Singapore Market Daily Review: Gold Shines, While China’s Growth Story Evolves

Lim & Tan Securities | 2 Jan 2025

Singapore’s Straits Times Index (STI) experienced a flat day, closing at 3,787.6 [[1]]. However, global markets saw more action, with profit-taking driving US indices down between 0.1% and 0.9% [[1, 2]]. This market review dives into key highlights, including the impressive performance of gold, China’s economic outlook, and specific stock recommendations.

Gold’s Record-Breaking Year

Gold glittered in 2024, heading for its biggest gain in 14 years with a 27% surge [[1, 2]]. This impressive performance was fueled by US monetary easing, persistent geopolitical risks, and central bank buying sprees. Despite a slight dip after the US presidential election, gold outshone most other commodities, including base metals and iron ore [[2]].

Experts like David ScuƩ of StoneX Group call gold’s performance “remarkable” and “relentless,” marking a potential shift in market dynamics. Its gains occurred despite a stronger US dollar and rising Treasury yields, factors typically unfavorable for gold [[2]].

China’s Economic Landscape: Steady Growth Amidst Challenges

President Xi Jinping announced China’s GDP growth for 2024 at around 5%, meeting its official target [[6]]. Despite initial uncertainty, stimulus measures implemented since late September helped improve the outlook. Xi signaled continued support for the economy in 2025, emphasizing proactive macroeconomic policies to navigate external uncertainties and the transition to new growth drivers [[7]].

While officials aim for a similar growth target of around 5% in 2025, economists surveyed by Bloomberg predict a slightly lower 4.5% growth [[8]]. The economy faces headwinds from weak domestic demand, an uncertain export outlook, persistent deflation, and a slumping property market. However, the government has pledged greater public borrowing, spending, and monetary easing to stimulate growth [[8]]. The People’s Bank of China (PBOC) is expected to provide further liquidity boosts, including potential cuts to the reserve requirement ratio (RRR) [[9, 10]].

Spotlight on CNMC Goldmine

The robust performance of gold benefits companies like CNMC Goldmine (S\$0.24) [[4]]. With operations in Malaysia, CNMC boasts a market cap of S\$99.9 million and trades at 8.3x annualized PE and 1.7x PB, offering a dividend yield of 4-5% [[4]]. The company is on track for its best performance since 2016, with a net profit of US\$4.4 million in 1H24 at an average realized gold price of US\$2,266/oz [[4]].

With gold currently above US\$2,600/oz, and CNMC selling at the spot rate, the higher realized gold price is expected to contribute significantly to their bottom line. Increased production capacity, funded internally and coming online by 1H25, further supports earnings growth momentum if gold prices remain stable. Lim & Tan Securities maintains a BUY rating on CNMC [[5]].

Other Market Highlights

Highest Consensus Forward Dividend Yield (%) [[6]]

• Frasers Logistics Trust (7.73%)
• Mapletree Pan Asia Comm Trust (6.69%)
• Mapletree Logistics Trust (6.38%)
• Mapletree Industrial Trust (6.06%)
• CapitaLand Ascendas REIT (5.84%)

Lowest Consensus Forward P/E (X) [[6]]

• Jardine Cycle & Carriage (7.85)
• Jardine Matheson (8.08)
• Singapore Airlines (9.01)
• OCBC Bank (9.74)
• Yangzijiang Shipbuilding (10.04)

Lowest Trailing P/B (X) [[6]]

• Hongkong Land (0.32)
• UOL Group (0.39)
• Jardine Matheson (0.42)
• City Developments (0.52)
• Wilmar International (0.71)

Lowest Trailing EV/EBITDA (X) [[6]]

• Genting Singapore (4.94)
• Jardine Cycle & Carriage (5.73)
• DFI Retail Group (6.12)
• Yangzijiang Shipbuilding (6.31)
• Wilmar International (9.38)

Impact of EU Tariffs on Chinese Automakers

Chinese automakers’ share of the European EV market dipped to its lowest in eight months following new tariffs [[10]]. These tariffs, adding up to 35% to import costs, followed an EU investigation into state aid within China’s EV industry [[10]]. While impacting all Chinese-produced EVs, including those by Western brands, the tariffs vary based on the level of state support received and cooperation with the EU probe [[10]].

MG, owned by SAIC, faced the heaviest tariffs at 45%, leading to a 58% drop in registrations in November [[10]]. Conversely, BYD thrived, with registrations more than doubling to 4,796 vehicles [[10]]. This contrasting performance highlights the varying impacts of the tariffs. While the tariffs have slowed China’s EV push in Europe, the impact has been less severe than anticipated, with Chinese EV makers experiencing growth in markets without the tariffs, such as the UK [[11]].

US Macroeconomic Data and Global Impact

The December Empire Manufacturing index fell short of expectations, slowing to 0.2 from 31.2 in November [[11]]. This suggests that the post-election surge was temporary, with cyclical components easing and new orders declining. The weak manufacturing data aligns with a deteriorating flash PMI, signaling bearish growth [[11]]. While the Empire Manufacturing survey can be volatile, the broad decline in its components warrants attention. Investors are advised to remain underweight on risk assets compared to government bonds and overweight on gold versus cyclical commodities [[12]].

Global flash PMIs showed diverging trends. While service sector growth picked up in core advanced economies, manufacturing continued to contract, with the US outperforming its developed market peers [[12]]. Japanese PMIs saw modest improvement, though global trade tensions continue to hinder growth. Investors should maintain a defensive allocation with a tactical tilt towards US assets and the USD [[12]].

Share Transactions, Buybacks, and Dividends

The report also details share transactions from December 2024 [[4]], including acquisitions and disposals by various companies. Several companies also engaged in share buybacks, with details on the number of shares purchased and the percentage of mandate completion [[4, 5]]. Upcoming dividends and special distributions are listed for companies like FNN, Frasers Property, PNE Industries, Thai Bev, and LHN [[7]].

SGX Watch-List

The report highlights the 32 companies currently on the SGX Watch-List as of December 2024 [[10]]. This list includes companies like Amos Group, Ascent Bridge, ASTI Holdings, and others facing financial challenges. Recent additions since 2H2023 are also noted, including Addvalue Technologies, Renaissance United, and more [[10]].