• As of 20 June, the FTSE ST All-Share Index generated a 3.9% total return in 2Q24, outpacing the FTSE Asia Pacific Index (+2.7%) and FTSE ASEAN All-Share Index (-1.9%). Over the period, the 94 constituents also booked S$62 million in net institutional inflow.
   
• The 10 strongest performers of the FTSE ST All-Share Index in 2Q24 (to 20 June) averaged 37% total returns, and were led by Yoma Strategic, Samudera Shipping and Yangzijiang Shipbuilding. The 10 least performing constituents for the period averaged 12% declines, led by Food Empire, Prime US REIT and DFI Retail.
   
• Looking forward to 3Q24, majority of the market (~65%) expects the Fed Funds Rate to be cut by the 18 Sep FOMC Meeting, while PCE Core Deflator projections see the Fed's preferred inflation gauge still in the vicinity of 2.5% to 2.7%. The Jackson Hole Symposium will be held 22-24 August.
   
• Potential risks to 3Q24 global growth remain, despite upside surprises and well-received policy support from China as well as rate cuts from some advanced economies. These include multiple spillover effects from the Fed holding rates high for longer, more geoeconomic fragmentation impacting manufacturing, investment and exports, and the potential impacts on commodity prices should geopolitical tensions escalate.
   

The FTSE ST All-Share Index has seen a modest year-to-date return of 3.4% as of 20 June 2024, reflecting varied performance across its constituents. The Index's broader composition, which includes a significant representation of the S-REIT sector, has contributed to its lag behind the STI since 2019. Market expectations for the Fed Funds Rate have shifted towards a more hawkish stance, now anticipating a band of 500-525bps following the September FOMC meeting. This shift in expectations is indicative of the market's response to economic signals and policy projections, with the US PCE Core Deflator still gauging inflation above 2.5%.

As of 20 June, the FTSE ST All-Share Index has generated a 3.9% total return in 2Q24. During the period, 43 constituents posted positive total returns, with three constituents unchanged and 48 constituents generating declines in total return. The 10 constituents that posted the strongest gains in 2Q24 (to 20 June) are tabled below. 

Note NIF refers to Net Institutional Flow; TR refers to Total Return. Source: SGX, SGX Screener, Refinitiv (Data as of 20 June 2024)

All 10 of the stocks tabled above also booked net institutional inflow for 2Q24 (to 20 June) totalling S$478 million. However, the broader group of 94 Index constituents booked S$62 million in net institutional inflow. Apart from rallying 157% in 2Q24 (till 20 Jun), Yoma Strategic Holdings' average daily trading turnover has soared five-fold from 1Q24 levels. On May 29, Yoma Strategic Holdings reported its FY23 (ended 31 Mar) net profit reached US$21.2 million, a turnaround from a net loss of US$63.3 million in FY22.

On the other side of the FTSE ST All-Share Index constituent performances, Food Empire Holdings has declined 19% in 2Q24 (to 20 June), reducing its total return since the end of 2019 to 95%. In its 1Q24 business update, Food Empire Holdings noted its total revenue had increased 14.5% from 1Q23, lifted by the positive impact of increased marketing and promotional activities in certain markets, higher production volume growth from manufacturing plants in Malaysia and India, and a robust pricing strategy across core markets. According to the SGX Stock Screener, Food Empire Holdings was trading at S$1.01 on 20 June, with the Refinitiv Consensus Estimate Target Price at S$1.618, ROE at 19.7%, P/B ratio at 1.3x and P/E ratio at 7.1x. 

The 10 constituents that posted the most declines in 2Q24 (to 20 June) are tabled below. 

Note NIF refers to Net Institutional Flow; TR refers to Total Return. Source: SGX, SGX Screener, Refinitiv (Data as of 20 June 2024)

Economic Outlook for 3Q24 & Beyond

The global economic landscape in 3Q24 and beyond presents a mix of factors influencing growth. While the recent policy support from China and rate cuts in some advanced economies can provide a boost, persistent high rates from the Fed Reserve and evolution of geoeconomic fragmentation pose further economic and market risks. 

These challenges are compounded by potential volatility in commodity prices should geopolitical tensions further escalate. 

At the same time, some economic counterbalance takes form of the interplay between the resurgence of the semiconductor and adjacent manufacturing sectors, and global pivots towards sustainable solutions. This is poised to significantly influence the manufacturing and export-related sectors, in addition to capital investment. Geoeconomic fragmentation, while potentially reducing the efficiency of various sectors, also intensifies the competition for global market share.

The culmination of these structural drivers, socio-economic challenges since 2019, and potential economic risks and has seen a resurgence in global industrial-led policies. As relayed by the IMF in April, governments are re-evaluating the role of state intervention in the economy to bolster strategic sectors and address issues like supply chain resilience, economic security, and climate change. This shift is evident in significant legislative moves such as the US CHIPS and Science Act, the EU's semiconductor investment, and China’s trade-in programs, reflecting a broader trend towards leveraging industrial policy for strategic economic development. The race to move upstream and capture more of the value in Global Value Chains, also requires significant levels of investment, as seen in the Penang-based technology sector. 

Market sentiment is currently leaning towards a reduction in the Fed Funds Rate by the September FOMC meeting, with a significant portion of analysts anticipating a cut. Despite this, inflation expectations remain slightly above the Fed's target, as the PCE Core Deflator is projected to hover around 2.5% to 2.7%. Meanwhile, the Jackson Hole Symposium, a key event for economic discourse, is scheduled for late August, potentially influencing future monetary policy decisions. 

The high value of the US dollar on the back of the higher for longer Fed Funds Rate has significant repercussions for emerging economies, often exacerbating their financial challenges. European-based Landfall Strategy Group maintain the US continues to comprise 90% of global payments, and the IMF maintain elevated interest rates can intensify the burden of debt servicing, leading to increased fiscal strain and potential threats to financial stability. Consequently, the heightened emphasis on ensuring the sustainability of public debt is expected to continue, particularly in light of the mix of factors driving the global economic landscape. This also provides opportunities as countries and corporates look to diversify from excess USD exposure.

While the IMF World Economic Outlook maintained that the medium term outlook for global growth is comparatively low converging on 3.1% in 2029, it noted that immediate downside and upside economic risks are balanced. This helps to set a stage for significant policy developments going into 2025.  

Further Resources and Research 

• Weekly Fund Flow Report: Data Reports - Singapore Exchange (SGX) 

Recent Financial Results/Business Updates

• Yoma Strategic: FY2023 Interim Financial Results 
• Samudera Shipping: Samudera Shipping Line 1QFY2024 Business Update | Samudera Shipping Line Annual Report 2023
• Yangzijiang Shipbuilding: Yangzijiang Shipbuilding 1QFY2024 Business Update | Yangzijang Shipbuilding Annual Report 2023
• Food Empire: Food Empire Annual Report 2023 
• Prime US REIT: Prime US REIT 1QFY2024 Business & Operational Updates | Prime US REIT Annual Report 2023 
• DFI Retail: DFI Retail Group Annual Report 2023 

Related Analyst Reports

• Yoma Strategic: Phillip Capital - Yoma Strategic Holdings Update : Deleveraging and growing | 
  Phillip Capital - Yoma Strategic holdings visit note : Capitalising on the new challenges
• Yangzijiang Shipbuilding: CGS-CIMB - Yangzijiang Shipbuilding update : “Clean”-ing up the orderbook | 
  DBS - Yangzijiang Shipbuilding update : Making New Highs
• Food Empire: CGSI Securities - Food Empire Holdings Ltd update : Working towards a re-rating
• Prime US REIT: DBS - Prime US REIT update : Different, yet the same | DBS - Prime US REIT update : Potential domino effect
• DFI Retail: DBS - DFI Retail Group Holdings update : Moving forward with a fresh strategic framework
   

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