In-Depth Analysis of Singapore and Global Financial Markets

7 November 2024 – Lim & Tan Securities

The financial markets have been bustling with activity, and we’ve got all the details you need to stay informed. From major market indices to in-depth company analyses, here’s a comprehensive look at the latest developments.

Market Overview

The FSSTI Index closed at 3,603.0, marking a 0.6% increase over the previous day, a 1.2% rise month-to-date, and an impressive 11.2% year-to-date gain. The Dow Jones, S&P 500, and NASDAQ indices also showed positive performance, reflecting optimism about economic measures under President Donald Trump. The VIX Index, a measure of market volatility, declined significantly by 20.6% in one day.

Commodities and Interest Rates

Gold prices saw a slight increase to \$2,663.0, while Crude Oil prices dipped to \$71.7. The Baltic Dry Index rose by 2.3%, indicating a positive trend in shipping rates. The 3-Month SGD SIBOR remained stable at 3.3%, and the SG 10-Year Bond Yield increased by 2.2% to 2.9%.

DBS Group Analysis

DBS Group reported a record-breaking net profit of SGD 3.03 billion for Q3 2024, a 15% increase from the previous year and an 8% rise from the previous quarter. Total income rose by 11% to SGD 5.75 billion, driven by balance sheet growth, record fee income from wealth management, and the strongest markets trading income in ten quarters. The cost-income ratio was 39%, and the net profit for the first nine months of 2024 was SGD 8.79 billion, an 11% increase year-over-year.

DBS announced a new SGD 3 billion share buyback program, which is expected to support its share price. However, management anticipates a slight decline in Group NIM, mostly offset by loan growth. The consensus target price for DBS is \$40.70, implying a potential return of 4% with a dividend yield of 5.5%.

Singapore Post Analysis

Singapore Post reported a 20.0% YoY increase in group revenue to S\$992.4 million and a 65.5% rise in net profit to S\$22.2 million for the first half ended 30 September 2024. The company’s underlying net profit was S\$25.2 million, up from S\$13.4 million in the same period last year.

The Australia business saw a 44.1% YoY increase in revenue to S\$574.9 million, driven by the acquisition of Border Express. The International cross-border business faced challenges, with revenue decreasing by 26.8% YoY to S\$117.9 million. The Singapore postal and logistics business saw a 12.4% YoY increase in revenue to S\$129.6 million, but profitability remained impacted by the unprofitable post office network.

SingPost declared an interim dividend of 0.34 cents per share for the half year ended 30 September 2024. The company currently trades at 17.6x forward PE and 1x PB, with a dividend yield of 1.7%. The consensus target price of 60 cents implies a potential return of 15%.

Hong Kong Market Analysis

Hong Kong’s one-month interbank rate remains high at about 4.2%, affecting new mortgages tied to floating rates. The Hong Kong government eased mortgage rules to allow lower down payments, which saw an uptick in home sales. However, the market outlook remains cautious due to economic challenges and high interest rates.

US Market Analysis

BCA Research expects Q3 earnings to be strong enough to support the soft-landing narrative. The consensus points to a 4.0% year-over-year growth in S&P 500 earnings. However, earnings growth is decelerating across sectors, with the sharpest slowdowns affecting Financials, Healthcare, Consumer Discretionary, and Utilities. The Magnificent Seven’s earnings are expected to grow 30% in Q3, down from 56% in Q2.

Company Transactions

Several companies have been involved in acquisitions and disposals. Notable transactions include:

• Stamford Ty Corp Ltd: Dawn Wee acquired 2,262,600 shares at S\$0.22.
• Raffles Medical Group: Loo Choon Yong acquired 1,000,000 shares at S\$0.885.
• Heeton Holdings Ltd: Toh Gap Seng acquired 100,000 shares at S\$0.25.

Companies like Capitaland Investment Ltd and OCBC also executed significant share buybacks.

Dividend Announcements

Several companies have announced dividends and special distributions. Key announcements include:

• PEC Ltd: 2.0 cents Final & 1.5 cents Special, ex-dividend date 8 Nov, payable 25 Nov.
• MTQ: 0.5 cents Interim, ex-dividend date 8 Nov, payable 20 Nov.
• Unionsteel Holdings Ltd: 1.3 cents Final, ex-dividend date 12 Nov, payable 27 Nov.

SGX Watch-List

34 companies are currently under the SGX Watch-List, including recent additions such as Addvalue Technologies and Renaissance United. These companies face various challenges and are under scrutiny for their financial performance.

Stay tuned for more updates and detailed analyses as we continue to monitor the financial markets closely.