Market Overview

Singapore

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

The Ministry of Trade and Industry (MIT) announced on 13 Aug that Singapore’s economy grew by 2.9% in Q2 2024, with a slight narrowing of the GDP growth forecast for the year to 2.0-3.0%.

Manufacturing and retail saw declines, while construction, wholesale trade, transportation, and finance grew. Tourism and tech sectors stayed strong. Manufacturing, especially electronics, is set to recover, with continued strength in tourism and finance, though biomedical may remain weak.

Singapore’s external demand outlook remains resilient, but there are risks from geopolitical conflicts and potential financial instability.

STI had managed to break and hold above the 3,400 level to close off August after rebounding from the low of 3,200 due to the global sell-off at the start of August.

If price can continue holding above the 3,400 level with 20d MA starts heading sideway before going higher, would not rule out more upside towards 3,500, as longer term trend (100d and 200d MA) are still generally moving up.

Hot News (Click to read):

• Singapore’s factory output returns to growth with 1.8% rise in July, as electronics sector improves (The Business Times)

• Singapore July core inflation 2.5% y/y, lowest in more than two years (Reuters)

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

DJI has rebounded strongly after the global sell off due to unwinding of yen-carry trade in Aug. It is currently retesting the 41,500 resistance level. 20d MA has also started to point up again, indicating short-term strength has returned. With longer term trend (100d and 200d MA) looking optimistic, would not rule out the index breaking above 41,500 towards 43,000.

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.

Similarly, S&P 500 is retesting the 5,670 resistance level with all 3 MAs heading higher. Key support remains to be around 5,400, where 20d MA has bounced off.

All eyes were on the recent Jackson Hole conference where Fed Chair Powell has indicated interest cuts ahead. This resulted in traders maintaining a 100% chance of at least a quarter percentage point rate cut in Sep, according to CME Group’s FedWatch.

However, unemployment rate has been on a slow consistent rise, which Powell attributed this to a slower pace of hiring and more individuals entering the workforce, rather than layoffs.

As the upcoming FOMC meeting will take place on 17-18 Sep, we can expect more volatility ahead.

Hot News (Click to read):

• Fed Chair Powell indicates interest rate cuts ahead: ‘The time has come for policy to adjust (CNBC)

• Buffett’s Berkshire Hathaway hits $1 trillion market value, first U.S. company outside of tech to do so (CNBC)

Singapore Stocks Spotlight

SINGTEL (Z74.SI)
Target Price: S$3.20

About Singtel

• Singapore Telecommunications Ltd. is an investment holding company that provides telecommunications systems and services

• Group Consumer segment offers mobile services, pay TV, fixed broadband, voice services, and equipment sales

• Group Enterprise segment provides mobile services, equipment sales, fixed voice and data, managed services, cloud computing, cyber security, IT, and professional consulting

Fundamental

• Singtel’s Q1 net profit surged 42.9% to S$690 million, driven by exceptional gains, despite revenue falling 2.1% due to the sale of its cybersecurity arm

• Underlying net profit rose 5.4%, but higher finance expenses and currency depreciation in Africa and Indonesia weighed on contributions from associates

• Despite macroeconomic challenges, Singtel remains confident in capturing growth opportunities across its markets

Technical

• Price has been trading range bound between 2.80 - 3.00 since Jul, where we have also hit our Jul newsletter target price

• This sideway consolidation is further supported by the 20d MA going sideways

• Longer-term trend (100d and 200d MA) are still sloping upwards

• Price has broken above 3.00 with high volume last Friday, indicating potential upside towards 3.20 first where some selling pressure can return

• Target to be revised to 3.40 if 3.20 is firmly breached

GLD US$ (O87.SI)
Target Price: US$248

About GLD US$

• ETF managed and marketed by State Street Global Advisors

• Designed to initially track the price of a tenth of a troy ounce of gold

Fundamental

• Gold provides a natural hedge against inflation and is generally regarded as a safe-haven investment

• Trading GLD shares in the secondary market or via a Trust may be lower than the costs associated with buying, storing and insuring physical gold in a traditional allocated gold bullion account

• Inverse relationship between gold prices and US dollar

  • In view of Feds cutting interest rates, US dollar could potentially depreciate

Technical

• Price has hit our previous target of US$226 stated in our Jun 24 Newsletter

• Immediate higher support looks to be around 229 - 230 and a dragonfly doji was spotted on 23 Aug near this new support

• Both short and long-term trend based on all 3 MAs are aligned and heading higher

• As long as new higher support holds, would not rule out more upside towards 248 alongside lowering interest rates

CAPLAND INTCOM TRUST (C38U.SI)
Target Price: S$2.25

About Capland Intcom Trust

• CICT is the largest real estate investment trust listed in Singapore as a result of the merger of CapitaLand Mall Trust (CMT) and CapitaLand Commercial Trust (CCT) in October 2020

• The trust has a diversified portfolio of 26 properties (offices, retail malls and integrated development) valued at SGD 13.7 billion as at Dec. 31, 2023

• There are also assets in Germany and Australia, making up less than 10% of portfolio

Fundamental

• CICT reported a 3.7% increase in distributable income to S$366.5m for 1H 2024, with a 2.5% rise in Distribution per Unit (DPU) to 5.43 cents, despite macroeconomic uncertainties and the absence of income from an asset under enhancement

• CICT maintained 96.8% occupancy, securing 1.1m sq ft in new leases and renewals with positive rent reversions

• The company kept a strong balance sheet, with 76% of debt at fixed rates and issued S$300m in green bonds at 3.75%

Technical

• Price is currently testing the multi-year high of 2.10 back in 2019

• It has been in a tight trading range between 1.85 - 1.95 from Dec 23 to mid Jul 24

• Price finally broke above the upper bound of the range with all 3 MAs heading higher, indicating returning of strength and interest in this stock

• As long as price is able to hold above this new higher support of 2.10, potential upside target towards 2.25

United States Stocks Spotlight

ALPHABET INC (GOOGL.NQ)
Target Price: US$180

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

• Alphabet's Q2 revenue rose 14% to $84.7b, with earnings of $1.89 per share, driven by strong Search and Google Cloud performance, which reached $10b in revenue and $1b in profit

• While overall ad revenue grew to $64.62b, YouTube ad revenue missed expectations at $8.66b, facing competition from platforms like TikTok

• The company continues to invest heavily in AI and its self-driving unit Waymo, which saw a $5b investment and expanded services in San Francisco, reinforcing its position for future growth

Technical

• GOOGL has hit our Apr 24 Newsletter target price of US$170, and continued to push higher towards 190

• We saw a 18% pullback towards 155 where buying pressure return

• However, longer term trend (100d and 200d MA) is still intact, looking optimistic

• Potential accumulation on dips near the 160 support as 20d MA starts to stabilize, with the first target around 178 - 180, where some selling pressure may return

COSTCO WHOLESALE CORP (COST.NQ)
Target Price: US$960

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

• Its product categories include food and sundries, hardlines, fresh foods, softlines, and ancillary

• Combining with operating efficiencies from volume purchase, it enable Costco to operate profitably at lower gross margins

Fundamental

• Costco's Q3 net sales increased by 9.1% year-over-year to $57.39b, with net income rising nearly 30% to $1.68b, surpassing analyst expectations

• E-commerce sales were a standout, growing 20.7% year-over-year, contributing significantly to Costco's overall revenue growth

• Costco expanded its partnership with Uber Eats, allowing its products to be sold and delivered through the platform, even to non-members, while offering special discounts to Costco members

Technical

• Our Feb 24 Newsletter target at 760 was achieved in Mar 24, where we saw price continuously soared higher

• Uptrend remains strong as all 3 MAs are still heading up

• Price is currently testing the immediate resistance around 900 where selling pressure returned once in Jul, while support looks to be around 835 - 840

• If price can break and hold firmly above 900, potential upside target towards 960

GE AEROSPACE (GE.NY)
Target Price: US$184

About GE Aerospace

• GE Aerospace, formerly known as General Electric Company, is a leading manufacturer of commercial and military aircraft engines, engine components, and aircraft systems

• GE Aerospace offers aftermarket services and support for its products, including maintenance, repair, and overhaul (MRO) services

Fundamental

• GE Aerospace reported a 4% increase in Q2 revenue to $9.1b, with net income of $1.4b, and an 18% surge in orders

• The company raised its full-year guidance, projecting an operating profit between $6.5b and $6.8b, and adjusted EPS of $3.95 to $4.20, reflecting strong momentum across its businesses

• GE Aerospace made significant strides in addressing supply chain challenges and is positioned for substantial profit and free cash flow growth in 2024

Technical

• We maintained our target for GE at US$184 in our Jun 24 Newsletter

• Price has been in a sideway price range of 158 - 175 since Apr 24, with 20d MA going horizontally, despite longer-term uptrend (100d and 200d MA) is still intact

• Starting Aug 24, we start to see that 20d MA is gently sloping up, indicating short-term strength returning

• Price has recently broke and held above 170. If it continues to hold firmly above it, potential upside target to 184, where some selling pressure can return

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