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>Last week APAC technology stocks posted their strongest gains in close to 40 weeks, with the top quartile of these stocks by market value averaging 4% gains, led by China Semiconductor Manufacturing plays. Like their global peers, regional technology stocks are on average trading at a 20%-25% discount to their end-2021 earnings multiples.</li>
</ul>
<ul>
<li>AEM, UMS, Frencken, ISDN and GVT all generated relatively synchronised gains last week averaging a 4.4% gain over the five sessions, reducing their average YTD decline in total return to -24.8%. Since the end of 2019, the five stocks together with STI constituent, Venture, have averaged total returns in in the vicinity of 100%.</li>
</ul>
<ul>
<li>The 1Q22 Singapore GDP report noted that electronics cluster is expected to expand more strongly than earlier projected, bolstered by robust global demand for semiconductors from the 5G and automotive markets, as well as cloud services and data centres. </li>
</ul>
 

With 20% index representation, technology is the largest sector of the FTSE Asia Pacific Index. The technology sector was a key driver of the regional gains last week, as Asia Pacific’s technology stocks lodged their strongest performance in 39 weeks. The preceding week (ending May 27) had seen technology stocks lead the US stock market, with Asia Pacific technology stocks catch-up in the week ending June 3. Over the past fortnight, the Philadelphia Semiconductor Index (SOX), a barometer for global semiconductor industry, has recovered 6%, which saw industries such as electronic components, semi-conductor and internet stocks among the stronger performing global industries for the 10 sessions. Note the SOX Index remains down 20% in the 2022 year to 3 June, yet up 75% since the end of 2019. The technology sector declines of the past 22 weeks have also positioned global and regional technology stocks to be trading at a 20% to 25% discount to their earnings multiple at the end of 2021. 

In Singapore, the more semiconductor-related stocks of AEM Holdings, UMS Holdings, Frencken Group, ISDN Holdings and Grand Venture Technology averaged 4.4% gains last week, while the STI was comparatively flat. This saw the 10 most traded technology-related stocks in Singapore average 3.8% gains last week, while booking a combined S$32 million of net institutional inflows. Across the Singapore stock market, Venture Corporation saw the second highest net institutional inflows for the week, after manufacturer Singapore Technologies Engineering. The comparative performances and recent flows are tabled below.
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<table class="table table-striped"><tbody>
<tr>
<td>
			Most Traded Tech-related stocks
			</td>
			<td>
			Code
			</td>
			<td>
			Mkt Cap S$M
			</td>
			<td>
			YTD Average Daily T/O (S$M)
			</td>
			<td>
			Week ending 3 June Total Return %
			</td>
			<td>
			Week ending 3 June Net Insti Flow S$M
			</td>
			<td>
			YTD Total Return %
			</td>
			<td>
			YTD Net Insti Flow S$M
			</td>
			<td>
			2021 Total Return %
			</td>
			<td>
			2020 Total Return %
			</td>
		</tr>
<tr>
<td>
			Venture
			</td>
			<td>
			V03
			</td>
			<td>
			5,186
			</td>
			<td>
			19.9
			</td>
			<td>
			2.2
			</td>
			<td>
			23.1
			</td>
			<td>
			0.2
			</td>
			<td>
			-83.8
			</td>
			<td>
			-2
			</td>
			<td>
			25
			</td>
		</tr>
<tr>
<td>
			AEM SGD
			</td>
			<td>
			AWX
			</td>
			<td>
			1,409
			</td>
			<td>
			12.0
			</td>
			<td>
			5.1
			</td>
			<td>
			4.6
			</td>
			<td>
			-12.3
			</td>
			<td>
			-47.9
			</td>
			<td>
			55
			</td>
			<td>
			75
			</td>
		</tr>
<tr>
<td>
			UMS
			</td>
			<td>
			558
			</td>
			<td>
			793
			</td>
			<td>
			9.0
			</td>
			<td>
			3.5
			</td>
			<td>
			1.0
			</td>
			<td>
			-20.4
			</td>
			<td>
			-54.8
			</td>
			<td>
			81
			</td>
			<td>
			10
			</td>
		</tr>
<tr>
<td>
			Frencken
			</td>
			<td>
			E28
			</td>
			<td>
			504
			</td>
			<td>
			6.5
			</td>
			<td>
			4.4
			</td>
			<td>
			1.0
			</td>
			<td>
			-38.3
			</td>
			<td>
			-49.0
			</td>
			<td>
			52
			</td>
			<td>
			47
			</td>
		</tr>
<tr>
<td>
			Nanofilm
			</td>
			<td>
			MZH
			</td>
			<td>
			1,776
			</td>
			<td>
			5.5
			</td>
			<td>
			12.5
			</td>
			<td>
			1.8
			</td>
			<td>
			-29.0
			</td>
			<td>
			-56.1
			</td>
			<td>
			-13
			</td>
			<td>
			N/A
			</td>
		</tr>
<tr>
<td>
			IFAST
			</td>
			<td>
			AIY
			</td>
			<td>
			1,401
			</td>
			<td>
			4.9
			</td>
			<td>
			1.9
			</td>
			<td>
			-0.2
			</td>
			<td>
			-42.8
			</td>
			<td>
			-67.9
			</td>
			<td>
			182
			</td>
			<td>
			195
			</td>
		</tr>
<tr>
<td>
			ISDN
			</td>
			<td>
			I07
			</td>
			<td>
			248
			</td>
			<td>
			1.7
			</td>
			<td>
			2.7
			</td>
			<td>
			0.1
			</td>
			<td>
			-22.1
			</td>
			<td>
			-4.4
			</td>
			<td>
			81
			</td>
			<td>
			79
			</td>
		</tr>
<tr>
<td>
			Aztech Gbl
			</td>
			<td>
			8AZ
			</td>
			<td>
			664
			</td>
			<td>
			1.6
			</td>
			<td>
			-0.6
			</td>
			<td>
			-0.1
			</td>
			<td>
			3.8
			</td>
			<td>
			-10.3
			</td>
			<td>
			N/A
			</td>
			<td>
			N/A
			</td>
		</tr>
<tr>
<td>
			Grand Venture
			</td>
			<td>
			JLB
			</td>
			<td>
			278
			</td>
			<td>
			0.4
			</td>
			<td>
			6.5
			</td>
			<td>
			0.1
			</td>
			<td>
			-30.7
			</td>
			<td>
			0.9
			</td>
			<td>
			262
			</td>
			<td>
			25
			</td>
		</tr>
<tr>
<td>
			Excelpoint
			</td>
			<td>
			BDF
			</td>
			<td>
			229
			</td>
			<td>
			0.4
			</td>
			<td>
			0.0
			</td>
			<td>
			0.0
			</td>
			<td>
			51.8
			</td>
			<td>
			5.7
			</td>
			<td>
			192
			</td>
			<td>
			-2
			</td>
		</tr>
<tr>
<td>
			Average
			</td>
			<td>
			 
			</td>
			<td>
			 
			</td>
			<td>
			 
			</td>
			<td>
			3.8
			</td>
			<td>
			 
			</td>
			<td>
			-14.0
			</td>
			<td>
			 
			</td>
			<td>
			99
			</td>
			<td>
			57
			</td>
		</tr>
<tr>
<td>
			Total 
			</td>
			<td>
			 
			</td>
			<td>
			12,488
			</td>
			<td>
			62
			</td>
			<td>
			 
			</td>
			<td>
			32
			</td>
			<td>
			 
			</td>
			<td>
			-368
			</td>
			<td>
			 
			</td>
			<td>
			 
			</td>
		</tr>
</tbody></table>
Source: SGX, Bloomberg, Refinitiv (Data as of 3 June 2022)
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Sector Developments

With the growth in technology demand in 1H22 built into 2021's rally, the technology sector has been the least performing global stock sector in the 2022 year to 3 June, weighed by supply chain constraints, higher energy costs and outlook for reduced demand growth in 2H22. The past fortnight of sector gains has coincided with continued declines in supply chain container market rates, Brent Crude Oil prices on the move, yet mostly range bound between US$110//bbl and US$125/bbl, and further policy initiatives to support growth in China. 

Supply chain container rates as represented by the Freightos Baltic Container (FBX) further declined over the week to 7370, which is one-third lower than the September 2021 high (yet still five times higher than end-2019 levels). Effective supply chain management has been a keen topic within the Singapore technology sector in recent years. UMS Holdings highlighted that last year JEP Holdings provided readily available manufacturing facilities in Singapore to support UMS Holdings’ strong customer order flows, alleviating the production challenges faced in the Group’s Penang campus due to the manpower crunch in Malaysia during the year. In late April, Venture Corporation also noted that several initiatives from its R&amp;D Labs has enabled it to mitigate supply chain disruptions and expand its capabilities to fulfil more orders.  

Looking ahead, the 1Q22 Singapore GDP report noted that electronics cluster is expected to expand more strongly than earlier projected, bolstered by robust global demand for semiconductors from the 5G and automotive markets, as well as cloud services and data centres.  In addition, 1Q22 saw AEM Holdings report a record quarterly revenue of S$262 million, which the electronic-services provider said was the highest in the group’s history, and up from S$80 million a year ago. AEM Holdings said it has raised the group’s revenue guidance for its FY22 to between S$700 million and S$750 million.

While the SEMI World Fab Forecast expects to see the global industry increasing capacity 8% in 2022 (following 7% growth in 2021), much will depend on whether the technology demand super cycle, running since 2016 on innovation, industry 4.0 adoption and widening fields of application, withstands the <a href="https://www.channelnewsasia.com/business/global-chip-shortage-likely-last-through-2023-us-official-2719156">key challenges</a> in supply chain inventories, higher energy and borrowing costs, in addition to potential declines in consumer products and services.
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Last week APAC technology stocks posted their strongest gains in close to 40 weeks, with the top quartile of these stocks by market value averaging 4% gains, led by China Semiconductor Manufacturing plays. Like their global peers, regional technology stocks are on average trading at a 20%-25% discount to their end-2021 earnings multiples.


AEM, UMS, Frencken, ISDN and GVT all generated relatively synchronised gains last week averaging a 4.4% gain over the five sessions, reducing their average YTD decline in total return to -24.8%. Since the end of 2019, the five stocks together with STI constituent, Venture, have averaged total returns in in the vicinity of 100%.


The 1Q22 Singapore GDP report noted that electronics cluster is expected to expand more strongly than earlier projected, bolstered by robust global demand for semiconductors from the 5G and automotive markets, as well as cloud services and data centres. 

 

With 20% index representation, technology is the largest sector of the FTSE Asia Pacific Index. The technology sector was a key driver of the regional gains last week, as Asia Pacific’s technology stocks lodged their strongest performance in 39 weeks. The preceding week (ending May 27) had seen technology stocks lead the US stock market, with Asia Pacific technology stocks catch-up in the week ending June 3. Over the past fortnight, the Philadelphia Semiconductor Index (SOX), a barometer for global semiconductor industry, has recovered 6%, which saw industries such as electronic components, semi-conductor and internet stocks among the stronger performing global industries for the 10 sessions. Note the SOX Index remains down 20% in the 2022 year to 3 June, yet up 75% since the end of 2019. The technology sector declines of the past 22 weeks have also positioned global and regional technology stocks to be trading at a 20% to 25% discount to their earnings multiple at the end of 2021. 

In Singapore, the more semiconductor-related stocks of AEM Holdings, UMS Holdings, Frencken Group, ISDN Holdings and Grand Venture Technology averaged 4.4% gains last week, while the STI was comparatively flat. This saw the 10 most traded technology-related stocks in Singapore average 3.8% gains last week, while booking a combined S$32 million of net institutional inflows. Across the Singapore stock market, Venture Corporation saw the second highest net institutional inflows for the week, after manufacturer Singapore Technologies Engineering. The comparative performances and recent flows are tabled below.




 




			Most Traded Tech-related stocks
			
			
			Code
			
			
			Mkt Cap S$M
			
			
			YTD Average Daily T/O (S$M)
			
			
			Week ending 3 June Total Return %
			
			
			Week ending 3 June Net Insti Flow S$M
			
			
			YTD Total Return %
			
			
			YTD Net Insti Flow S$M
			
			
			2021 Total Return %
			
			
			2020 Total Return %
			
		


			Venture
			
			
			V03
			
			
			5,186
			
			
			19.9
			
			
			2.2
			
			
			23.1
			
			
			0.2
			
			
			-83.8
			
			
			-2
			
			
			25
			
		


			AEM SGD
			
			
			AWX
			
			
			1,409
			
			
			12.0
			
			
			5.1
			
			
			4.6
			
			
			-12.3
			
			
			-47.9
			
			
			55
			
			
			75
			
		


			UMS
			
			
			558
			
			
			793
			
			
			9.0
			
			
			3.5
			
			
			1.0
			
			
			-20.4
			
			
			-54.8
			
			
			81
			
			
			10
			
		


			Frencken
			
			
			E28
			
			
			504
			
			
			6.5
			
			
			4.4
			
			
			1.0
			
			
			-38.3
			
			
			-49.0
			
			
			52
			
			
			47
			
		


			Nanofilm
			
			
			MZH
			
			
			1,776
			
			
			5.5
			
			
			12.5
			
			
			1.8
			
			
			-29.0
			
			
			-56.1
			
			
			-13
			
			
			N/A
			
		


			IFAST
			
			
			AIY
			
			
			1,401
			
			
			4.9
			
			
			1.9
			
			
			-0.2
			
			
			-42.8
			
			
			-67.9
			
			
			182
			
			
			195
			
		


			ISDN
			
			
			I07
			
			
			248
			
			
			1.7
			
			
			2.7
			
			
			0.1
			
			
			-22.1
			
			
			-4.4
			
			
			81
			
			
			79
			
		


			Aztech Gbl
			
			
			8AZ
			
			
			664
			
			
			1.6
			
			
			-0.6
			
			
			-0.1
			
			
			3.8
			
			
			-10.3
			
			
			N/A
			
			
			N/A
			
		


			Grand Venture
			
			
			JLB
			
			
			278
			
			
			0.4
			
			
			6.5
			
			
			0.1
			
			
			-30.7
			
			
			0.9
			
			
			262
			
			
			25
			
		


			Excelpoint
			
			
			BDF
			
			
			229
			
			
			0.4
			
			
			0.0
			
			
			0.0
			
			
			51.8
			
			
			5.7
			
			
			192
			
			
			-2
			
		


			Average
			
			
			 
			
			
			 
			
			
			 
			
			
			3.8
			
			
			 
			
			
			-14.0
			
			
			 
			
			
			99
			
			
			57
			
		


			Total 
			
			
			 
			
			
			12,488
			
			
			62
			
			
			 
			
			
			32
			
			
			 
			
			
			-368
			
			
			 
			
			
			 
			
		

Source: SGX, Bloomberg, Refinitiv (Data as of 3 June 2022)




Sector Developments

With the growth in technology demand in 1H22 built into 2021's rally, the technology sector has been the least performing global stock sector in the 2022 year to 3 June, weighed by supply chain constraints, higher energy costs and outlook for reduced demand growth in 2H22. The past fortnight of sector gains has coincided with continued declines in supply chain container market rates, Brent Crude Oil prices on the move, yet mostly range bound between US$110//bbl and US$125/bbl, and further policy initiatives to support growth in China. 

Supply chain container rates as represented by the Freightos Baltic Container (FBX) further declined over the week to 7370, which is one-third lower than the September 2021 high (yet still five times higher than end-2019 levels). Effective supply chain management has been a keen topic within the Singapore technology sector in recent years. UMS Holdings highlighted that last year JEP Holdings provided readily available manufacturing facilities in Singapore to support UMS Holdings’ strong customer order flows, alleviating the production challenges faced in the Group’s Penang campus due to the manpower crunch in Malaysia during the year. In late April, Venture Corporation also noted that several initiatives from its R&amp;D Labs has enabled it to mitigate supply chain disruptions and expand its capabilities to fulfil more orders.  

Looking ahead, the 1Q22 Singapore GDP report noted that electronics cluster is expected to expand more strongly than earlier projected, bolstered by robust global demand for semiconductors from the 5G and automotive markets, as well as cloud services and data centres.  In addition, 1Q22 saw AEM Holdings report a record quarterly revenue of S$262 million, which the electronic-services provider said was the highest in the group’s history, and up from S$80 million a year ago. AEM Holdings said it has raised the group’s revenue guidance for its FY22 to between S$700 million and S$750 million.

While the SEMI World Fab Forecast expects to see the global industry increasing capacity 8% in 2022 (following 7% growth in 2021), much will depend on whether the technology demand super cycle, running since 2016 on innovation, industry 4.0 adoption and widening fields of application, withstands the key challenges in supply chain inventories, higher energy and borrowing costs, in addition to potential declines in consumer products and services.



Regional Tech Stocks Post Highest Weekly Gain in Eight Months 