A quiet start but the STI did manage to regain the 3,800 level

Date: January 6, 2025

• The STI rose 30 points or 0.8% to 3,801.83
• UOB led the trio of banks higher with a 1.4%
• Not practical to use sovereign funds to support stock market: Gan Kim Yong
• Singapore’s economy grew 4% in 2024: MTI
• Outlook for Singapore’s economy in 2025: around 2-3% growth
• SingPost can potentially pay special dividends after asset sales: Maybank

 

Led by the banks and Seatrium, the STI regained 3,800 lost on 17 Dec

Trading in the local stock market got off to a quiet start last week, which is only to be expected given the holiday period meant there were only three full trading days.

The Straits Times Index, which ended 2024 at 3,787.60 for a gain of almost 17% for the year, finished the week at 3,801.83 for a net gain of 30 points or 0.8% in the first trading week of 2025. The 3,800 level had been lost on 17^th Dec.

As was the case for most of 2024, it was the banks which were the main focus. UOB led the way with a gain of S$0.52 or 1.4% at S$36.58, with DBS and OCBC adding S$0.07 and S$0.05 at S$43.62 and S$16.57 respectively.

The other notable index gainer was Seatrium, which rose S$0.14 or 6.8% over the week to S$2.19.

Not practical to use sovereign funds to support stock market: Gan Kim Yong

The Monetary Authority of Singapore’s (MAS) equities market review group is studying how to make optimum use of seed capital to attract more commercial capital.

This will ensure that government developmental capital is deployed in a fiscally prudent manner, Minister for Trade and Industry Gan Kim Yong said at the Singapore Exchange’s (SGX’s) 25^th anniversary ceremony.

“While there have been suggestions to channel sovereign monies into our equities market, it is not practical to rely on sovereign monies alone to sustain these funds and to support the equity market,” he added.

Gan, who is also deputy prime minister, instead called for the crowding in commercial capital on a sustained basis – such as institutional wealth, individual investors and family offices – as a key measure to stimulate market interest and maintain trading liquidity.

He also highlighted the importance of broadening liquidity, particularly for smaller counters with market caps between S$500 million and S$3 billion.

Singapore’s economy grew 4% in 2024: MTI

Singapore’s economy expanded 4% year on year in 2024, faster than the 1.1% growth recorded in the previous year according to advance estimates from the Ministry of Trade and Industry (MTI).

This makes last year’s gross domestic product better than the official forecast of “around 3.5%” that MTI had narrowed to last November.

Fourth-quarter GDP growth came in at 4.3%, slower than the revised 5.4 per cent recorded in Q3. This was as growth for the manufacturing sector decelerated to 4.2% , from a jump of 11.1% in the previous quarter.

Outlook for Singapore’s economy in 2025: around 2-3% growth

In 2025, MTI expects Singapore’s economy to grow by 1-3%. DBS economist Chua Han Teng was quoted in the Business Times as saying the official forecast range “leaves some scope for much weaker growth, should global economic growth and trade slow discernibly, as they did in 2019 under (Trump’s first term)”.

“The medium-term challenges for highly trade-dependent economies like Singapore from a more protectionist global economic landscape are undoubtedly rising, even as the eventual global economic impact would depend on the roll-out sequence of the US administration’s policies,” he added.

Private-sector economists generally stuck to their forecasts, which fall within the official range. UOB is expecting 2025 full-year growth to be 2.5%, closer to the upper end of the forecast range.

“According to our estimates of the output gap… Singapore’s economic growth ran slightly above potential in 2024 and under our baseline scenario, growth momentum could slow in H2 FY25, resulting in a modest negative output gap for the full year,” said Koh.

Maybank economists Chua Hak Bin and Brian Lee also kept to their forecast of 2.6% growth in 2025. “Easing monetary conditions, a generous election Budget, construction of major projects, and manufacturing front-loading in the first half will help cushion the uncertainty and shock from Trump’s global trade war,” they noted.

RHB analysts Barnabas Gan and Laalitha Raveenthar predict full-year growth of 3% in 2025.

“We expect the country to experience resilient GDP growth, fuelled by a favourable global trade and investment environment,” they said. Singapore, as a key player in the global semiconductor supply chain, also stands to benefit from the positive outlook for the global tech cycle.

At least two economists adjusted their forecasts following MTI’s release. Barclays economist Brian Tan raised his forecast slightly to 2%, from 1.8%, while OCBC’s Selena Ling slashed her forecast to 2.2% from 2.7%.

SingPost can potentially pay special dividends after asset sales: Maybank

National postal service provider SingPost could offer a potentially “significant” special dividend after it completes its planned sale of two business units, said Maybank on Friday, referring to SingPost’s proposed divestment of its Australian logistics business Freight Management Holdings and its potential sale of freight forwarding business Famous Holdings.

Maybank says that the sale of Famous Holdings should conclude by end January 2025, which should raise between S$80 million and S$100 million in proceeds.

“We expect a significant special dividend after both businesses are sold,” said Maybank analyst Jarick Seet. The analyst said in a note earlier December that SingPost’s cash position will be bumped to S$1.3 billion after the Australian business sale, which is more than its existing S$1.1 billion debt.

“We believe the focus should be on further monetisation with special dividends as the reward,” he said, adding that he believes potential dividends could amount to more than the current share price.

Maybank maintains its buy rating on SingPost, with a price target of S$0.77. Shares of the troubled company closed up 2.8% or S$0.015 at S$0.555 on Friday.

They have bounced back following the company’s firing of three C-suite executives in late December. They are former group chief executive Vincent Phang, group chief financial officer Vincent Yik, and the chief executive of the company’s international business unit Li Yu.

They were found to have been negligent in the handling of internal investigations over a whistle-blower’s report.

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