A BRIGHTER 2018: Singapore Industry Outlook for the coming year

Investors January 20th, 2018
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2017 Singapore economy recap

2017 had been a good year for Singapore’s economy, as the island state registered a better than forecasted 3.5% full year growth. Singapore’s GDP expanded by 3.5%, mainly fuelled by the uptick in manufacturing segment, with the electronics manufacturing sub-sector contributing strongly to the output recovery. Construction segment was the laggard sector where it registered a negative growth of 8% for the full year. Services segment, contributing approximately 75% of Singapore’s overall GDP expanded 2.5% as well, making 2017 another year of continued expansion at a much faster pace compared to 2016. As a nation highly dependent on global trade, 2017 was a good one for our major trading partners US and China, and exports to these countries saw significant improvement for the whole of 2017. 2018 will a good year economically as well at all corners of the globe, and Singapore is expected to do well on the back of stronger forward growth.   

Singapore Industry outlook 2018

Manufacturing sector contributes 20% of Singapore’s GDP as of 2016, and the percentage contribution remains stable going into 2017 and 2018. Electronics manufacturing industry experienced a surge in orders due to the global semiconductor boom, and bank economists are forecasting robust growth in 2018 in the range of 4 to 7%.  OCBC Bank head of treasury research Selena Ling sees manufacturing sector demand robustness holding up in 2018 with the supporting strong demand for latest technological tools and Internet of Things (IoT). Physical technological tools permeate all facet of life and increasing applications of electronics will entail higher orders and SIngapore’s manufacturers including SMEs are poised to benefit from these tailwinds.

Singapore’s marine and offshore industry had been the black sheep for the economy for most of 2014 to 2017 and is still very much in recovery stage. Turnaround is on the cards in 2018, as part of the services segment, the sector has seen uptick in hiring as highlighted by CIMB Private Bank economist Song Seng Wun, which signify orders and contracts are returning. Global crude oil price increased since the start of the year to finish 2017 on a high note, and the advance continuing into 2018 may see demand for crude oil finally gathering steam.

Construction sector contributes around 5% of Singapore’s total GDP. Outlook for the sector is definitely positive going into 2018 with healthy improvement from 2017. Singapore government is committed in supporting the sector by boosting public sector construction project awards from SGD24.5 billion in 2017 up to a maximum of SGD31billion. SGD1.4 billion worth of public sector projects will be brought forward by 2 years which would bring a much needed boost to the sector. The North-South Corridor would see project worth SGD9billion awarded to contractors and drive the segment beyond 2018 up till 2021. Overall sector will experience positive growth, projected to be 2.4% in real terms as forecasted by leading industry research house BMI Research. Property market sentiment is on the rise, which will drive up private sector construction demand. The twin boosters of increased construction orders from private and public sector will have a positive spillover effect to SMEs taking on subcontracts from the larger construction players and property developers.

Singapore’s investment outlook for 2018

Local fund managers and investment bank research heads are bullish on the recovery of offshore and marine sector as well as property sector in 2018. Strong U.S. economy and China’s stabilizing growth would benefit Singapore’s exporters. Corporate earnings are forecasted to be higher in 2018 which justifies the higher valuations accorded to public listed companies. A rising tide lift all boats and SMEs will enjoy the spills of buoyant business climate locally. DBS Bank head of equities research singled out property and offshore marine sectors as 2 of the favourable sectors for 2018 in addition to banking and consumer goods. Investment climate will be great on the back of low interest rate environment and stable growth.

Marine and offshore related companies will be seeing a better year in 2018 as orders slowly return due to improving demand for oil. Manufacturing segment will see continued strong orders due to global semiconductor growth. The companies which are in the construction segment are expected to enjoy stable orderbooks and stable operating cashflows receipts which could translate into prompt repayments to investors.

Diversification Opportunities with MoolahSense

Moolahsense campaigns and notes offerings are tied to a variety of sectors which are well positioned for the strong growth forecasted for 2018. With a variety of new campaigns available in the various sector added on daily basis, MoolahSense provides the opportunities for investors to diversify in the sectors that have a positive outlook.

Analysts and economists are looking forward to 2018 as another year of continued growth, and similar views are echoed by MAS managing director Ravi Menon. Investors should be mindful by always practicing good risk management which is to diversify and spreading capital over different campaigns.

As the year begins, it’s time to start looking at the opportunities available and grow your portfolio with MoolahSense. It is easy to sign up and takes less than 5 minutes! With a minimum investment amount of just SGD100, you can proceed by perusing through our campaigns and having a good head start in picking your preferred investments in the various sectors. Investors will be well rewarded by taking good care of risk and returns should flow for the whole of 2018.