Singapore’s market cap up 5% in November amid brighter Asia outlook

THE total value of Singapore stocks rose in November, as global markets priced in the potential for a brighter economic outlook in Asia.

Total market capitalisation of the 642 stocks listed on the Singapore Exchange (SGX) gained 5 per cent to S$830.5 billion as at Nov 30, from S$791 billion as at end-October, data compiled by The Business Times showed.

Overall, gainers outnumbered losers 313 to 162. The total market cap for mainboard-listed counters rose by 5 per cent, while the total market cap for companies listed on the Catalist board was up 0.6 per cent.

Meanwhile, the total market cap of components in the Straits Times Index (STI) rose 6.1 per cent to S$544.9 billion in the month.

SGX market strategist Geoff Howie noted that multiple Asian benchmarks outperformed this month, amid expectations Asia will be the main engine of growth in 2023 and 2024.

The outlook in China also improved in November, with policy moves such as optimised Covid rules, fiscal support to small businesses and supportive property market policies, Howie said.

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He noted, however, that the outlook for 2023 interest rates remains “highly fluid”, with markets currently focused on the US Federal Open Market Committee meeting in December for further rate hikes.

Month on month, UOB was the biggest gainer in value in November, gaining S$5.8 billion to reach a market cap of S$52.6 billion.

As for the rest of the local banks, DBS gained S$2.6 billion to reach S$90.9 billion, while OCBC gained S$1.4 billion to reach S$56.2 billion.

The banks posted robust earnings and beat analysts’ earnings estimates in the third quarter of 2022, as the lenders continued to benefit from interest rate hikes.

While top executives of the local banking trio warned of a slowdown in Asia, the banks expect rate hikes will likely continue to support their net interest margins (NIMs).

Singtel was also one of the top performers of the month, gaining S$3.6 billion to reach a market cap of S$44.9 billion.

Net profit of the telecommunications giant rose 23 per cent year on year to S$1.17 billion for its first half ended Sep 30. Singtel also declared an interim dividend of S$0.046 a share and a special dividend of S$0.05 a share for FY2023, to be paid in two tranches of S$0.025 each.

Meanwhile, Golden Energy and Resources (Gear) was one of the top decliners by value month on month, losing S$250.6 million to hit a market cap of S$2 billion.

Gear had in November said it is looking to exit its energy coal business and delist from the SGX, but market watchers noted that the deal terms may not be favourable to the company’s shareholders.

The company is proposing a distribution in specie of its 62.5 per cent stake in Indonesia-listed thermal coal subsidiary Golden Energy Mines (Gems). Shareholders can receive either 13,936 Gems shares for every 10,000 Gear shares they own, or cash of 76.6 million rupiah (S$6,670). Shareholders will also receive S$0.16 a share in an exit offer for Gear’s delisting.

By sectors, the manufacturing sector was the top gainer for the month, rising 7.3 per cent, while the mining and quarry sector was the top loser of the month, falling 8 per cent.

Shekhar Jaiswal, head of equity research at RHB Singapore, noted that the outlook of the real estate investment trusts (Reits) sector continued to be weighed down by investor concerns on rising interest rates, their impact on Reit interest costs and growing scrutiny on their distribution per unit outlook.

Jaiswal expects that companies with resilient earnings and the ability to pass on costs and maintain strong cash flow should outperform in the current volatile environment.

He said: “We recommend investors to buy banks as a proxy to rising interest rates, build exposure to selective economic reopening plays such as the travel, tourism, healthcare and hospitality sectors, and rotate into selective industrial and office Reits.”