Financial Markets Analysis – November 4, 2024

Broker: Lim & Tan Securities

Date: November 4, 2024

Market Overview

The Singapore financial markets have shown a consistent performance with key indices reflecting varying degrees of growth and decline. The FSSTI Index closed at 42,052.2, marking a 0.7% increase both on a daily and month-to-date basis, with a year-to-date growth of 11.6%. The S&P 500 and NASDAQ indices also saw daily gains of 0.41% and 0.80% respectively.

Major Market Indices

The following major market indices were observed:

• FSSTI Index: 42,052.2 (+0.7% 1D, +0.7% MTD, +11.6% YTD)
• INDU Index: 5,728.8 (+0.4% 1D, +0.4% MTD, +20.1% YTD)
• SPX Index: 18,239.9 (+0.8% 1D, +0.8% MTD, +21.5% YTD)
• CCMP Index: 8,177.2 (+0.8% 1D, +0.8% MTD, +5.7% YTD)
• UKX Index: 38,053.7 (-2.6% 1D, -2.6% MTD, +13.7% YTD)
• NKY Index: 20,506.4 (+0.9% 1D, +0.9% MTD, +20.3% YTD)
• HSI Index: 3,272.0 (-0.2% 1D, -0.2% MTD, +10.0% YTD)
• SHCOMP Index: 21.9 (-5.5% 1D, -5.5% MTD, +75.7% YTD)
• VIX Index: 23.2 (+13.8% 1D, +38.4% MTD, +86.0% YTD)

Key Interest Rates

Interest rates remain a critical factor in the financial markets. As at 8.00am SG time:

• 3 Mth SGD SIBOR: 3.3% (0.0% 1D, 0.0% MTD, -18.7% YTD)
• SG 10 YR Bond Yield: 2.9% (+1.1% 1D, +1.1% MTD, +5.4% YTD)
• US 10 YR Bond Yield: 4.4% (+2.3% 1D, +2.3% MTD, +13.0% YTD)

Commodities

Commodity prices have shown mixed results:

• Gold: \$2,739.9 (+0.1% 1D, -0.2% MTD, +32.8% YTD)
• Crude Oil: \$69.5 (+0.3% 1D, +0.3% MTD, -3.0% YTD)
• Baltic Dry: 1,378.0 (-0.7% 1D, -0.7% MTD, -34.2% YTD)
• Crude Palm Oil: 4,868.0 (+3.7% 1D, +3.7% MTD, +35.5% YTD)

Company Analysis

CSE Global Limited

Stock Price: \$0.43 (down 0.005)

CSE Global Limited, a global systems integrator providing electrification, communications, and automation solutions, has secured two major contracts totaling US\$28.8 million (approximately S\$38.4 million) in the USA. These contracts involve the design and manufacturing of power distribution centers, and the integration of switchgear and motor control centers, slated for execution from 2024 to 2026.

Mr. Lim Boon Kheng, Group Managing Director of CSE Global, stated that the rising demand for power due to urbanization and digitalization will continue to drive the electrification trend. These contract wins showcase CSE Global’s capabilities and are expected to contribute positively to the company’s financial performance for the financial years 2024 to 2026.

Additionally, CSE Global announced securing S\$186.7 million of new orders in Q3 2024, including two major contracts worth S\$38.4 million. However, excluding the effect of these one-off major contracts, the group’s order intake for Q3 2024 declined 10.6% year-on-year.

Mr. Lim Boon Kheng also highlighted the resilient order intake in Q3 2024 despite lower offshore work due to hurricane weather in the USA. The Electrification business segment secured S\$78.3 million of new orders, contributing about 41.9% of total order intake during the quarter. However, this was 57.4% lower year-on-year, mainly due to the absence of several major electrification projects secured in Q3 2023.

The Communications business segment contributed about 32.4% of Q3 2024 total order intake, securing S\$60.5 million of new orders compared to S\$66.4 million in Q3 2023. Excluding the effect of a major contract for the Singapore Government in Q3 2023, order intake for Communications business in Q3 2024 increased 16.4% year-on-year.

The Automation business segment clinched about S\$47.8 million of new orders in Q3 2024. Excluding the effect of a major multi-year maintenance contract awarded by the Singapore Government in Q3 2023, the Automation business segment’s new order intake grew 35.6% year-on-year. The Energy sector reported a 26.6% growth year-on-year in order intake for Q3 2024, while the Infrastructure sector registered a 56.7% decline due to the absence of major electrification projects secured in Q3 2023.

With these new orders in Q3 2024, the Group closed 9M 2024 with an order book of S\$633.6 million. CSE Global is favored for its steady orders and potential benefits from Amazon’s Electrification Trends. Positive segments include Automation and Greening trends, with an attractive yield of 6.4% and a Bloomberg consensus 1-year target price of 60 cents, implying a potential return of 40%. An Accumulate rating on CSE Global is maintained.

US Economy and Market Trends

Bloomberg reported that options traders across markets are reducing risk and bracing for more volatility ahead of a hotly contested US election. Equity options volatility climbed through most of October, anticipating the election, earnings season, and a Federal Reserve interest-rate decision. The race between Kamala Harris and Donald Trump is too close to call, leading to increased volatility in various markets.

Bond yields have been rising since the Fed cut rates in September. Traders are adding tail-risk hedges on higher rates, with volatility for the yuan, Mexican peso, and euro increasing due to trade and tariff uncertainties. Positioning is relatively clean, with potential for post-election risk/reward opportunities. Short-term options are preferred for hedging around the election, and implied volatility remains high, signaling market hedging.

While volatility has been elevated, it points to about a 1.7% move for the S&P 500 the day after the election. The implied move has fallen steadily from a peak of around 2% in early October to be in line with the long-term average for past elections. Sectors such as crypto and clean-energy stocks are seeing higher volatility. Fundamental market flows are expected to support a rally into the end of the year as hedges are taken off, mutual fund buying kicks in, and lower volatility draws in systematic buying.

Institutional and Retail Fund Flows

Institutional investors net sold S\$310.4 million in the week of October 21, 2024, compared to a net buy of S\$1.1 million a week ago. Retail investors net bought S\$237.1 million, reversing a net sell of S\$206.8 million a week ago. Key sectors with notable fund flows include consumer cyclicals, consumer non-cyclicals, energy/oil & gas, financial services, healthcare, industrials, materials & resources, real estate (excluding REITs), REITs, technology, telcos, and utilities.

Institutional investors’ net buy/sell amounts across various sectors for the week of October 21, 2024, include:

• Consumer Cyclicals: +S\$0.2 million
• Consumer Non-Cyclicals: +S\$9.6 million
• Energy/Oil & Gas: -S\$4.3 million
• Financial Services: -S\$164.8 million
• Healthcare: -S\$0.0 million
• Industrials: +S\$4.0 million
• Materials & Resources: -S\$5.7 million
• Real Estate (excl. REITs): -S\$1.0 million
• REITs: -S\$113.9 million
• Technology: -S\$2.0 million
• Telcos: -S\$15.3 million
• Utilities: -S\$17.1 million

Retail Investors’ Fund Flows

For the same week, retail investors’ net buy/sell amounts across various sectors include:

• Consumer Cyclicals: -S\$4.5 million
• Consumer Non-Cyclicals: -S\$1.0 million
• Energy/Oil & Gas: -S\$3.1 million
• Financial Services: +S\$74.1 million
• Healthcare: -S\$1.2 million
• Industrials: +S\$28.2 million
• Materials & Resources: +S\$7.9 million
• Real Estate (excl. REITs): +S\$9.5 million
• REITs: +S\$99.4 million
• Technology: +S\$7.5 million
• Telcos: +S\$8.9 million
• Utilities: +S\$11.3 million

Top Institutional and Retail Net Buy/Sell Stocks

Top 10 Institutional Net Buy (+) Stocks (S\$M) Week of 21 Oct

• SATS: 26.0
• Keppel DC REIT: 17.9
• Jardine Cycle & Carriage: 13.7
• Yangzijiang Shipbuilding: 5.9
• Thai Beverage: 5.1
• DFI Retail Group: 4.9
• Frasers Centrepoint Trust: 3.0
• Wee Hur: 2.8
• Yanlord Land: 2.5
• Sheng Siong: 2.2

Top 10 Institutional Net Sell (-) Stocks (S\$M) Week of 21 Oct

• DBS: -113.9
• CapitaLand Integrated Commercial Trust: -36.2
• UOB: -26.5
• CapitaLand Investment: -20.4
• CapitaLand Ascendas REIT: -19.9
• Seatrium: -17.5
• Sembcorp Industries: -17.1
• Mapletree Logistics Trust: -16.1
• Singtel: -15.5
• Mapletree Pan Asia Commercial Trust: -14.3

Top 10 Retail Net Buy (+) Stocks (S\$M) Week of 21 Oct

• DBS: 64.0
• Seatrium: 36.9
• SIA: 21.9
• Mapletree Pan Asia Commercial Trust: 18.4
• CapitaLand Investment: 18.2
• CapitaLand Ascendas REIT: 16.5
• CapitaLand Integrated Commercial Trust: 14.9
• Mapletree Logistics Trust: 12.6
• Sembcorp Industries: 11.3
• Parkway Life REIT: 9.9

Top 10 Retail Net Sell (-) Stocks (S\$M) Week of 21 Oct

• SATS: -33.9
• Keppel DC REIT: -14.0
• Jardine Cycle & Carriage: -13.5
• OCBC: -6.9
• Dyna-Mac: -5.1
• DFI Retail Group: -4.6
• SGX: -4.5
• Wee Hur: -2.8
• Top Glove Corporation: -1.4
• Marco Polo Marine: -1.3

Dividends and Special Distributions

Several companies have announced dividends and special distributions:

• Mapletree Pan Asian CommTrust: 1.98c (July-Sept), Ex-Dividend Date: 1 Nov, Payable: 6 Dec
• Suntec REIT: 1.58c (July-Sept), Ex-Dividend Date: 1 Nov, Payable: 28 Nov
• Tiong Woon Corp: 0.9c Special & 0.6c Final, Ex-Dividend Date: 4 Nov, Payable: 20 Nov
• Fraser Centrepoint Trust, Ex-Dividend Date: 4 Nov, Payable: 29 Nov
• IFAST: 1.5c Interim, Ex-Dividend Date: 5 Nov, Payable: 19 Nov
• Guocoland Ltd: 6.0c Final, Ex-Dividend Date: 5 Nov, Payable: 19 Nov
• Spindex Industries: 2.7c Final, Ex-Dividend Date: 6 Nov, Payable: 18 Nov
• SGX: 9.0c Interim, Ex-Dividend Date: 7 Nov, Payable: 15 Nov
• Grand Bank Yacht: 1.0c Final, Ex-Dividend Date: 7 Nov, Payable: 18 Nov
• PEC Ltd: 2.0c Final & 1.5c Special, Ex-Dividend Date: 8 Nov, Payable: 25 Nov
• MTQ: 0.5c Interim, Ex-Dividend Date: 8 Nov, Payable: 20 Nov
• Unionsteel Holdings Ltd: 1.3c Final, Ex-Dividend Date: 12 Nov, Payable: 27 Nov
• First REIT: 0.58c (July-Sept), Ex-Dividend Date: 12 Nov, Payable: 20 Dec