FSSTI Market Overview
The FSSTI Index closed at 3,794.9, marking a flat day with a 0.0% change but showing growth of 1.5% for the month and a significant 17.1% year-to-date increase. The market summary shows a daily market value of S\$902.3 million and a volume of 1,040.0 million shares. The 52-week high and low for the STI stand at 3,842.7 and 3,078.8, respectively.
Global Market Indices
The Dow Jones closed at 44,465.0, maintaining stability with no daily change but facing a monthly decline of 1.3% and a year-to-date rise of 18.4%. The S&P 500 and NASDAQ both saw slight daily declines of 0.1%, with the S&P 500 showing a modest monthly gain of 0.2% and NASDAQ achieving a month-to-date increase of 2.3%.
Commodity and Interest Rates
Gold remained unchanged at 2,659.3, displaying a 0.6% increase for the month and a substantial 28.9% rise year-to-date. Crude Oil, however, dropped by 1.6% daily, contributing to a year-to-date decrease of 6.2%. The US 10-year bond yield slightly fell by 0.2% daily but has increased by 8.1% year-to-date.
Company Spotlight: Civmec Limited
Civmec Limited, trading at S\$1.12, presents a promising outlook as detailed by Lim & Tan Securities. Their flagship facility in Henderson, Western Australia, spans over 200,000 square meters, featuring a 29,000 sqm fabrication hall and a 53,000 sqm assembly hall. This state-of-the-art facility is part of the Australian Marine Complex and plays a crucial role in naval shipbuilding and sustainment. Civmec’s engineering and maintenance capabilities span sectors such as resources, energy, infrastructure, marine, and defence.
The Henderson assembly hall, built in 2020, stands 70 meters high and is equipped with 20 overhead cranes, capable of accommodating large modules up to 187 meters in length. This positions Civmec well for continuous shipbuilding and support work in the coming decades. The facility, the largest of its kind in Australia, also supports the construction and maintenance of large vessels, including Air Warfare Destroyers and Offshore Patrol Vessels.
Located within the newly-formed Henderson Defence Precinct, Civmec is strategically positioned near Garden Island, home to Fleet Base West, Australia’s largest naval base. This proximity enhances Civmec’s role in supporting the AUKUS nuclear-powered submarine pathway, which is expected to cost hundreds of billions over the next few decades. Civmec is the only Australian company offering a full in-house service for OEM material handling machines, meeting the demand for new and refurbished machines across Australia.
Currently capitalized at S\$569 million, Civmec trades at a forward P/E of 10.3x and a P/B of 1.3x, with a dividend yield of 4.7%. The company is set to benefit from infrastructure spending as Australia increases its naval vessel delivery and sustainment. Despite optimism about Civmec’s growth trajectory, management anticipates lower activity levels in 2HFY25 due to project award delays, recommending an “Accumulate on Weakness” strategy.
Market Highlights and Economic Projections
The US economy faces a projected federal budget deficit increase by \$400 billion, as reported by the Congressional Budget Office. Key contributors include military aid spending, student loan cost reductions, and increased Medicaid spending. This report challenges President Joe Biden’s deficit reduction claims as borrowing is predicted to rise.
Looking forward, the nation’s debt is expected to increase from 99% of GDP in 2024 to 122% by 2034, raising concerns about servicing this debt amidst an aging population and rising healthcare costs. Fiscal policy suggestions include reversing Biden’s executive actions and addressing mandatory spending drivers.
The White House budget proposal aims to reduce the deficit by \$3 trillion over ten years through increased tax revenues and spending adjustments. It includes provisions for child tax credits, homebuyer tax incentives, and increased defense spending, aiming to support families amidst inflationary pressures.
Chinese Market and Ant Group Developments
Jack Ma made a rare appearance at Ant Group’s 20th anniversary, emphasizing AI opportunities. Despite regulatory challenges, Ant Group is reorganizing and expanding its AI-powered services. With a profit growth of 193% in the last quarter, Ant is enhancing global operations through Ant International, focusing on Alipay+, Antom, WorldFirst, and Embedded Finance.
Ant’s strategic shifts, including setting up independent boards for various units, aim to pave the way for future spinoffs. This aligns with Ma’s rallying calls for optimism, mirroring his motivational strategies at Alibaba.
