UOB: Singapore September NODX may signal tech slowdown

Singapore two-dollar bills

The shifting destinations for Singapore’s exports away from South Korea and China are cause for concern about the trade outlook, Alvin Liew, senior economist at UOB, said in a note on Wednesday.

Singapore’s non-oil domestic exports, or NODX, rose 8.3 percent on-year in September, expanding more than August’s 5.0 percent growth, according to data from Enterprise Singapore on Wednesday.

The largest contributors to the NODX increase were the U.S., the EU and Thailand, while shipments to China, South Korea, Malaysia, Taiwan, Japan and Hong Kong fell, Enterprise Singapore said.

Liew pointed to shifting destinations as a concern.

“The NODX declines to North Asia may be correlated with the global tech cycle slowdown while stronger exports to U.S. reflect the robust economic outlook and final demand in U.S.,” he said.

Liew noted that exports to China contracted for a fifth straight month, declining 17.8 percent on-year in September, while exports to South Korea contracted 10.9 percent on-year in September.

Overall, Electronics NODX fell 0.9 percent on-year in September, following August’s 1.5 percent decline, the data release said, adding that PCs, diodes and transistors, and parts of ICs contributed the most to the decrease.

Liew said he was “less sanguine” about NODX ahead.

“Exports of electronics NODX looks to remain weak because of the high base effects from 2017 and the decelerating global semiconductor sales,” he said. “We continue to be concerned about the on-going U.S.-China trade tensions which will certainly cloud the outlook for a very
trade-dependent Singapore.”

UOB kept its forecast for NODX to expand 5.5 percent in 2018, down from 8.8 percent in 2017.

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