World economy heads for one of its worst years in three decades

The world economy is facing one of its worst years in the three decades as the energy shocks unleashed by the war in Ukraine continue to reverberate, according to Bloomberg Economics.
In a new analysis, economist Scott Johnson forecasts growth of just 2.4% in 2023. That&rsquo s down from an estimated 3.2% this year and the lowest &mdash excluding the crisis years of 2009 and 2020 &mdash since 1993.
However, the headline figure is likely to mask diverging fortunes, with the euro area starting 2023 in recession and the US ending the year in one. By contrast, China is projected to expand more than 5%, boosted by a faster-than-expected end to its zero-tolerance Covid strategy and support for its crisis-hit property market.
Differences will also be on display when it comes to monetary policy after a year in which central banks &ldquo dashed toward restrictive territory in a pack,&rdquo Johnson wrote.
&ldquo In the US, with wage gains set to keep inflation above target, we think the Fed is headed toward a terminal rate of 5%, and will stay there till 1Q24. In the euro area, meanwhile, a more rapid decline in inflation will mean a lower terminal rate and the possibility of cuts at the end of 2023.&rdquo
In China, where authorities are torn between a desire to support the recovery and concern about the weakness of the currency, &ldquo limited&rdquo rate cuts are on the cards.
 

UOB, Singtel & OCBC Led Net Institutional Buying in Early October

• The first 11 sessions of October have seen Singapore stocks book S$280 million of net institutional inflow, following on from close to S$330 million of net institutional inflow in September. UOB, Singtel and OCBC led the net inflow over the past 11 sessions, while averaging 2.9% gains.
   
• This has taken the 2021 YTD total returns of UOB and OCBC to 22% and 23%, as Singtel generated a 10% total return. While Singtel saw S$390 million of net institutional selling in 1H21, the stock has seen S$260 million of net institutional buying in the 2H21 to 15 Oct.
   
• The 10 non-STI stocks that saw the highest net institutional inflow since 30 Sep showed further rotation to the Energy Sector and Agri-businesses over the 11 sessions, on the back of higher energy and food prices, with institutional investors also rotating to Hospitality-related stocks on local and global progress towards VTLs.

• UOB and OCBC were among the stocks with the highest net institutional inflows for the 11 sessions, with net buying of S$124.0 million and S$50.5 million respectively, while DBS Group Holdings (&ldquo DBS&rdquo ) saw net institutional outflows of S$6.2 million. There is at least another two weeks of trading in the three bank stocks (that are currently averaging 1.2% trading ranges a day) before focus reverts to Financial Results/Business Updates, with OCBC and UOB  providing 3QFY21 numbers on 3 Nov, while DBS will report its 3QFY21 numbers on 5 Nov. For their 2QFY21 (ended 30 June), DBS, OCBC & UOB Averaged 46% YoY Net Profit Growth and in 1HFY21, DBS, OCBC and UOB maintained respective annualised Return on Equity (&ldquo ROE&rsquo ) ratios of 14.0%, 10.8%, and 10.1%. By comparison, the average ROE of the Singapore banks was higher than both the median ROE for the top quartile of global banks by market value and the median for the approximate 600 banking stocks listed across Asia Pacific.
   
• Singapore Telecommunications (&ldquo Singtel&rdquo ) saw S$58.9 million in net institutional inflow over the 11 sessions, after seeing the highest net institutional inflows in September. Singtel has also been a part of the group of Singapore companies conducting strategic reviews, after announcing in May it was weighing options for its digital marketing and cyber security businesses. Fitch Ratings noted the review signaled suggests a sharper focus on profitable growth and prudent capital preservation, and on 12 Aug, Singtel reported a turnaround net profit of S$445 million for its 1QFY22 (ended 30 June). On 1 Oct, Singtel announced that Pension Fund Australian Super will buy a 70% stake in Singtel&rsquo s Australia tower network for A$1.9 billion. Since the end of June, Singtel has generated an 11% total return, outpacing global telecommunication stocks which have declined 2%. While Singtel saw S$390 million of net institutional selling in 1H21, the stock has seen S$260 million of net institutional buying in the 2H21 to 15 Oct.