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Singapore's FSSTI sees rebound despite extension in domestic restrictions

Amala Balakrishner
Amala Balakrishner11/3/2021 02:47 PM GMT+08  • 3 min read
Singapore's FSSTI sees rebound despite extension in domestic restrictions
The FSSTI closed up 111.47 points or 3.61% m-o-m at 3,198.17 points in October.
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Things are seemingly looking up for Singapore’s stock market, despite the extension in the Covid-19-related restrictions.

For one, the FSSTI closed up 111.47 points or 3.61% m-o-m at 3,198.17 points in October.

A substantial lift came from the “promising US earnings season, even as China reported a sharp drop in 3Q2021 growth at 3.9% y-o-y,” CGS-CIMB analysts Lim Siew Khee and Jeremy Ng write in an Oct 29 note.

“[China is] the last major global holdout pursuing a Covid-zero strategy, [and this presents] potential ramifications for the global economy,” they add.

Singapore too is seemingly en route to a route to reopening its economy, through the establishment of Vaccinated Travel Lanes (VTLs) with more countries.

See: Analysts mostly positive on ST Engineering following plans to acquire TransCore

See also: Singapore market to offer stability amidst global volatility in 2023: OCBC

Advance estimates released by the Ministry of Trade and Industry (MTI) penciled a 0.8% q-o-q expansion in the city-state’s economy in 3Q2021. However, a drag still came from a contraction in the domestic-oriented sectors no thanks to the pandemic control measures.

Against this backdrop, Lim and Ng say that the 3Q2021 results have been “uneventful” so far.

“All sectors were positive for Oct, save for technology, which continued to be plagued by component shortages,” they explain.

See also: STI down 0.72% despite December NODX expansion

“Institutional investors inflows extended for a further four weeks, moving into consumer, financials, property and telcos, while moving out of REITs and tech. Retail investors were net sellers for the preceding four weeks, taking the opposite side of the institutional trades,” they add.

Lim and Ng consider Jardine Cycle & Carriage (JCNC), Hong Kong Land and Sembcorp Industries as outperformers of the FSSTI.

JCNC’s performance was in line with the rise of its associate Astra International, an Indonesia-headquartered company in the automotive space.

Hong Kong Land’s earnings were lifted by its housing plans in Hong Kong while that for Sembcorp Industries was driven by contract wins.

Conversely, underperformers of the FSSTI include Keppel DC REIT (due to overhang from placement shares), SGX and Mapletree Industrial Trust, Nanofilm (supply chain issues) and IFAST (lower trading turnover).

Overall, Lim and Ng say tht the FSSTI is “effectively on an uptrend”.

“The strong rebound over the past few weeks have also led to a bullish crossover between the 20- and 60-day moving average on Oct 15,” they observe.

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The analysts expect the bullish momentum “to sustain to target the 3,280 resistance next, followed by 3,380 points [in] the next one to three months”.

However, "we believe the cluster of support at the 3,100-3,140 range will hold and keep the uptrend intact, [if the weakness reappers],” Lim and Ng stress.

Cover image: file photo

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