This week in the Singapore market, strategic opportunities and anticipation center on updates from the manufacturing sector, retail performance, and potential market movements considering a likely rate cut by the US Federal Reserve in September.
Our economists have revised their projections, anticipating a 75-basis point (bps) cut this year, followed by a further 150 bps next year, with the goal of reaching a terminal rate of 3% by early 2026. Historically, the Singapore stock market has often benefited during the early stages of rate-cut cycles, as seen in 2007 and 2019.
This potential easing could present a favorable environment for certain asset classes, particularly Singapore real estate investment trusts (S-REITs) and companies well-positioned in the ASEAN region. Our firm believes that companies such as Japfa Ltd (SGX:UD2) and Wilmar International Ltd (SGX:F34) stand to benefit from stronger ASEAN currencies.
On the manufacturing front, Singapore’s August Purchasing Managers Index (PMI) data will be released soon. Last month, the Manufacturing PMI edged up to 50.7, marking an 11th consecutive month of expansion. However, the electronics sector, which plays a significant role in the manufacturing landscape, showed signs of slowing down. The electronics PMI dipped to 51 in July from 51.2 in June, suggesting that while there is still growth, the pace is decelerating.
Also due for release is the S&P Global Singapore PMI for August. It surged to 57.2 in July, the fastest pace of expansion since October 2022. This increase was largely driven by stronger demand conditions and new business growth
In the financial sector, August’s foreign reserves data will provide insight into Singapore’s external position. In July, foreign exchange reserves rose to S$506.4 billion, up from S$503.7 billion in the previous month.
Retail sales data for July will also be closely watched, especially after June’s figures showed a decline of 0.6% year-on-year and 3.7% month-on-month. The upcoming retail sales figures will be critical in assessing consumer sentiment and domestic economic health.
Adding to the mix, the Monetary Authority of Singapore (MAS) will soon release its latest Survey of Professional Forecasters. This quarterly survey provides a snapshot of macroeconomic expectations and may influence market outlooks and investment strategies in the near term.
From a technical perspective, our firm’s analysis of the MSCI Singapore Index suggests that it is approaching a short-term target of 325.30. While there is potential for the index to exceed this and reach 335.00 over the next three months, investors should be wary of a possible bull trap if the index advances too rapidly.
Moving forward, it’s important for retail investors to carefully weigh the upcoming data and its potential implications. The steady expansion in manufacturing, the uncertainty in retail sales, and the anticipated rate cuts in the US all point to a market in transition. As we await these updates, strategic portfolio adjustments could be key to capturing opportunities while managing risks.
Disclaimer: ProsperUs Manager of Content Hailey Chung doesn’t own shares of any mentioned companies.
