Despite yesterday’s correction for the STI, equities are still up for the year. We expect equities to remain in favor, despite higher interest rates concern ahead, backed by several positive factors including a recovering global economy, still-healthy corporate earnings, cash-rich US corporates which will fuel mergers and takeovers, and relatively low corporate debts. We are expecting several positive factors to drive interest in 1H15 and the quiet 4Q14 is an opportune time to undertake a stock pick strategy and establish positions for a 1H15 pick-up. We are overweight on the banks and continue to like DBS and UOB, with DBS as our top pick in the sector. Other stocks on our BUY list include CapitaLand, Ezion, FCT, Hotel Properties, Keppel Corp, Keppel Land and Wheelock.
Singapore: A long-term outperformer!
While the Singapore market is generally perceived as being stable (and defensive), an analysis of the 5-year trend showed that the STI has been on a general uptrend since Sep 2009 or a CAGR of 16% from 2009’s low to now. The Oil & Gas sector topped the list and delivered a CAGR of 31% for the same period – a strong double-digit gain! The Real Estate sector has also done well. The S-REIT index garnered gains of 21% over the same period, while the Real Estate Developers’ Index rose 20%. Local banks have also transformed and moved actively into the region and were rewarded with a 19% CAGR over the same period. Other performing sectors included the Small-cap index (CAGR of 17%), Telecommunications (14%) and Technology (10%).
5-yr CAGR return of 16%...
A comparison of the key equity indices showed that the STI has returned a CAGR of 12.5% from 2009 to 2013. This is even higher at 15.7% if dividends were included. This bucked the conventional view that the Singapore market is defensive (low returns) and boring (5-year index range was 37%, as the STI traded from a low of 2521 to a high of 3464, resulting in ample short-to-medium term trading opportunities).
Stock pick strategy; buy blue chips on price weakness
The quiet 4Q is an opportune time to accumulate quality stocks. We expect M&As, IPOs and key corporate activities to be pushed back into 1H2015 as we are near the traditionally quieter final quarter of the year. As Singapore celebrates its 50th year, we also expect a bountiful year of goodies, mainly in the form of better dividend payouts, led by key government-linked listed entities. We are overweight on the banks and continue to like DBS and UOB, with DBS as our top pick in the sector. Other stocks on our BUY list include CapitaLand, Ezion, FCT, Hotel Properties, Keppel Corp, Keppel Land andWheelock.
While the Singapore market is generally perceived as being stable (and defensive), an analysis of the 5-year trend showed that the STI has been on a general uptrend since Sep 2009 or a CAGR of 16% from 2009’s low to now. The Oil & Gas sector topped the list and delivered a CAGR of 31% for the same period – a strong double-digit gain! The Real Estate sector has also done well. The S-REIT index garnered gains of 21% over the same period, while the Real Estate Developers’ Index rose 20%. Local banks have also transformed and moved actively into the region and were rewarded with a 19% CAGR over the same period. Other performing sectors included the Small-cap index (CAGR of 17%), Telecommunications (14%) and Technology (10%).
5-yr CAGR return of 16%...
A comparison of the key equity indices showed that the STI has returned a CAGR of 12.5% from 2009 to 2013. This is even higher at 15.7% if dividends were included. This bucked the conventional view that the Singapore market is defensive (low returns) and boring (5-year index range was 37%, as the STI traded from a low of 2521 to a high of 3464, resulting in ample short-to-medium term trading opportunities).
Stock pick strategy; buy blue chips on price weakness
The quiet 4Q is an opportune time to accumulate quality stocks. We expect M&As, IPOs and key corporate activities to be pushed back into 1H2015 as we are near the traditionally quieter final quarter of the year. As Singapore celebrates its 50th year, we also expect a bountiful year of goodies, mainly in the form of better dividend payouts, led by key government-linked listed entities. We are overweight on the banks and continue to like DBS and UOB, with DBS as our top pick in the sector. Other stocks on our BUY list include CapitaLand, Ezion, FCT, Hotel Properties, Keppel Corp, Keppel Land andWheelock.
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