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Singapore exports data underscores expanding demand from the customer

Singapore’s preliminary GDP data for last month paints a grim picture.  At -11.5%, the March figure released yesterday is the worst year-over-year reading since at least 1976 leading to a statement from the Trade Ministry today, following the release of equally abysmal export data, predicting that Singapore’s Economy may contract by 6 to 9% this year. March non-oil exports registered at a modest sequential improvement of -16.97% Y/Y or +22.35% M/M.

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As the primary entrepot economy in South East Asia, Singapore has long served as a canary in the coal mine for changing Asia/Pacific trade trends.  Although the misery of global contraction is clearly baked in for Singapore, the regional and product export break out released today suggest that the one place where business is improving is facing the customer –exports to China and Hong Kong both increased by double digits on a month-over-month basis, the second sequential m/m increase for China  bound shipments.

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Although the China bound exports of electronics and other consumer products remain in the doldrums, the increase in transport equipment and chemicals clearly supports the thesis that Chinese demand is gaining momentum as Beijing’s massive stimulus program works through the system.  Although we sold our China ETF position last month to lock in profits we continue to be bullish on the path of recovery there and have adjusted our portfolio around the theme of increasing demand there by taking long  positions in commodities and commodity centric economies. 

We do not have an investment opinion on Singapore’s markets.

Andrew Barber
Director