Alpha Picks
Alpha Picks: Portfolio Resilience In A Weaker Market
Highlights
- Our Sep 26 Alpha Picks beat the FSSTI by 0.4ppt on a market cap-weighted basis, but underperformed by 2.5ppt on an equal-weighted basis.
- For Oct 26: Add CICT; remove CIT and SIE.
- Oct 26 Alpha Picks: BKM, CICT, FEH, HUAGL, KEP, NTTDCR, OCBC, OTEK, RSTON, SATS, UIBREIT, VALUE and VMS.
What’s New
- Market review. Singapore equities fell 1.4% mom in Sep 26. Finance (+0.6% mom) and aviation (+0.3%) were the only ones to post gains, while shipyard was broadly flat. Financials remained relatively resilient on continued support from bank earnings and capital returns, while aviation benefitted from healthy travel demand. In contrast, others (-7.5% mom), property (-5.7% mom), plantation (-5.6% mom), telecoms (-5.3% mom) and REITs (-4.9% mom) led the declines. Property and REITs were weighed by higher bond yields, while plantation stocks pulled back after their strong ytd run. Technology (-3.9% mom), healthcare (-4.0% mom) and land transport (-2.3% mom) also weakened. Singapore stocks were broadly weaker across most sectors in Sep 26, reflecting weaker sentiments amid higher economic uncertainties.
- Portfolio beat on a market cap-weighted basis. Our Alpha Picks portfolio declined 1.0% mom on a market cap-weighted basis, outperforming the FSSTI’s 1.4% decline by 0.4ppt. The price-weighted portfolio fell 2.4% mom, underperforming the benchmark by 1.0ppt, while the equal-weighted portfolio declined 3.9% mom, underperforming by 2.5ppt, as weakness in the SMID cap markets weighed on performance.
- Gains led by OCBC, UIBREIT and SIE; FEH, CIT and BKM weighed. OCBC (+1.5%) led gains, supported by its higher interim dividend and continued capital return programme, while UIBREIT (+1.3%) and SIE (+1.0%) also advanced amid healthy leasing momentum and resilient underlying MRO demand. Conversely, FEH (-15.6%) and CIT (-11.2%) recorded the largest declines, with FEH weighed by concerns over its Russia exposure, while CIT fell after its strategic review as investors await the execution of its outlined three-year plan. BKM (-10.8%) also weakened amid lower gross margins due to project mix. VMS (-3.9%), NTTDCR (-3.1%), OTEK (-2.9%), KEP (-2.8%), VALUE (-2.5%), RSTON (-2.4%) and SATS (-2.3%) also declined, while HUAGL (-0.7%) was relatively flat.
Highlights
- Our Sep 26 Alpha Picks beat the FSSTI by 0.4ppt on a market cap-weighted basis, but underperformed by 2.5ppt on an equal-weighted basis.
- For Oct 26: Add CICT; remove CIT and SIE.
- Oct 26 Alpha Picks: BKM, CICT, FEH, HUAGL, KEP, NTTDCR, OCBC, OTEK, RSTON, SATS, UIBREIT, VALUE and VMS.
What’s New
- Market review. Singapore equities fell 1.4% mom in Sep 26. Finance (+0.6% mom) and aviation (+0.3%) were the only ones to post gains, while shipyard was broadly flat. Financials remained relatively resilient on continued support from bank earnings and capital returns, while aviation benefitted from healthy travel demand. In contrast, others (-7.5% mom), property (-5.7% mom), plantation (-5.6% mom), telecoms (-5.3% mom) and REITs (-4.9% mom) led the declines. Property and REITs were weighed by higher bond yields, while plantation stocks pulled back after their strong ytd run. Technology (-3.9% mom), healthcare (-4.0% mom) and land transport (-2.3% mom) also weakened. Singapore stocks were broadly weaker across most sectors in Sep 26, reflecting weaker sentiments amid higher economic uncertainties.
- Portfolio beat on a market cap-weighted basis. Our Alpha Picks portfolio declined 1.0% mom on a market cap-weighted basis, outperforming the FSSTI’s 1.4% decline by 0.4ppt. The price-weighted portfolio fell 2.4% mom, underperforming the benchmark by 1.0ppt, while the equal-weighted portfolio declined 3.9% mom, underperforming by 2.5ppt, as weakness in the SMID cap markets weighed on performance.
- Gains led by OCBC, UIBREIT and SIE; FEH, CIT and BKM weighed. OCBC (+1.5%) led gains, supported by its higher interim dividend and continued capital return programme, while UIBREIT (+1.3%) and SIE (+1.0%) also advanced amid healthy leasing momentum and resilient underlying MRO demand. Conversely, FEH (-15.6%) and CIT (-11.2%) recorded the largest declines, with FEH weighed by concerns over its Russia exposure, while CIT fell after its strategic review as investors await the execution of its outlined three-year plan. BKM (-10.8%) also weakened amid lower gross margins due to project mix. VMS (-3.9%), NTTDCR (-3.1%), OTEK (-2.9%), KEP (-2.8%), VALUE (-2.5%), RSTON (-2.4%) and SATS (-2.3%) also declined, while HUAGL (-0.7%) was relatively flat.
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This report is provided subject to, and must be read together with, the full Disclosures / Disclaimers available at this link, which are incorporated by reference into this report. In particular, this report is intended for general circulation and informational purposes only and does not constitute personal investment advice or a recommendation to buy or sell any investment product or security. You should independently evaluate the information and, where necessary, seek advice from a qualified financial adviser regarding the suitability of any investment. Analyst certifications required under applicable regulations, including SEC Regulation AC (where relevant), are included in this report. By accessing, receiving or using this report, you acknowledge that you have read, understood and agreed to be bound by the Disclosures / Disclaimers, as may be amended, supplemented or updated from time to time.
