Singapore’s economic growth is gaining momentum against the backdrop of a global economic upswing. The island country’s economy growth accelerated to 4.6% YoY in the third quarter, beating Reuters forecast of 3.8%.

Faster-than-expected growth was driven by fast expansion in the manufacturing sector, which surged 15.5% YoY. Electronics, biomedical and precision engineering clusters are among the best performing manufacturing sectors.

Meanwhile, the Monetary Authority of Singapore (MAS) announced its decision to maintain a neutral monetary policy on Friday morning, which is in line with the market’s expectation. The central bank also endorsed improvement in the economic condition, saying “Singapore economy is likely to expand at a steady, but slightly slower pace in 2018 compared to 2017… the MAS expects GDP growth to stay firm in 2018”.

Upbeat GDP readings and MAS policy decision sent Straits Times Index (STI) to its highest level in more than two months at opening. STI has finished its two-month consolidation and is gaining upward momentum ahead of 3Q earnings season.

3,300 point is a psychological and technical resistance level for the STI. Breaking out above this critical point will pave way for more upside towards the previous highs of 3,354 points.   The STI has underperformed regional peers over the last two months and its performance was lagging behind major indices S&P and Hang Seng. Going forward, good earnings results will help to boost confidence and attract more liquidity into Singapore.

Besides earnings, external factors such as the Federal Reserve’s monetary policy shifts in December, Trump’s tax reform progress and North Korea uncertainties will likely be catalysts to drive market movements in the fourth quarter as well.  

Economic calendar – Singapore GDP advanced readings

Singapore Free chart – October 2017

 

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