SGX Market Updates

Taking Stock of Singapore’s Trade Contraction in 2023


PUBLISHED ON |

18 January 2024

  • While Singapore's exports have lagged behind Taiwan and Korea in Nov-Dec 2023, they have showed signs of recovery after a year of steep drops. NODX may stabilise in 2024 after contracting 13% in 2023, helped by a base effect, and external factors such as the potential chip rebound, looser finance conditions, and the WTO's global trade outlook.

  • External factors also affect the prospects of the iEdge SG Advanced Manufacturing Index's most traded stocks. The uneven growth that is fueling the diverse and dynamic manufacturing and trade landscape creates different risk and return profiles for the stocks with global revenue and operations.

  • Some of the most traded index stocks, such as Yangzijiang Shipbuilding, Dyna-Mac and Food Empire, have high P/B ratios compared to their historical averages, indicating strong market valuation. Meanwhile others, such as Top Glove, Medtecs International and AEM, currently have low P/B ratios relative to their performance over the past 5 years.

  • The 5 index stocks with the highest net institutional inflow over the past 12 sessions were SATS, Yangzijiang Shipbuilding, Venture Corp, Thai Beverage and ST Engineering.

  • Stocks that increased their average daily turnover over these 12 sessions compared to the 2023 year, include Thai Beverage, SATS, AEM, Frencken, NIO, Medtecs International and Food Empire.




Singapore's recent export performance has not been as strong as seen in Taiwan, and South Korea over the final two months of 2023, however there are clear signs of stabilisation following the sharp declines than spanned 4Q22 through to 3Q23.

According to the latest data, Singapore's NODX contracted by 1.5% year-on-year in December, following 1.0% year-on-year growth in November and a 3.5% year-on-year decline in October.

Observations include:

  • The stabilisation of NODX in the last quarter was mainly driven by non-electronic exports, which grew by 1.4% year-on-year in December, 5.2% year-on-year in November, and shrank by 2.9% year-on-year in October. Non-electronic exports continue to account for about 80% of the total NODX value. The key contributors to the non-electronic NODX growth in both November and December were pharmaceuticals, non-monetary gold, and miscellaneous manufactured articles.

  • On the other hand, electronic exports remained weak, contracting by 11.7% year-on-year in December, 12.8% year-on-year in November, and 5.6% year-on-year in October.

  • By destination, NODX to China and Hong Kong increased year-on-year for three consecutive months, while NODX to the US rebounded year-on-year in November and December, after falling in October.


The moderation in global demand for semiconductors, which started in late 2022 and extended into 2023, has been cited as a reason for the NODX contractions throughout 2023.

Looking to 2024, there are indications that the semiconductor downcycle could be near inflection as indicated by PMIs, with the segment also recently boosting Singapore's Industrial Production figures. Electronics make up about 45% of Singapore's Industrial Production, and semiconductors account for 38 percentage points of that.

As shown below, the directional correlation between NODX and Singapore Industrial Production has been stronger since 2019 than in the previous years.



Singapore Industrial Production & NODX Expansion/Contraction % y-o-y



Singapore's Industrial Production for December will be announced on 26 January, and the previous two months have shown year-on-year growth, driven by the semiconductor segment.

If NODX expands in 2024 and partially recoups the 13% contraction in 2023, it would be supported by a base effect, a semiconductor recovery as discussed above, the eventuality of less tight financial conditions, in addition to the WTO maintaining overall global merchandise trade volume growth will accelerate to 3.3% in 2024, from 0.8% in 2023.

The outlooks for the most traded stocks of the iEdge SG Advanced Manufacturing Index are also heavily influenced by external economic conditions. Given the current balance of headwinds over tailwinds for these stocks, it is of no surprise that the majority of the 20 most traded stocks of the iEdge SG Advanced Manufacturing Index covered by at least three analysts, are presently trading below their Refinitiv consensus estimates. These estimates are available on the SGX Stock Screener and represent the average of individual estimates provided by analysts covering the stock with estimates typically representing an analyst's opinion of the stock performance over the next 18 months.

Nonetheless the uneven economic growth across the key segments of manufacturing and trade have provided opportunities for varied risk and return across the wide field of stocks with international revenue and manufacturing-relevant operations. Three of the 20 most traded stocks of iEdge SG Advanced Manufacturing Index are trading at price-to-books (P/B) ratios that are well above their 5 year average P/B ratios, including Yangzijiang Shipbuilding (SGX:BS6), Dyna-Mac (SGX:NO4), Food Empire (SGX:F03), while Top Glove (SGX:BVA), Medtecs International (SGX:546) and AEM (SGX:AWX) are currently trading well below their 5 year average P/B ratios.

The recent flows, performances and trading activity of the current 20 most traded stocks of the iEdge SG Advanced Manufacturing Index are tabled below.

Stock SGX
Code
Market Cap
S$M
YTD Average
Daily Turnover
S$M
2023 Average
Daily Turnover
S$M
YTD Total
Return
%
YTD Net
Institutional Inflow
S$M
2023 Total
Return
%
2023 Net
Institutional Inflow
S$M
2022 Total
Return
%
P/B
(x)
5-Year
Average P/B
(x)
Yangzijiang Shipbuilding BS6 6,242 26.0 33.0 6.0 28.0 14.0 2.6 107.4 1.8 0.7
Seatrium S51 7,709 19.9 39.6 -4.2 4.0 -14.5 80.1 68.3 0.9 0.8
Thai Beverage Y92 13,065 17.1 14.6 -1.0 6.1 -20.6 -131.9 7.0 1.7 2.8
SATS S58 4,278 14.1 13.0 4.4 36.0 2.4 -42.4 -27.0 1.8 2.6
Wilmar F34 20,976 13.4 21.7 -5.9 1.3 -10.5 -48.9 4.7 0.8 1.1
ST Engineering S63 11,927 11.4 14.9 -1.5 5.4 21.2 110.1 -5.7 4.9 5.2
Venture Corp V03 3,941 11.0 18.0 -0.3 16.9 -16.2 -229.8 -2.8 1.4 1.9
AEM AWX 955 6.3 5.7 -10.7 -10.2 2.3 32.0 -33.3 1.9 3.9
Frencken E28 542 4.5 4.4 -5.9 -0.5 48.0 17.0 -50.6 1.4 1.5
UMS 558 872 3.2 5.7 -3.0 2.1 19.1 59.5 -19.0 2.5 2.3
NIO NIO 16,511 3.1 2.5 -30.2 -3.7 -9.1 3.5 N/A 4.8 N/A
NanoFilm MZH 524 2.9 3.8 -11.5 -4.2 -33.5 -28.9 -63.3 1.4 N/A
Medtecs International 546 86 2.7 1.3 -15.6 0.3 -7.0 -3.5 -40.4 0.4 1.2
Dyna-Mac NO4 264 2.3 1.9 -23.9 -6.2 80.2 7.4 106.6 5.2 3.8
Keppel Infra Trust A7RU 2,813 1.4 3.1 0.0 -2.5 6.9 -58.2 6.0 1.6 1.5
First Resources EB5 2,332 1.2 3.0 4.2 3.4 6.9 -3.9 2.0 1.3 1.7
Top Glove BVA 2,042 1.2 1.2 0.0 1.1 -5.6 6.7 -64.9 1.2 4.2
Food Empire F03 601 1.0 0.7 0.9 -1.5 85.8 14.2 -14.1 1.7 1.2
Olam VC2 3,607 0.9 2.8 -9.1 -1.5 -25.0 -12.1 -12.1 0.5 0.7
Riverstone AP4 978 0.9 0.9 -6.4 1.2 31.7 10.1 9.0 2.0 3.1
Average -5.7 8.8 -1.2
Total 100,263 145 192 76 -216



Already 12 sessions into 2024, the most traded 20 stocks of the Index have generated mixed returns since their median 2.4% total return of 2023. Observations include:



After posting the highest total returns of the 20 stocks in 2023, Food Empire has posted the fourth highest total returns over the past 12 sessions, after Yangzijiang Shipbuilding, SATS and First Resources. Over the past 12 sessions, four of the 20 stocks posted gains, two were unchanged and 14 stocks have posted declines.







This article is provided by SGX My Gateway.



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