Monthly Market Wrap: The STI ended the year with a bang, possibly thanks to last-minute window-dressing

Date: January 2, 2024

  • A late push on the STI ensured it recorded a modest 0.3% loss for the year
  • For the month, the gain was 5.5%; for the week it was 3.2%
  • The S&P 500 gained 24% for the year, the Nasdaq 53.8%, the Dow 13.7%
  • The 10-year US Treasury yield ended the year at 3.86%
  • Probability that the Fed will cut rates in January is 15.5%
  • Singapore’s factory output grew less-than-expected 1% in Nov
  • 17Live, which merged with VTAC, sank on its debut; Pegasus to dissolve
  • Cordlife in focus after MOH suspension


Little impact of FOMC decision here – until the final three trading days

The main market-moving event during December was the US Federal Open Markets Committee (FOMC) meeting held on 12-13 Dec at which the Fed signalled it will hold interest rates steady for the foreseeable future and possibly cut rates three times next year.

Although this message had been widely anticipated by Wall St in the weeks leading up to the meeting, and although three cuts are less than the four the market had expected, it nevertheless sparked off a large rally in stocks and bonds that send the major US equity indices to record highs.

The impact here, however, was muted – except for the final three trading days. Up till then, the Straits Times Index had hardly responded to Wall St’s rally but between Wednesday and Friday, it surged 100.29 points to end the year at 3,240.27.

The late push, which was possibly thanks to last-minute window-dressing, ensured the index finished the year with only an 11 points or 0.3% loss, whilst for the month, the gain was 168 points or 5.5%. The weekly rise was 100 points or 3.2%.

Most explanations surrounding the STI’s relative underperformance for most of the year revolved around the heavy weightage given to the banks and the Jardine group.

The former’s earnings are expected to shrink if interest rates are reduced whilst the latter is exposed to a slowing China beset by property market woes.

How Wall Street fared

The S&P 500 still finished the year with a 24% gain while the Dow Jones Industrial Average rose 13.7%. The Nasdaq, meanwhile, gained 53.8% for 2023, its best annual performance since 1999 and fourth-best on record.

Bond yields continued to drop, probability of no hike in Jan now 84.5%

The 10-year US Treasury yield, which rose above 4% in February and 5% in October, last week sank to 3.788% before ending the year at 3.86%.

Yields have declined as investors continued to bet that the easing of inflation, which dampened down to 3.1% in November, means that the Federal Reserve will lower borrowing costs next year.

According to the CME FedWatch Tool, the probability that the Fed will keep rates unchanged at its 31 Jan 2024 meeting is 84.5%.

However, this also means that markets are assigning an 15.5% chance of a 25-basis points rate cut.

Factory output grew less-than-expected 1% in Nov

Singapore’s manufacturing output gained 1% on year in November, extending October’s surprise 7.6% growth after a year-long slump. The reading, however, underperformed against economists’ median expectations of a 2.2% growth in a Bloomberg poll.

This came as the key electronics sector grew at a slower pace than in the preceding month. Excluding the typically volatile biomedical cluster, factory output climbed 1.9% following the 7.4% year-on-year increase in October.

17Live, which merged with VTAC, sank on its debut; Pegasus to dissolve

The issue price of VTAC units, the first Special Purpose Acquisition Company (SPAC) to list here, as at its listing in January 2022 was $5. After it completed its merger with Taiwanese live streaming firm 17Live in early December, VTAC, which offered shareholders a redemption price of S$5.01 but whose shares had been sliding up to that point, closed on Dec 7 down S$0.61 or 13.6% to $3.88.

Over the course of the month it continued to come under pressure, ending at S$1.55.

Another SPAC, Pegasus Asia, announced it will not conclude a business combination “after considering macroeconomic and market conditions”. Pegasus said it would make an announcement in due course on the next steps for shareholders to redeem all of their issued outstanding Class A ordinary shares.

Following this, the SPAC will cease operations and wind up its business.

Pegasus, which raised gross proceeds of S$170 million in its January 2022 initial public offering (IPO) – is sponsored by European asset manager Tikehau Capital as well as Financiere Agache, which is luxury goods company LVMH chief executive Bernard Arnault’s family office.

Earlier this year, the sponsor’s Pegasus Europe SPAC was also wound up after failing to find a target.

Singapore-listed SPACs have two years to announce their potential business combination, which is also known as a de-SPAC transaction. If the SPAC is unable to find a suitable acquisition target, it is required to dissolve and return the funds to investors.

The third and remaining SGX-listed Spac, Novo Tellus Alpha Acquisition (NTAA), has until January 2024 to announce a potential business combination.

A Singapore Exchange (SGX) spokesman said that “the SPAC framework is here to stay in the long term and complements the traditional IPO route”.

“The framework was launched to offer listing aspirants greater certainty on price and execution. New structures and products such as SPAC offer wider choices to both issuers and investors’’.

Cordlife in focus after MOH suspension

Cord-blood storage firm Cordlife was in the spotlight following news that the Ministry of Health issued a six-month suspension notice to the company after finding that seven of the company’s 22 cord-blood storage tanks were kept at temperatures above acceptable limits.

A week later in response to queries from the Singapore Exchange as to why the company did not make earlier disclosures, Cordlife said that its board was informed of irregular temperatures in one of its tanks in February 2023 but did not make any announcement as it assessed that there would be “no material impact on the financial performance of the group” for FY2022 and FY2023.

SGX had noted that Cordlife was aware that there were tanks exposed to temperatures beyond the acceptable limits for several days in February, March and June 2022, but had not made any announcements.

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