The 4Q17 earnings season ended two weeks ago with largely uninspiring results. According to CIMB, companies missing the mark outweighed those that beat expectations by 15 to seven. Sectors like shipyards, aviation and telecommunications showed disappointing results.
Spike in the 10-year bond and fears over inflation have led to a sell-off among S-REITs in recent weeks. Some investors have raised concerns that this resembles the painful memories of 2013 where S-REITs plunged 22 percent. However, in DBS’s opinion, the recent sell-off is different and largely overdone. Instead, DBS recommends investors to continue keeping faith in S-REITs and invest in them at a discount.
Following the part two of our three-part series, here are the last three of the nine stocks that UOBKH thinks you should add to your China portfolio.
Following the first part of our three-part series, we continue to highlight another three stocks that UOBKH thinks you should add to your China portfolio.
Following UOBKH’s market outlook on China, we highlight nine Chinese stocks that UOBKH recommends owning in 2018.
If you are worried about a possible market crash, here is DBS advice for you: Opportunity, not calamity. DBS believes that the recent market correction is an opportunity to bargain hunt as the market takes a breather. According to DBS’ estimates, the earnings growth trend seems to be on an accelerated trend. Earnings revisions have been positive with an expected one percent improvement in FY18. This should build a strong case for the bull run to continue despite the recent market correction.
The overall Chinese market had a solid performance in 2017. MSCI China index rose 52.3 percent in 2017, far outperforming Shanghai A-shares' 6.6 percent rise. In terms of valuation, the MSCI index is now trading at 12-month forward price-to-earnings (P/E) of 14.1 times. This is the highest since late-2009 and early-2010 when the economy was emerging from the global financial crisis low. In 2018, UOBKH foresees two key threats that will affect the equities outlook in China, i.e. rising interest rates and funds outflow from emerging markets.
In close to three decades since the introduction of Volatility Index (VIX), the “fear index” has never been as low as 2017, having hit an all-time low of 9.14 in November 2017. As we entered 2018, VIX slowly crept up and shot to 37.2 at the start of February. While VIX is now lower at 19.6, it is still above levels seen in 2017. While the VIX has historically been an early warning signal for a market crash, UOBKH believes it is different this time around.
Investors have experienced volatile conditions in the market in the past few weeks as the US market underwent a correction. The Hong Kong market plunged by more than ten percent in one week. Since 1998, such drastic plunge in the stock market only happened during economic crisis periods. But if you are vested in the stock market, fret not. Deutsche Bank (DB) believes that the recent correction is an opportunity to buy, rather than sell.
While it is still three months away from the Great Singapore Sale, OCBC concurs that the great stock market sale came early this year in the form of a market correction. The plunge that took place at the start of February was a dramatic one that market had not seen since August 2011. The volatility index also spiked sharply and hit a high of 50 during intraday trading. While the Singapore market did not experience the same magnitude of drop as the rest of the region, there was hardly any market that was left unscathed in this round of market correction.