Singapore NODX poised to jump 10% in February

Due to low base effect.

According to DBS, stand by for an upside surprise in February non-oil domestic export (NODX) figure due on Monday morning. Market has penciled in a rise of 6.6% but DBS reckons a strong 10% YoY surge may be on the cards.

Here's more:

A low base coupled with the need to deliver fresh orders to plants in China after the Chinese New Year lull are the key factors that will prompt the upside surprise.

Moreover, this has been reinforced by the still healthy showing in the manufacturing PMI. Overall manufacturing PMI inched up a tad to 50.9, up from 50.5 in the previous month, on account of the continued rise in the production index.

However, the build-up in the inventory and stocks of finished goods indexes hint of moderation ahead. And this is also evident from the easing in the new orders index. This is also reflected by the recent dips in the manufacturing PMIs of key markets such as the US, Eurozone and China.

In addition, the upswing in the electronics cluster is coming to an end. It’s PMI has eased by 0.8pt to 51.2 in the month. New orders, production and inventory sub-indexes have all moderated, suggesting an adjustment in production out-put level in the making. Manufacturers are attempting to unwind on their production level after having ramped up output over the last 6-9 month.

Indeed, the SEMI book-to-bill ratio has moderated while the global semiconductor sales growth has tapered. Essentially, the global electronics cycle may have peaked and the impetus going forward may become weaker.

In short, while we do not believe the manufacturing sector will dip into contraction, some degree of downward adjustment in production growth can be expected in the coming months.