Global stocks slump with growing recession fears: Weekly Recap

Three things kept me absolutely riveted this week.

First up, Singapore’s very own Max Maeder delivered a world-class performance at the Olympics, clinching a bronze medal in kite-foiling on our National Day. 

Winning a medal is never easy, but what truly impressed me was Max’s positive attitude and mental resilience. 

When asked about what drives him, Max once said that his hard work is fuelled by the joy of seeing people smile because of the results. I know I definitely smiled watching our athlete compete on the international stage after the winds finally picked up. Congrats, Max!

Another standout moment was the announcement that DBS’ Tan Su Shan will be taking over as CEO in March next year, succeeding the long-serving Piyush Gupta. 

When asked about her vision for Southeast Asia’s largest bank, Tan shared her hopes to continue steering DBS on a path of transformation, innovation, and growth. It’s an exciting time for the bank, and I’m eager to see how her leadership will shape its future.

On a more turbulent note, global financial markets experienced sharp gyrations, with Japanese stocks seeing their steepest one-day decline since 1987. 

The key learning from this? Consistency is key and do not lose sight of your long-term goals.

As Max wisely put it, "When you get something unexpected in life, you need to remain patient. Remember what you prepared for, and see how you can turn it into a positive outcome." Wise words to live by, whether you’re on the water or in the markets.

Gerald, Founder of Beansprout

⏰ This Week In Markets

📉 Volatility Returns

What happened? 

Global stocks fell sharply at the start of the week, driven by growing concerns of a US recession following weak employment data. 

The Nikkei 225, Japan’s benchmark stock index, saw its sharpest one-day decline since 1987 with a decline of 12.4% on Monday 5 August.

The sharp decline in Japanese stocks was exacerbated by an unwinding of the Yen carry trade following the Bank of Japan’s recent interest rate hike, which signalled that the era of cheap Yen-denominated borrowing to fund purchases of higher-yield assets elsewhere might be over. 

What does this mean?

Global stocks eventually found a footing and staged a tentative recovery as new economic data showed that the services sector in the US was performing better than expected, helping to partly ease recession fears. 

At the same time, the Bank of Japan governor played down chances of further near term rate hikes and said that the central bank will not raise interest rates when markets are unstable. 

Why should I care? 

According to JP Morgan’s global FX Strategy Co-Head, the unwinding in carry trades is only about half complete as of 6 August.

This may mean that the continued unwinding of the carry trades may continue to destabilise markets. 

We discuss what we will be looking out next to determine the direction of stocks and REITs here.

🚗  Moving This Week

• DBS 2Q24 net profit of S$2.8 billion was 6% higher year-on-year. The company announced an interim dividend of 54 cents. Separately, DBS announced that its current Chief Executive Officer (CEO) Piyush Gupta will step down in March 2025. He will be succeeded by Tan Su Shan, who is currently the Global Head of Corporate and Commercial Banking at DBS. Read our analysis here.
• SGX FY24 adjusted net profit rose 4.5% year-on-year to S$525.9m, driven by commodities and currency derivative trades. It proposes a final quarterly dividend of 9 cents, bringing total dividend to 34.5 cents for FY24.
• Venture 1H24 net profit fell 11.7% year-on-year to S$123.7m. The company expects 2H revenue to be higher than 1H, and maintained an interim dividend of 25 cents per share.
• SembCorp Industries reported 11% year-on-year decline in 1H24 net profit from continuing operations to S$540m, as revenue from gas and related service fell 18.2%.
• Lendlease Global Commercial REIT FY24 DPU fell 17.7% year-on-year to 3.87 cents due to higher borrowing costs. Gearing at end-Jun was 40.9%, and adjusted interest coverage ratio at 1.7x.

Source: Bloomberg, CNBC, Business Times, Edge Singapore

💡 The Big Important Story

Is It Time To Buy Singapore REITs?

We recently held a webinar to share our thoughts on Singapore REITs. Here's what you need to know about their outlook.

🤓 What We're Looking Out For Next Week

• Tuesday, 13 Aug: CapitaLand Integrated Commercial Trust (CICT) earnings, Singapore 2Q GDP data
• Wednesday, 14 Aug: ST Engineering, Genting Singapore, CDL Hospitality Trust earnings, US Consumer Price Index (CPI) data
• Thursday, 15 Aug: 6-month Singapore T-bill auction, Alibaba earnings

Check out the full list of Singapore stocks, REITs and ETFs with upcoming dividend payments with our dividend calendar

Source: SGX, Bloomberg, Refinitiv

🤓 Coming Up

Here’s what to expect for the T-bill auction on 15 Aug

The closing yield on the 6-month Singapore T-bill has fallen further to 3.35%.

Join the Beansprout Telegram group for the latest insights on Singapore stocks, REITs, bonds and ETFs.