Singapore stocks’ market cap up 4.6% in July
Tan Nai Lun
THE total market capitalisation of Singapore stocks gained 4.6 per cent in July, amid a better-than-expected corporate earnings reporting season.
Data compiled by The Business Times indicated that market cap of the overall Singapore market was S$841.6 billion in July, up from S$804.7 billion at end-June.
Of the 624 companies listed on the Singapore Exchange (SGX), gainers outnumbered losers 250 to 230.
Total market capitalisation of the benchmark Straits Times Index component counters rose 4.1 per cent on month, or S$21.9 billion, to S$560.3 billion in July.
SGX market strategist Geoff Howie noted growing concerns that decelerating growth in July would impact corporate earnings and outlooks.
But the earnings season thus far has seen more upside surprises than downside surprises in the US, across Asean as well as in Singapore, he noted.
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Strong tourism data, and not-as-bad-as-feared results for the quarter from most real estate investment trusts lifted the market as well, said Peggy Mak, research manager at Phillip Securities Research.
Most of the market also expects that the US Federal Reserve’s latest interest rate hike will be the last for the current tightening cycle, Howie added. In July, the Fed brought the US Fed Funds Rate to between 5.25 and 5.5 per cent.
Furthermore, said Maybank Securities head of equity research Thilan Wickramasinghe, the market may have taken cues from the strength of the US market as well as the increasing policy support in China.
The manufacturing industry had the biggest percentage increase in market cap, up 14.6 per cent month on month.
Wickramasinghe noted that the soft landing narrative is gaining traction, especially following Singapore’s latest manufacturing readings showing a shallower-than-expected contraction.
But the Asia-Pacific region still saw a lag in technology stocks, likely due to continued fragmentation and bifurcation, said Howie.
The finance industry recorded a strong performance in July, up 5.8 per cent month on month.
Banks saw strength ahead of their second-quarter results amid expectations of resilient margins and indications of higher interim dividends, Wickramasinghe said.
UOB on Jul 27 posted a 27 per cent rise in its second-quarter net profit, with optimism on further growth in its net interest margins amid the current interest rates environment. DBS and OCBC are due to report their results on Thursday (Aug 3) and Friday, respectively.
The commerce industry had the biggest percentage decline, down 3.4 per cent month on month.
Wickramasinghe also noted that the industrials sector likely had some declines due to profit taking ahead of their results, while the consumer sector was weak amid limited traction from China tourist arrivals.
Looking ahead, Wickramasinghe said he will continue to watch for management guidance amid the current quarterly reporting season for outlook on margins and volumes in the second half.
Meanwhile, Phillip’s Mak said to watch for Singapore’s July property data, which should result in some impact on property stocks and banks.
Amid a slowdown in prices, rents and volumes transacted in June, July’s data will indicate if demand has eased or if June was just a wait-and-see for prices to fall further, Mak added.
China’s possible roll-out of economic stimuli could also benefit those with exposure to its property or consumer spending, she said.
Mak added that the severity and length of the El Nino weather cycle is another trend to look out for due to its impact on crop yields and food prices.
Asian countries are more vulnerable as food accounts for a bigger share of the Consumer Price Index basket, thus worse conditions could stall the recovery in the Asean economies and affect stocks such as Delfi and Jardine C&C, she said.
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