Biopharma, Sri Trang Agro, Riverstone and Top Glove Corp averaging 17% total returns.

Singapore’s official growth expectation for 2020 remains unchanged with a contraction of -5% to -7% from 2019 levels. The three key sectors that continue be impacted the most are travel-related, consumer-facing domestic services and construction. On the latter, advanced estimates for Singapore’s construction sector in 3Q20 showed a 44.7% decline from 3Q19, attributed to a slow resumption of construction activities due to the need for construction firms to implement safe management measures for a safe restart. From 2Q20 however, the construction sector grew by 38.7%, underlying the sequential recovery. The preliminary 3Q20 URA Private Home Price Index also gained 0.8% from 2Q20, which in turn gained 0.3% from 1Q20.

On the consumer-facing domestic services front, Singapore’s August retail sales declined 6% from August 2019, but rose 1.4% from July and the August F&B Services Index was down 3% in August from July, but was up 29% in July compared to June. Like SIPMM reports, Singapore’s NODX report last week also relayed more evidence of a path of sequential and gradual recovery Singapore’s economy. 

Currently the economy is seeing most job creation in information and communications, food services, professional services, healthcare, and finance and insurance. While Singapore’s services component of GDP is well diversified over industries that encompass wholesale and retail trade, business services, finance and insurance, transportation, information and communications, the immediate outlook for those sectors is uneven, with very different operating conditions for transportation as opposed to information and communications. 

With the uneven aspect of the recovery, also referred to as a K-recovery, there have been some significant highlights that include Singapore’s Electronics PMI at the highest level since September 2018 and September outbound shipments to Malaysia rising close to 30% YoY, which was the strongest growth pace since April 2010.  

Over the first two weeks of 4Q20, STI Heavyweights DBS Group Holdings, Oversea-Chinese Banking Corp and United Overseas Bank were recipient to S$217 million in net institutional inflows, with the trio averaging 5% gains. In 2020 accommodative monetary policy and economic lockdowns have meant that global banks have had to contend with a sudden reduction in interest rate margins and overall demand for financing, while needing to boost loan provisions, hence uniform drivers have seen parallel performances of banking sectors across the globe. This year’s declines in the three banks have been highly correlated with the top quartile of global banks by market value throughout 2020.

Key Banking Sector themes continuing into 2021 include domestic and external economic drivers, bank abilities to generate income, tier 1 capital to risk-weighted assets and non-performing loan ratios. The Singapore trio have gradually increased quarterly net Interest Income to above S$4 billion in 2QFY15 and above S$5 billion in 2QFY18, maintaining a combined Net Interest Income of S$5.4 billion in 2QFY20. Will also add that on that ability to generate income since 2010, DBS, OCBC & UOB have increased their combined annual income that is segmented to Greater China by 175% with the combined Greater China income grew from S$2.33 billion in 2010, to S$6.42 billion in 2019.

Of Singapore’s 100 most traded stocks in 2020, healthcare supply stocks have again started 4Q20 as the strongest contingent of stocks, with Medtecs International, UG Healthcare, iX Biopharma, Sri Trang Agro, Riverstone and Top Glove Corporation averaging a 17% total return bringing their media total return in the 2020 year to date to 408%. In its FY21 outlook, Top Glove Corporation Bhd management noted that without a readable vaccine to COVID-19, much of the momentum of the Rubber Glove Sector will continue to be in trader’s focus. With COVID-19, Top Glove estimates that glove demand will grow by 20% per annum in 2020, 25% in 2021 and 15% post-COVID-19, noting that notwithstanding news of several promising vaccines in the pipeline, glove demand remains at a supernormal level, as gloves will still be required even when a vaccine becomes available. 

Singapore’s 100 most traded stocks in the 2020 year to date are tabled below and sort by highest net institutional inflow in the 4Q-to-date. 

Source: SGX, Bloomberg, Reuters (Data as of 15 October)