Top Stock Market Highlights of the Week: Singapore’s GDP, US Federal Reserve and BYD’s Record Sales

Welcome to the latest edition of top stock market highlights.

Singapore’s GDP

There is good news for Singapore’s economy.

Gross domestic product (GDP) grew by 2.8% year on year in the fourth quarter of 2023 (4Q 2023), nearly triple the 1% recorded in the third quarter (3Q 2023).

These numbers are based on advanced estimates provided by the Ministry of Trade and Industry (MTI).

On a quarter-on-quarter basis, Singapore’s economy grew by 1.7% for 4Q 2023, slightly higher than the quarter-on-quarter growth of 1.3% for 3Q 2023.

For 2023, Singapore’s GDP grew by 1.2%, within the range of 0.5% to 1.5% forecasted by the Monetary Authority of Singapore (MAS).

Prime Minister Lee Hsien Loong delivered a New Year’s Day message on 31 December 2023 where he mentioned that MTI expects Singapore’s GDP to grow between 1% to 3% for 2024.

In addition, inflation is also expected to ease, though this will hinge on the external environment.

These numbers bode well for Singapore as the country enjoys rising tourism with global air travel numbers projected to surpass pre-pandemic levels this year.

US Federal Reserve

The minutes of the last US Federal Reserve meeting for 2023 revealed that interest rates are likely at their peak.

Almost all the members concurred that lower interest rates “would be appropriate” by the end of this year.

This news should come as a breath of fresh air for the REIT sector, which has been hit by lingering pessimism over high inflation and surging interest rates last year.

However, there was no indication as to when the cuts will commence.

The US central bank also left the door open for potential rate hikes should inflation come roaring back again.

Participants agreed that inflation was still way above the Federal Reserve’s target of 2% and that rates needed to remain “higher for longer” for this objective to be achieved.

Interest rates are currently hovering at a 22-year high of between 5.25% to 5.5%.

Analysts are now predicting a median of three rate cuts for 2024 but Federal Reserve officials have hinted that a cut will not be forthcoming in March.

The central bank needs to be convinced that inflation is indeed heading towards its 2% target before cuts will even begin.

This approach is consistent with what the Federal Reserve had communicated all through last year – that they are relying on a data-dependent approach to calibrate their moves and ensure that they do the right thing to engineer a desired “soft landing”.

Meanwhile, another encouraging signal has emerged.

Core inflation on a six-month annualised basis fell to 1.9%, which is below the central bank’s target of 2%.

This could imply that the interest rate reductions could come faster than projected.

BYD (HKSE: 1211)

Chinese automaker BYD posted impressive sales numbers for 4Q 2023.

The electric vehicle manufacturer sold 526,409 fully-electric vehicles (EV), beating rival Tesla’s (NASDAQ: TSLA) 484,000 in the same quarter.

BYD’s latest sales numbers help it to maintain its pole position within the electric vehicle industry.

For 2023, BYD sold a total of 3.01 million units, beating Tesla’s total deliveries of 1.81 million units.

The higher sales were aided by aggressive year-end discounting.

Tesla also initiated a price war in 2022 that extended into 2023 but still lagged behind BYD in sales numbers despite the discounting.

BYD’s full-year volumes were nearly as high as its EV and hybrid vehicle sales over the past five years, an impressive feat.

Despite seeing record sales volume, shares of BYD declined nearly 24% last year.

In contrast, competitor Tesla’s shares shot up 130% in 2023.

BYD continued its global expansion with the establishment of its first production line in Hungary.

The plant, located in the city of Szeged, will produce EVs and plug-in hybrids to serve the European market and help create thousands of jobs.

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Disclosure: Royston Yang does not own shares in any of the companies mentioned.

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