As trade war between US and China intensifies, volatility has been increasing in the global stock market. Over in Hong Kong, the Hang Seng Index has lost over sixteen percent since the beginning of the year. On the bright side, value is also emerging gradually. Here are six stocks touted to be at a bargain for investors looking to invest in the Chinese market.
The bear has bare its fangs on our local stock market. Following the plunge in US equities on Wednesday overnight, local benchmark Straits Times Index (STI) plunged as much as 3 percent to 3,035.2 on Thursday, 11 October 2018. The STI managed to regain some ground to close 2.7 percent in the red at 3,047.
It is almost unquestionable that Singapore boasted one of the most successful economic stories in the last half century. Through our rapid development, our economy has transformed from a fishing hub to one that is now heavily service-oriented. As Singaporeans rose to achieve one of the highest purchasing powers in the world, Singapore naturally became an ideal destination for retailers to set up shops here.
SGX lists six stocks with a market capitalisation above S$1 billion that maintain a significant agriculture business. The six – Wilmar, Olam, Golden Agri-Resources, First Resources, Japfa and Bumitama Agri – have a combined market capitalisation of more than S$30 billion. In 3Q18, the best-performing agri stocks were Bumitama Agri (+9.2%), First Resources (+8.5%) and Wilmar (+6.4%). These three plays averaged a total return of 8.0% over the quarter, reversing their negative returns in 1H18. Japfa was the only stock that registered positive total returns of +3.1% and +25.8% for 3Q18 and 1H18 respectively.
The Hang Seng Composite Small and Mid-Cap Index did not post the best of performance this year. From January 2018 to end-September, the index fell more than 15 percent, underperforming the benchmark Hang Seng Index or the HSI. According to UOBKH, the underperformance is attributable to the weaker trading liquidity, corporate governance risk and less defensive nature of small and mid-caps compared to the blue chips.
The woes of the global market continue to drag down performance of the STI and investors are seeing the warning signs to be more selective in stock picking. Here are five stocks that UOBKH thinks will be better positioned.
In light of the recent cooling measures and trade war between United States and China, investors have been flocking back to real estate investment trusts (REITs) in search of better stability. As investors rotate into Singapore REITs, the FTSE Straits Times REIT Index has outperformed by registering a two-percent gain over the past two months. On the other hand, the FTSE Straits Times Real Estate Holding and Development Index shed almost 5.1 percent in the same period.
The FTSE ST Singapore Shariah Index was launched last week, with 48 constituents that are selected from the FTSE ST All-Share Index, meeting criteria involving both business activity screenings and financial ratios screenings. The Index includes nine REITs with a combined market capitalisation of S$11.8 billion. The property assets of the REITs, span industrial, e-commerce, commercial and retail space. The nine REITs average an indicative distribution yield of 6.7%.
Indonesian REITs have not been performing well of late, weighed down by the depreciating Indonesian Rupiah which in turn affected the amount of distribution paid out to unitholders. In contrast to Lippo Malls Indonesia Retail Trust which has plunged 31.3 percent year-to-date, First REIT’s 12.2 percent decline would have been considered mild. This is largely due to the latter’s Indonesia properties’ rentals being pegged to Singapore dollars to mitigate foreign exchange volatility. In spite of this, there are growing concerns in the market recently with regard to the weakening financial health of First REIT’s sponsor, namely Indonesia’s largest property conglomerate Lippo Karawaci.