Key Financial Trends of April 2024

In this month’s roundup of the latest economic, business, and financial news, Singapore posted a 2.7% GDP growth in Q1 2024, Chinese tourists have spent more than in 2019 so far, Eu Yan Sang is set to be acquired for US$594 million, and more.

ValueChampion Editorial Team

by ValueChampion Editorial Team on Apr 24, 2024

Marina Bay Sands in Singapore during National Day

Singapore’s GDP Grows 2.7% in Q1 2024

The Ministry of Trade and Industry (MTI) announced on 12 April that Singapore’s GDP saw a 2.7% year-on-year (YoY) growth in the first quarter of 2024. This outstrips the last quarter of 2023, where Singapore’s economy grew 2.2%. The standout sectors were Construction and Information & Communications, Finance & Insurance and Professional Services.

Respectively, they posted a YoY growth of 4.3% and 4.2%. Furthermore, the Wholesale & Retail Trade and Transportation & Storage sector group more than doubled its YoY growth, expanding 2.7% compared to 1% in the final quarter of 2023. However, there were some concerning figures too. The Manufacturing sector only recorded a 0.8% YoY growth.

Additionally, quarter-on-quarter (QoQ) growth shrunk greatly. Although the MTI’s report solely contains advance estimates, it’s expected that the first quarter of 2024 only grew 0.1% QoQ. In comparison, the third and fourth quarter of 2023 saw a 1% and 1.2% QoQ growth respectively.

Singapore’s economy may be impacted by several major events overseas too, such as the US potentially delaying interest rate cuts and Iran-Israel conflict. Another issue plaguing Singapore  is persistent (and rebounding) inflation. Core inflation was at 3.6% in February after recording just 3.1% in January.

What This May Mean For You

Singapore’s economy growing at a faster pace is definitely good news. However, its QoQ numbers would make anyone pause. The backdrop of rising inflation doesn’t help either. Dutch bank ING expects core inflation in Singapore for March to remain high at 3.5% and the Monetary Authority of Singapore to adjust its policy only in October 2024.

Stay alert and remain invested during this period of time. Don’t fall prey to the panic selling which has been plaguing risk assets without first evaluating your investments’ fundamentals. Also, exercise prudence with your finances and prioritise eliminating high-interest debt (personal loans, overdue credit card bills, etc.) to free up your budget.

Related: Singapore’s Economic Outlook for 2024

Chinese tourists on holiday in China
Source: Unsplash

On 6 April, China’s Ministry of Culture and Tourism announced that local tourists spent close to CN¥54 billion (S$10 billion) during the long Qingming Festival weekend. On a trip-by-trip basis, this is higher than 2019’s figures. According to Chinese financial services firm Sinolink Securities, this also represents the highest holiday spending in the past five years.

Other crucial points mentioned in the Ministry of Culture and Tourism’s announcement include the significant increase in demand for short-distance overseas travel. For example, Southeast Asia, Japan, and South Korea. The Ministry also noted that more Hong Kong and Macau residents were visiting mainland China for various reasons.

Just two weeks later, the Chinese government would have more cause to celebrate. The National Bureau of Statistics reported the country’s GDP growth in the first quarter of 2024, clocking in at 5.3%. This outstripped forecasts and 2023’s 5.2% GDP growth. With economic growth and rising consumer spending, deflationary pressures might just ease up.

However, China’s overall outbound tourism still has some way to go before reaching pre-COVID-19 levels. According to The Economist Intelligence Unit, the total number of cross-border trips made in 2023 was only 60% of 2019. On the bright side, tourists spent more in 2023 than they did across 2015 to 2019.

What This May Mean For You

Despite the encouraging GDP figures, China’s economic recovery has been bumpy. However, it aims to capitalise on its current momentum and “be a strong driving force for the world’s economic recovery in 2024”, according to Zhao Leji, chairman of the Standing Committee of the National People’s Congress.

If you’re invested or plan to invest in China, you’ll be glad to know that there’s a capital markets reform plan in place. This is meant to boost dividend payouts, improve the quality of IPOs, and protect investors better by requiring greater corporate accountability. Also, the MSCI China Index has recovered to ~5,530 points, up from a low of 4,984 points in January.

Related: How to Tap on the Long-Term Potential of China Bonds

Chinatown in Singapore
Source: Unsplash

On 4 April, Japanese general trading company Mitsui & Co announced it had partnered with Rohto Pharmaceutical Co to acquire Eu Yan Sang for S$800 million. A special purpose company jointly formed by the two Japanese firms will first purchase an 86% stake in the Singaporean Traditional Chinese Medicine (TCM) chain.

Once this deal is complete in June, there will be a takeover bid for the remaining 14% of Eu Yan Sang’s shares. Additionally, the TCM chain’s founding family will partially reinvest in this special purpose company. In short, Eu Yan Sang’s shares will be divvied up as follows, should everything fall into place:

  • Rohto Pharmaceutical Co: ~60%
  • Mitsui & Co: ~30%
  • Eu Yan Sang’s founding family: ~10%

Founded in 1879, Eu Yan Sang has grown to become Southeast Asia’s largest TCM chain, with over 170 stores and more than 30 clinics in six markets. The firm was even trading on the Singapore Exchange from 2000 to 2016 before being bought out by a consortium for US$196 million (~S$266.8 million).

Post-acquisition, Eu Yan Sang will be comfortably within the top 50 companies in Singapore by market capitalisation, ranking above businesses like Singapore Post and PropertyGuru.

What This May Mean For You

This deal puts Eu Yan Sang in a position to expand at a quicker pace, especially overseas. The company is currently operating in Singapore, Malaysia, China, Hong Kong, Taiwan, and Macau. Although it has not publicly stated its post-acquisition business plans, Eu Yan Sang was targeting the North American market last year.

For folks in Singapore, it should be business as usual. The TCM chain already has more than 40 retail outlets here, alongside 20 clinics. What’s more, the local TCM market  is highly competitive as well. Eu Yan Sang has to contend not only with other TCM retail chains, but clinics too.

Related: Cost Guide to Starting Your Own Business in Singapore

Professionals setting up and using their laptop PCs working
Source: Unsplash

Global PC Shipments Growing Again After Two-Year Decline

On 8 April, market research company International Data Corporation (IDC) reported that there were 59.8 million shipments of personal computers (PCs) worldwide in the first quarter of 2024. This is significant as it represents the first period of growth after two years of declines. IDC also noted this shipment volume was almost identical to the first quarter of 2019 (60.5 million).

The five companies leading the way were:

  1. Lenovo (13.7 million PCs)
  2. HP Inc (12 million PCs)
  3. Dell Technologies (9.3 million PCs)
  4. Apple (4.8 million PCs)
  5. Acer Group (3.7 million PCs)

Coming in at a close sixth is ASUS, with 3.6 million PCs shipped. However, IDC considers this as a statistical tie with Acer Group.

IDC went on to elaborate that PC shipments were beginning to recover due to inflation generally receding. On the other hand, China was still seeing relatively weak demand for PCs because of deflationary pressures and a preference for laptops.

PCs with AI capabilities are expected to be the next shot in the arm for the industry, potentially bearing higher prices. This is set to be an additional opportunity for PC companies themselves, along with component manufacturers like Intel and Nvidia.

What This May Mean For You

The AI boom has been a blessing for PC component manufacturers and you need look no further than Nvidia. Its share price in late April last year recorded a high of US$280.30. Fast forward a year and this would triple to US$843.24. Ditto for its closest competitor AMD, whose stock price has risen from ~US$90 to ~US$146 in the same period of time.

Although China’s preference for laptops also hints at a global preference, AI-capable PCs might make people reconsider their purchase. These computers are meant to be able to handle generative AI programs, chatbots, and more. Whether you’re using these for work or as part of your hobby, you’d want a device which can run these applications smoothly.

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Cover image source: Unsplash

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