Market Overview

Singapore

Straits Times Index (STI) is a market capitalization weighted index that tracks the performance of the top 30 companies listed on SGX.

Many investors are opting to remain on the sidelines, eagerly anticipating a more definitive market direction due to the uncertainty and slowing economic outlook. Inflation has taken center stage, capturing headlines worldwide.

In light of these unfolding dynamics, we are bracing ourselves for heightened volatility in the market, especially with the expected ‘one last’ rate hike by the end of 2023. Let’s continuing watching how would this affect the market in Singapore.

Price seems to have found a new support around 3140-3150 where it has rebounded 4 times since May. Resistance remains around 3250 where sellers are still in control.

Looking at the moving averages, there are signs of weakness as the 20d MA is below both 100d and 200d MA respectively. Furthermore, 20d MA is pointing downwards, which means that there is some short term weakness.

Hot News (Click to read):

• The rich are flocking to Singapore, but bankers are sticking with Hong Kong (The Business Times)

• Singapore is winning out over Hong Kong, ANZ bank CEO says (The Business Times)

United States

Dow Jones Industrial Average (DJIA) tracks the daily price movements of 30 large, public-owned blue-chip American companies.

The geopolitical tensions stemming from Hamas attack against Israel, creating a sense of fear within the market, especially the energy sector. Looking at DJIA, price has broken below the 34,500 level (which has now turned to become a resistance). Market seems to have found a temporary support around 32,800. However, we are seeing that 20d MA is attempting to break below 200d MA.

The potential of a looming recession adds to the prevailing unease, especially so when US Fed Reserve indicates that they are willing to risk a recession in its effort to regain control of inflation.

S&P 500 Index is a market-capitalization weighted index of the 500 leading companies in the US which is widely considered as one of the best gauge of the US economy.

Based on S&P500, market seems to have found the support around 4200. Signs of short-term weakness can be seen from 20d MA crossing below 100d MA. Immediate psychological resistance is still holding at 4400.

Cautiously optimistic while expecting volume to decline as we approach the holiday season.

Hot News (Click to read):

• Payrolls soared by 336,000 in September (CNBC)

• Feds Officials see ‘restrictive” policy staying in place until inflation eases (CNBC)

Earnings Calendar

Note that the below information is taken from the confirmed dates on Earnings Whispers. We've exclusively chosen stocks favored by investors withwidely recognized names. The below calendar is not exhaustive. Please refer to Earnings Whispers for the full list.

Singapore Stocks Spotlight

SGX (SGX:S68)
Target Price: S$10.60

About SGX

• SGX engages in the treasury management, provision of management and administrative services to related corporations, provision of contract processing and technology connectivity services

Fundamental

• Treasury income surged 177% YoY to S$137mn for FY23 and reached a record high, mainly due to higher yield on margin balances from the higher interest rate environment

• Average fee per contract for Equity, Currency and Commodity derivatives was higher at $1.61 in FY23

• On Cash equities, revenue was 12% lower YoY in 2H23 mainly due to listing revenue declining 9% YoY and trading and clearing revenue falling 21% YOY

Technical

• Price has found a new Immediate support area around 9.60 where we see a tweezer bottom pattern on 4 & 5 Oct

• Key psychological resistance is around 10.00 where selling pressure return

• Upward sloping channel support line still remains intact as price are forming higher lows

• If price is able to break and hold above 10.00, potential upside target towards 10.50 - 10.60

ST ENGINEERING (SGX.S63)
Target Price: S$4.20

About ST Engineering

• Singapore Technologies Engineering Ltd provides solutions and services in the aerospace, electronics, land systems, and marine sectors

  Operates through the following business segments: Commercial Aerospace, Urban Solutions and Satcom and Defence and Public Security

Fundamental

• Singapore stepped up defence and security spending by 12% and 17% in FY21 and FY22

• Total contracts won for defence and security amounted to S$5.2bn in 1H23, 20.9% higher than the whole of FY22

• Higher demand for maintenance, repair and overhaul since the aviation rebounded since late FY22

Technical

• Long term uptrend remains intact as 100d and 200d MA are still heading up

• There is some short-term consolidation between the range of 3.80 - 3.90 over the past 2 months.

• Would not rule out more upside towards 4.20, if price is able to hold above 3.90

UMS (SGX:558)
Target Price: S$1.55

About UMS

• UMS Holdings Ltd engages in manufacturing high precision front-end semiconductor components, perform electromechanical assembly and final testing services

Fundamental

• Net profit attributable to owners of the parent tumbled 42% to SG$11.6 million in the second quarter

• Revenue for the three months ended June 30 slipped 14% year over year to SG$74.4 million from SG$86.6 million, owing to weaker performances of the semiconductor and other business segments

Technical

• Price is looking to test the key psychological resistance around 1.40 where it is has been kept below since 2022

• Immediate support is found around 1.20 - 1.25

• Short-term trend looks strong as 20d MA is still heading higher. Longer-term uptrend looks to be forming as 100d MA is attempting to cross above 200d MA

• Potential upside target towards 1.55 if price is able to break and hold above key psychological resistance

FRENCKEN (SGX:E28)
Target Price: S$1.40

About Frencken

• Frencken Group Ltd engages in the provision of design and manufacturing solutions for analytical and life sciences, automotive, healthcare, industrial, and semiconductor industries

Fundamental

• Frencken posted a 53.8% drop in net profits toS$12.1m for the first half ended Jun 30

• Its net profit fell despite lower income tax expenses and selling and distribution expenses, as they booked lower revenue and higher finance costs

• Semiconductor business recorded a 19.7 per cent fall to S$122.7m

• The Group’s finance costs rose 99.6 per cent to S$2.9 for H1

Technical

• Psychological key support is around 1.00 & resistance is around 1.20

• Uptrend looks to be forming as 20d MA has crossed above 100d and 200d MA in Aug and Sep

• A bullish engulfing pattern formed on 22 Sep and price has rallied for that week but sellers came back to push price back down nearing the support

• If price manage to break and hold above 1.20, may see more strength towards 1.30, where some sellers could come back first

United States Stocks Spotlight

COSTCO WHOLESALE CORP (COST.NQ)
Target Price: US$610.00

About Costco Wholesale Corp

• The leading warehouse club, Costco has 815 stores worldwide

• It sells memberships that allow customers to shop in its warehouses, which feature low prices on a limited product assortment. Costco mainly caters to individual shoppers, but roughly 20% of paid members carry business memberships

Fundamental

• Costco's unique membership strategy and strong business model position it well for long-term success

• Costco reported Q4 earnings per share of $4.86, beating expectations by $0.07, with revenue of $78.94b beating expectations by $1.22b

• Costco's expansion efforts continue with plans to open 10 new units in the first 12 weeks of fiscal year 2024, in addition to the 23 net new units added in fiscal year 2023

Technical

• Price has broke above the downward sloping channel resistance line in May

• Uptrend remains intact as 100d and 200d MA are still heading upwards

• Immediate support is around 540 where price rebounded strongly from on 6 Oct, which is also where 100d MA is at

• Potential upside target toward 610 if price is able to break and hold above immediate resistance of 570

INTEL CORP (INTC.NQ)
Target Price: US$40.00

About Intel Corp

• Intel Corporation is an American multinational corporation and technology company

• One of the world's largest semiconductor chip manufacturer by revenue

• Supplying microprocessors for computer system manufacturers such as Acer, Lenovo, HP, and Dell

Fundamental

• Global semiconductor leader, dominating PC and server processor markets

• Market dominance provides Intel with economies of scale, innovation opportunities, and growth potential

• Strong position in AI semiconductor market with a diverse portfolio and solid financial backing for growth and innovation

• Solid balance sheet, providing financial flexibility to pursue growth opportunities and invest in new areas

Technical

• Prices are still following the upward sloping channel support line, forming higher lows

• A shooting star pattern appeared on 12 Sep around the resistance level of 40, adding more importance to his level (Shooting star is a bearish reversal pattern). May see selling pressure return when nearing 40

• Support level is around 32 where prices have rebounded from a few times since Jun

ALPHABET INC(GOOGL.NQ)
Target Price: US$152.00

About Alphabet Inc

• American multinational technology company focusing on artificial intelligence, online advertising, search engine technology, cloud computing, computer software, quantum computing, e-commerce, and consumer electronics

Fundamental

• Initially perceived as lagging in artificial intelligence (AI), but it has since demonstrated its leadership in AI

• The company's capabilities in AI have become more evident, dispelling concerns about its position in this field

• Expected to see growth in its Cloud segment, which has become a profit driver for the company. AI is also a significant focus, with a robust product development pipeline in this area

• Google Cloud entered operating profitability in Q1,doubling its operating income contribution in Q2

Technical

• Uptrend started forming in Apr when 20d MA has crossed above above 100d and 200d MA. Uptrend remains intact as price is still adhering to the upward sloping channel support line

• Support looks to be around 127 - 128 and temporary immediate resistance is around 140

• If price is able to break and hold above the 140, may see more strength towards 150 - 152

NVIDIA CORP (NVDA.NQ)
Target Price: US$600.00

About Nvidia Corp

• NVIDIA Corp. engages in the design and manufacture of computer graphics processors, chipsets and related multimedia software

• Operating through the following segments; Graphics Processing Unit (GPU), Tegra Processors

Fundamental

• Stock prices had reached an all time high, as earnings came in at US$2.70 vs US$2.09

• Revenue came in at US$13.51b vs U$11.22b

• Largely driven by its data centre segment which has seen a surge in business due to the uptake of AI services such as ChatGPT, the Board of directors has also authorized US$25b share buyback

Technical

• Price found the key psychological support level around 400, where it has rebounded from multiple times since Jun

• Immediate resistance still remains at 500 where bears are still in control for now

• Seeing some short-term weakness with 20d MA flattening out but longer-term uptrend is still intact with 100d and 200d MA pointing up

• Potential upside target towards 600 if price can hold above 500

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