🎁Singapore Equity & Economic Outlook 2024: A Year of Renewal

[Miser]Roar into the year 2024, Tigers![Miser]

The year is (almost) coming to a close, and while the SGX has sadly fallen, let's share the wisdom of the claws!

In this article, we explore the market landscape in Singapore in 2023 and give you some exciting predictions for the year ahead.

[Allin]Let's make 2024 a perfect year for your investments![Allin]

1. Singapore stock market $Straits Times Index(STI.SI)$ has relatively differentiated characteristics In 2023.

On the one hand, it was a benefit from the global economic recovery and Singapore’s economic fundamentals. On the other hand, the Singapore stock market has also experienced a certain degree of volatility under the influence of various factors.

For example, after the outbreak of the Russia-Ukraine conflict, the Singapore stock market experienced a significant decline. In addition, the increase in interest rates in the US and other major economies has put pressure on the Singapore stock market.

As of the post data, the $Straits Times Index(STI.SI)$ has fallen by 2.38% in 2023.

Weekly chart

Look into the sectors, electronic components, public utilities, steel, gold, financial technology, pharmaceuticals, and aviation are currently the 10 best performing sectors.

Data from Tiger brokers

[Miser]Top 10 star companies by YTD 2023 as of Dec 27th are: $SEMBCORP INDUSTRIES LTD(U96.SI)$ , $ISEC(40T.SI)$ , $SINGAPORE AIRLINES LTD(C6L.SI)$ , $Frasers HTrust(ACV.SI)$, $YZJ Shipbldg SGD(BS6.SI)$, $OVERSEA-CHINESE BANKING CORP(O39.SI)$ , $SINGAPORE EXCHANGE LIMITED(S68.SI)$, $Genting Sing(G13.SI)$ , $DBS GROUP HOLDINGS LTD(D05.SI)$ , $STI ETF(ES3.SI)$

Data from Tiger brokers

[Miser]The top 10 REITs by YTD 2023 as of Dec 27th are $DigiCore Reit USD(DCRU.SI)$ , $Mapletree Ind Tr(ME8U.SI)$ , $Frasers HTrust(ACV.SI)$ , $Far East HTrust(Q5T.SI)$ , $UtdHampshReitUSD(ODBU.SI)$ , $CapLand Ascendas REIT(A17U.SI)$ , $Keppel DC Reit(AJBU.SI)$ , $Frasers Cpt Tr(J69U.SI)$ , $First Reit(AW9U.SI)$, $AIMS APAC Reit(O5RU.SI)$

Data from Tiger brokers

2. Regarding the SGX equities outlook in 2024,

According to @Nikko AM's Singapore Equities 2024: Brighter Prospects After Subdued Year

2023 was quiet, but 2024 looks promising: Singapore equities underperformed, but a confluence of positive factors could drive growth in 2024. We see positives in technology, services, and potentially firmer external demand.

Earnings to continue expanding: Corporate earnings are expected to rise modestly in 2024 after two stellar years, supported by sectors like tech, manufacturing, and tourism.

"New Singapore" narrative still relevant: Focus on sectors representing the future, such as energy transition, data, healthcare, and logistics, offers abundant opportunities.

Cautiously optimistic outlook: Economic growth is forecast to accelerate slightly to 2%, with a potential US slowdown balanced by a firmer China.

REITs remain under watch: Interest rate pressures might be easing, but sound balance sheets and alignment with "New Singapore" themes could lead to improvement in preferred REITs.

Overall, 2024 presents a more optimistic picture for Singapore equities, with opportunities in diverse sectors aligned with the city-state's future growth story.

3.The performance of the Singapore stock market is inextricably linked to the expected support of the Singapore economy.

• On the one hand, Singapore has a good business environment and talent advantages that attract global investors.

• On the other hand, the Singapore government is actively introducing policy measures to address the downward pressure on the economy.

Taken together, Singapore's economy is expected to maintain its growth in 2024, but the growth rate will slow down. Specifically, Singapore's economic growth could be between 2.0% and 3.0%, indicating a degree of resilience.

Below is the summary of the DBS Focus Singapore Outlook 2024: A year of renewal

• Growth to improve in 2024, mainly supported by a gradual yet fragile external-led recovery.

• Inflation is set to be bumpy, but ease in 2024.

• Monetary policy to normalise in July by reducing the steepness of the SGD NEER policy band’s slope.

• USD/SGD to hold in the same 1.30-1.38 range with a downside bias as the year progresses.

• SORA to drop more meaningfully when the Fed cuts in 2H24.
  

The specific summary is as follows:

Overall, Despite global uncertainties, 2024 is expected to be a year of renewal and modest growth for Singapore. The economy is projected to improve, driven by external factors and government policies. And the 7 areas worth paying attention to are as follow:

Gradual growth: GDP is expected to rise to 2.2% in 2024, supported by recovering manufacturing and trade.

Foreign investments: Singapore will continue to attract investments due to its business-friendly environment and ongoing supply chain shifts.

Less tight labor market: Slower economic growth will ease labor market tightness, though wage growth might still moderate.

Bumpy inflation moderation: Inflation will trend lower than 2023, but remain above pre-pandemic levels due to domestic factors like GST hikes.

4G leadership transition: The handover from Prime Minister Lee to Deputy Prime Minister Wong is expected in late 2024, with policy continuity anticipated.

Fiscal policy balance: Government spending will prioritize near-term cost-of-living support and long-term policy initiatives.

Monetary policy normalization: The MAS is likely to adjust its monetary policy stance in July 2024, aligning with global central banks.

SGD outlook: USD/SGD is expected to remain within the 1.30-1.38 range in early 2024, before weakening later in the year. SORA will likely peak and gradually decline later in 2024.

Risks and uncertainties: Global economic headwinds, geopolitical tensions, and potential policy missteps pose challenges to the projected growth.

Overall, this report paints a cautiously optimistic picture for Singapore's economy in 2024. While external factors and policy decisions will play a significant role, the focus appears to be on resilience, renewal, and long-term sustainability.

4. Some more perspectives from MAS survey

Downward adjustment:

• Private-sector economists lowered their 2024 GDP growth forecast for Singapore to 2.3%, down from 2.5% due to increased risk of a global slowdown.

• Main concerns include spillovers from weaker global growth, geopolitical tensions, inflation, and slower growth in China.

Uncertainty and potential:

• Despite the downgrade, there's still hope for an upturn in 2024 driven by external factors like better-than-expected global growth, recovering electronics exports, and stronger Chinese growth.

• MTI also predicts growth between 1% and 3% in 2024, highlighting the risk of slower-than-expected Chinese growth and high interest rates.

Inflation:

• While both all-items and core inflation are expected to ease in 2024, forecasts were revised slightly upwards compared to the previous survey.

• All-items inflation is now projected at 3.4%, while core inflation is seen at 3%.

• DBS expects a bumpier path early in 2024 due to the GST hike, with 2024 average inflation at 3.5% for all-items and 3.1% for core.

Other indicators:

• 57% of respondents anticipate higher corporate profitability in 2024.

• Private residential property prices remain uncertain, with equal predictions of both rise and decline.

• No change in MAS's tight monetary policy is expected in January 2024, but a shift towards easing might occur from April onwards.

Overall: Singapore's economic outlook for 2024 is cautiously optimistic, with potential for growth but subject to significant external uncertainties. Inflation is expected to remain elevated but gradually moderate. Policy measures and external factors will play a crucial role in shaping the final outcome.

Thanks for the reading and feel free to add your comments.

Sources:

1. https://www.dbs.com.sg/corporate/aics/templatedata/article/generic/data/en/GR/122023/231204_insights_singapore.xml

2. https://www.nikkoam.com.sg/insights/2023/singapore-equity-outlook-2024

3. https://omny.fm/shows/moneyfm-afternoon-show/market-wrap-singapore-s-2024-economic-outlook-and

4. https://www.straitstimes.com/business/economy/economists-cut-singapore-s-2024-growth-forecast-on-global-slowdown-fears-mas-survey