Singapore Exchange Ltd (SGX)

Singapore Exchange is Asia’s leading and trusted market infrastructure, facilitating the exchange of capital and ideas to create value for people, businesses and economies. As a multi-asset exchange operating equity, fixed income and derivatives markets to the highest regulatory standards, SGX is a vertically integrated business that provides listing, trading, clearing, settlement, depository and data services.

With about 40% of listed companies and over 80% of listed bonds originating outside of Singapore as well as established linkages across the region and in Europe, SGX is Asia’s most international and connected exchange. Offering a full suite of derivatives products across Asian equity indices, commodities and currencies, SGX is the world’s most liquid international market for the benchmark equity indices of China, India, Japan and ASEAN.

As Asia’s pioneering central counterparty, SGX is globally recognised for its risk management and clearing capabilities, and was one of the first globally to adopt the Principles for Financial Market Infrastructure.

Headquartered in AAA-rated Singapore, SGX has over 800 employees including offices in Beijing, Chicago, Hong Kong, London, New York, Mumbai, San Francisco, Shanghai and Tokyo.

Asia’s leading multi-asset exchange

SGX Market Strategist, Equity & Fixed Income, Singapore Exchange Ltd (SGX)

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

Equity Bottom-Up

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<ul>
<li>
Tonight the scheduled Phase 1 trade deal between the US and China is scheduled to be signed in Washington, almost two years to the date that President Trump first announced tariffs would be levied on certain manufactured imports from China. 
	 </li>
	<li>
Similar to Singapore, the US Manufacturing Sector has felt the brunt of the deceleration in global growth. The January US Empire State Manufacturing Survey general business conditions index is also due tonight (9:30pm), and presently at a shade of its 2017 highs. 
	 </li>
	<li>A cautious tone today saw the exchange’s five most traded Singapore-based manufacturers end Wednesday without a gain. Yangzijiang, Wilmar, Venture, ST Engineering and AEM averaged a session decline of 0.9%, trimming their early 2020 average gains to 4.0%. </li>
</ul>
 

Tonight, a Phase 1 trade deal between the United States and China is scheduled to be signed in Washington. This follows two years of trade tensions that began in January 2018, when US President Trump announced he would levy tariffs on imports of solar panels and washing machines from China. While trade tensions have created uncertainty for international businesses, deceleration of global growth rates over the past 18 months have also been reported to impact capital expenditures, margins or outlooks.

Just as manufacturing makes up approximately one-fifth of the Singapore economy, one-fifth of Singapore’s 30 most traded stocks by turnover in 2019 consisted of stocks with manufacturing businesses.

Amidst the global growth challenges of the past 18 months (from 30 June 2018) five of the six most traded manufacturing stocks listed in Singapore posted sturdy gains with the six stocks averaging a 39% total return. As detailed in the table below, the six manufacturers have international businesses than span multiple and diverse industries. Five of the six stocks are Singapore-based with Thai Beverage PLC based in Bangkok.

<table class="table table-striped"><tbody>
<tr>
<td>
			Stocks with a Manufacturing Business
			</td>
			<td>
			SGX Code
			</td>
			<td>
			Relevant Industries
			</td>
			<td>
			Turnover Ranking in 2019 
			</td>
			<td>
			Total Return 30 Jun 2018 - 15 Jan 2020
			</td>
		</tr>
<tr>
<td>
			Yangzijiang Shipbuilding Holdings
			</td>
			<td>
			BS6
			</td>
			<td>
			Shipbuilding &amp; Offshore Engineering
			</td>
			<td>
			6
			</td>
			<td>
			34%
			</td>
		</tr>
<tr>
<td>
			Wilmar International
			</td>
			<td>
			F34
			</td>
			<td>
			Agribusiness
			</td>
			<td>
			15
			</td>
			<td>
			44%
			</td>
		</tr>
<tr>
<td>
			Venture Corporation
			</td>
			<td>
			V03
			</td>
			<td>
			Technology solutions, products and services
			</td>
			<td>
			16
			</td>
			<td>
			-2%
			</td>
		</tr>
<tr>
<td>
			Singapore Tech Engineering
			</td>
			<td>
			S63
			</td>
			<td>
			Technology, defence and engineering
			</td>
			<td>
			20
			</td>
			<td>
			32%
			</td>
		</tr>
<tr>
<td>
			Thai Beverage PCL
			</td>
			<td>
			Y92
			</td>
			<td>
			Beverages
			</td>
			<td>
			23
			</td>
			<td>
			24%
			</td>
		</tr>
<tr>
<td>
			AEM Holdings
			</td>
			<td>
			AWX
			</td>
			<td>
			Hi-tech handling, testing and advanced manufacturing solutions
			</td>
			<td>
			29
			</td>
			<td>
			104%
			</td>
		</tr>
</tbody></table>
 Source: Thomson Reuters, Bloomberg (Data as of 15 January 2020)

The past three years, from the end of 2016 through to the end of 2019, saw acceleration in global growth through to mid-2018, that was followed by growth deceleration in the ensuing 18 months. For the three years, Singapore-based stocks performed well in comparison to Asia stocks, with Singapore’s performance almost on par with China, and Asia led by Taiwan for the three year period. The FTSE Singapore Index, different to the Straits Times Index (“STI”), can be used to provide cross-country comparisons of not only country index performance but also cross country volatility and dividend yields. As reported by FTSE Russell (click <a href="https://research.ftserussell.com/Analytics/Factsheets/Home/DownloadSingleIssue?issueName=ASIAMR&amp;IsManual=true&amp;fireglass_rsn=true">here</a>, p.10) the FTSE Singapore Index was the third strongest performing Index across Asia, with lower than average volatility for the three year period through to 31 December 2019. In addition, Singapore maintained the highest dividend yield of the relevant Asia Indices as of the end of 2019.  

Manufacturing a Key Focus of 2020

Following a strong year of synchronised growth in 2017, extending into the first six months of 2018, the past 18 months have seen synchronised slowdown in global growth rates, bringing the expected and soon-to-be confirmed global GDP growth rate in 2019 to a 10-year low. 

<ul>
<li>For the United States, its Manufacturing Sector has felt the brunt of the global slowdown, as shown by the US Empire State Manufacturing Survey, the economic indicator published by Federal Reserve Bank of New York to report on  business activity in New York State. The Survey’s headline general business conditions index in December 2019 stood at 3.5, down significantly from a high of 27.2 in October 2017. The January 2020 US Empire State Manufacturing Survey will be released tonight at 9:30pm Singapore time with consensus expectations for a marginal gain in the index (click <a href="https://www.newyorkfed.org/survey/empire/empiresurvey_overview.html#tabs-2">here</a> for more). This follows the United States seeing a loss of 12,000 manufacturing jobs in December 2019 as reported last week, which meant less than 50,000 manufacturing jobs were created in the United States in 2019 (compared to more than 250,000 in 2018). Similarly, the Chair of the US Federal Reserve detailed in mid-July 2019 to Congress that global numbers “particularly in the manufacturing and trade-related sectors” was the key rationale behind the change to a dovish rate outlook. 
	 </li>
	<li>For Singapore, GDP is expected to have grown by 0.7% in 2019, following on from a 3.1% growth rate in 2018 and 3.6% in 2017. Service producing industries and construction have offset some of the weakness in manufacturing which had a significant impact on the GDP growth rate in 2019. With manufacturing sentiment a global theme, in addition to Central Bank responses, from the perspectives of manufacturing-related sectors, there was much synchronicity in the local and global median returns in 2019.</li>
</ul>
Key Singapore Manufacturing Stocks Ahead of the Phase 1 Signing

On the eve of that the scheduled Phase 1 trade deal between the US and China is scheduled to be signed, the five Singapore-based most traded manufacturing stocks traded with caution and without a gain, averaging a 0.9% decline. In addition, there has been a pick-up in conjecture that multiple US tariffs on China imports may not be reduced, and a Phase 2 deal might not be on the table until after the United States’ November 2020 elections.

All five Singapore-based manufacturers have still maintained positive returns over the first 10 sessions of 2020, averaging a 4.0% gain.

Bangkok-based Thai Beverage PCL generated a gain of 1.7% on Wednesday, bringing its 2020 return through to 15 January to a decline of 1.7%. 

Together, the six stocks averaged 45% total returns in 2019 with S$650 million of net institutional inflow. The individual performances are tabled below.

<table class="table table-striped"><tbody>
<tr>
<td>
			Stocks with Manufacturing Businesses
			</td>
			<td>
			SGX Code
			</td>
			<td>
			Mkt Cap S$M
			</td>
			<td>
			2019 Volatility
			</td>
			<td>
			2019 Price Change
			</td>
			<td>
			2019 Total Return
			</td>
			<td>
			2020 YTD Total Return
			</td>
			<td>
			2019 Average Daily Turnover (S$M)
			</td>
			<td>
			2019 Net Insti Flow (S$M)
			</td>
		</tr>
<tr>
<td>
			Yangzijiang Shipbuilding Holdings
			</td>
			<td>
			BS6
			</td>
			<td>
			4,546
			</td>
			<td>
			46%
			</td>
			<td>
			-10%
			</td>
			<td>
			-7%
			</td>
			<td>
			4%
			</td>
			<td>
			34.5
			</td>
			<td>
			13.6
			</td>
		</tr>
<tr>
<td>
			Wilmar International
			</td>
			<td>
			F34
			</td>
			<td>
			26,953
			</td>
			<td>
			19%
			</td>
			<td>
			32%
			</td>
			<td>
			36%
			</td>
			<td>
			 3%
			</td>
			<td>
			20.0
			</td>
			<td>
			241.5
			</td>
		</tr>
<tr>
<td>
			Venture Corporation
			</td>
			<td>
			V03
			</td>
			<td>
			4,764
			</td>
			<td>
			31%
			</td>
			<td>
			16.1%
			</td>
			<td>
			21%
			</td>
			<td>
			 2%
			</td>
			<td>
			19.9
			</td>
			<td>
			-4.8
			</td>
		</tr>
<tr>
<td>
			Singapore Tech Engineering
			</td>
			<td>
			S63
			</td>
			<td>
			12,803
			</td>
			<td>
			17%
			</td>
			<td>
			13%
			</td>
			<td>
			17%
			</td>
			<td>
			 4%
			</td>
			<td>
			16.9
			</td>
			<td>
			146.0
			</td>
		</tr>
<tr>
<td>
			Thai Beverage PCL
			</td>
			<td>
			Y92
			</td>
			<td>
			21,974
			</td>
			<td>
			29%
			</td>
			<td>
			46%
			</td>
			<td>
			49%
			</td>
			<td>
			 -2%
			</td>
			<td>
			14.9
			</td>
			<td>
			187.0
			</td>
		</tr>
<tr>
<td>
			AEM Holdings
			</td>
			<td>
			AWX
			</td>
			<td>
			583
			</td>
			<td>
			45%
			</td>
			<td>
			145%
			</td>
			<td>
			154%
			</td>
			<td>
			7%
			</td>
			<td>
			10.4
			</td>
			<td>
			66.8
			</td>
		</tr>
<tr>
<td>
			Average
			</td>
			<td>
			 
			</td>
			<td>
			 
			</td>
			<td>
			31%
			</td>
			<td>
			40%
			</td>
			<td>
			45%
			</td>
			<td>
			3%
			</td>
			<td>
			 
			</td>
			<td>
			 
			</td>
		</tr>
<tr>
<td>
			Median 
			</td>
			<td>
			 
			</td>
			<td>
			 
			</td>
			<td>
			30%
			</td>
			<td>
			24%
			</td>
			<td>
			29%
			</td>
			<td>
			   4% 
			</td>
			<td>
			 
			</td>
			<td>
			 
			</td>
		</tr>
</tbody></table>
Source: Thomson Reuters, Bloomberg (Data as of 15 January 2020)

 
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Tonight the scheduled Phase 1 trade deal between the US and China is scheduled to be signed in Washington, almost two years to the date that President Trump first announced tariffs would be levied on certain manufactured imports from China.  
	 
	
Similar to Singapore, the US Manufacturing Sector has felt the brunt of the deceleration in global growth. The January US Empire State Manufacturing Survey general business conditions index is also due tonight (9:30pm), and presently at a shade of its 2017 highs.  
	 
	A cautious tone today saw the exchange’s five most traded Singapore-based manufacturers end Wednesday without a gain. Yangzijiang, Wilmar, Venture, ST Engineering and AEM averaged a session decline of 0.9%, trimming their early 2020 average gains to 4.0%. 

 

Tonight, a Phase 1 trade deal between the United States and China is scheduled to be signed in Washington. This follows two years of trade tensions that began in January 2018, when US President Trump announced he would levy tariffs on imports of solar panels and washing machines from China. While trade tensions have created uncertainty for international businesses, deceleration of global growth rates over the past 18 months have also been reported to impact capital expenditures, margins or outlooks.

Just as manufacturing makes up approximately one-fifth of the Singapore economy, one-fifth of Singapore’s 30 most traded stocks by turnover in 2019 consisted of stocks with manufacturing businesses.

Amidst the global growth challenges of the past 18 months (from 30 June 2018) five of the six most traded manufacturing stocks listed in Singapore posted sturdy gains with the six stocks averaging a 39% total return. As detailed in the table below, the six manufacturers have international businesses than span multiple and diverse industries. Five of the six stocks are Singapore-based with Thai Beverage PLC based in Bangkok.




			Stocks with a Manufacturing Business
			
			
			SGX Code
			
			
			Relevant Industries
			
			
			Turnover Ranking in 2019 
			
			
			Total Return 30 Jun 2018 - 15 Jan 2020
			
		


			Yangzijiang Shipbuilding Holdings
			
			
			BS6
			
			
			Shipbuilding &amp; Offshore Engineering
			
			
			6
			
			
			34%
			
		


			Wilmar International
			
			
			F34
			
			
			Agribusiness
			
			
			15
			
			
			44%
			
		


			Venture Corporation
			
			
			V03
			
			
			Technology solutions, products and services
			
			
			16
			
			
			-2%
			
		


			Singapore Tech Engineering
			
			
			S63
			
			
			Technology, defence and engineering
			
			
			20
			
			
			32%
			
		


			Thai Beverage PCL
			
			
			Y92
			
			
			Beverages
			
			
			23
			
			
			24%
			
		


			AEM Holdings
			
			
			AWX
			
			
			Hi-tech handling, testing and advanced manufacturing solutions
			
			
			29
			
			
			104%
			
		

 Source: Thomson Reuters, Bloomberg (Data as of 15 January 2020)

The past three years, from the end of 2016 through to the end of 2019, saw acceleration in global growth through to mid-2018, that was followed by growth deceleration in the ensuing 18 months. For the three years, Singapore-based stocks performed well in comparison to Asia stocks, with Singapore’s performance almost on par with China, and Asia led by Taiwan for the three year period. The FTSE Singapore Index, different to the Straits Times Index (“STI”), can be used to provide cross-country comparisons of not only country index performance but also cross country volatility and dividend yields. As reported by FTSE Russell (click here, p.10) the FTSE Singapore Index was the third strongest performing Index across Asia, with lower than average volatility for the three year period through to 31 December 2019. In addition, Singapore maintained the highest dividend yield of the relevant Asia Indices as of the end of 2019.  

Manufacturing a Key Focus of 2020

Following a strong year of synchronised growth in 2017, extending into the first six months of 2018, the past 18 months have seen synchronised slowdown in global growth rates, bringing the expected and soon-to-be confirmed global GDP growth rate in 2019 to a 10-year low. 


For the United States, its Manufacturing Sector has felt the brunt of the global slowdown, as shown by the US Empire State Manufacturing Survey, the economic indicator published by Federal Reserve Bank of New York to report on  business activity in New York State. The Survey’s headline general business conditions index in December 2019 stood at 3.5, down significantly from a high of 27.2 in October 2017. The January 2020 US Empire State Manufacturing Survey will be released tonight at 9:30pm Singapore time with consensus expectations for a marginal gain in the index (click here for more). This follows the United States seeing a loss of 12,000 manufacturing jobs in December 2019 as reported last week, which meant less than 50,000 manufacturing jobs were created in the United States in 2019 (compared to more than 250,000 in 2018). Similarly, the Chair of the US Federal Reserve detailed in mid-July 2019 to Congress that global numbers “particularly in the manufacturing and trade-related sectors” was the key rationale behind the change to a dovish rate outlook. 
	 
	For Singapore, GDP is expected to have grown by 0.7% in 2019, following on from a 3.1% growth rate in 2018 and 3.6% in 2017. Service producing industries and construction have offset some of the weakness in manufacturing which had a significant impact on the GDP growth rate in 2019. With manufacturing sentiment a global theme, in addition to Central Bank responses, from the perspectives of manufacturing-related sectors, there was much synchronicity in the local and global median returns in 2019.

Key Singapore Manufacturing Stocks Ahead of the Phase 1 Signing

On the eve of that the scheduled Phase 1 trade deal between the US and China is scheduled to be signed, the five Singapore-based most traded manufacturing stocks traded with caution and without a gain, averaging a 0.9% decline. In addition, there has been a pick-up in conjecture that multiple US tariffs on China imports may not be reduced, and a Phase 2 deal might not be on the table until after the United States’ November 2020 elections.

All five Singapore-based manufacturers have still maintained positive returns over the first 10 sessions of 2020, averaging a 4.0% gain.

Bangkok-based Thai Beverage PCL generated a gain of 1.7% on Wednesday, bringing its 2020 return through to 15 January to a decline of 1.7%. 

Together, the six stocks averaged 45% total returns in 2019 with S$650 million of net institutional inflow. The individual performances are tabled below.




			Stocks with Manufacturing Businesses
			
			
			SGX Code
			
			
			Mkt Cap S$M
			
			
			2019 Volatility
			
			
			2019 Price Change
			
			
			2019 Total Return
			
			
			2020 YTD Total Return
			
			
			2019 Average Daily Turnover (S$M)
			
			
			2019 Net Insti Flow (S$M)
			
		


			Yangzijiang Shipbuilding Holdings
			
			
			BS6
			
			
			4,546
			
			
			46%
			
			
			-10%
			
			
			-7%
			
			
			4%
			
			
			34.5
			
			
			13.6
			
		


			Wilmar International
			
			
			F34
			
			
			26,953
			
			
			19%
			
			
			32%
			
			
			36%
			
			
			 3%
			
			
			20.0
			
			
			241.5
			
		


			Venture Corporation
			
			
			V03
			
			
			4,764
			
			
			31%
			
			
			16.1%
			
			
			21%
			
			
			 2%
			
			
			19.9
			
			
			-4.8
			
		


			Singapore Tech Engineering
			
			
			S63
			
			
			12,803
			
			
			17%
			
			
			13%
			
			
			17%
			
			
			 4%
			
			
			16.9
			
			
			146.0
			
		


			Thai Beverage PCL
			
			
			Y92
			
			
			21,974
			
			
			29%
			
			
			46%
			
			
			49%
			
			
			 -2%
			
			
			14.9
			
			
			187.0
			
		


			AEM Holdings
			
			
			AWX
			
			
			583
			
			
			45%
			
			
			145%
			
			
			154%
			
			
			7%
			
			
			10.4
			
			
			66.8
			
		


			Average
			
			
			 
			
			
			 
			
			
			31%
			
			
			40%
			
			
			45%
			
			
			3%
			
			
			 
			
			
			 
			
		


			Median 
			
			
			 
			
			
			 
			
			
			30%
			
			
			24%
			
			
			29%
			
			
			   4% 
			
			
			 
			
			
			 
			
		

Source: Thomson Reuters, Bloomberg (Data as of 15 January 2020)

 



Key Manufacturing Stocks Converge Ahead of Landmark Signing