|04 December 2017|
|Banks, REITs & Consumer Discretionary Sectors Led in November|
The Straits Times Index (STI) added 1.8% for the month of November bringing its dividend inclusive return for the first 11 months of 2017 to 23%, compared to SGD denominated average returns of 18% for the benchmarks of Australia, Hong Kong and Japan.
As illustrated below, Singapore’s Cyclical Sectors have all performed better than the Defensive Sectors for the first 11 months of 2017. Performances of the seven Cyclical Sectors ranged from a 106% market capitalisation weighted total return for Information Technology (“IT”) to a 17% market capitalisation weighted total return for Industrials. There has also been a 5% performance differential between the least performing Cyclical Sector (Industrials) and the best performing Defensive Sector (Utilities).
GICS® Sector Performances – Market Cap Weighted 2017 YTD Total Returns
*Note Delong Holdings gain in 2017 YTD accounted for two-fifths of the gains for the Materials Sector (or 35% of the 80%), implying the remainder of the Materials Sector gained 45%. The Indicative GICS ® Sector performance is weighed to market cap at the end of November, is in SGD and includes reinvested dividends. Source: SGX StockFacts & Bloomberg.
Indicative Market-Capitalisation Weighted Total Returns
As illustrated in the heatmap below, the Banks were the strongest of the sectors in November with a 6.2% market capitalisation total return. This was followed by the REIT Sector with an 2.0% return, and then the Consumer Discretionary Sector with a 1.9% return.
*Note Delong Holdings’ 145.0% gain in October accounted for almost three quarters of the gains of the Materials Sector (or 10.9% of the 15.2%) implying the remainder of the Materials Sector gained 4.3%. For monthly data, the Indicative GICS® Sector performance is weighed to market cap at each month end, is in SGD terms and includes reinvested dividends. Source: SGX StockFacts & Bloomberg.
The indicative sum of the best performing sector for each of the past 12 months was 85%. As illustrated above, the 85% total return, weighed to market capitalisation, started with the Industrials Sector returning 1.5% in December 2016 and ended with the Banks adding 6.2% in November 2017. Incidentally, Banks were also the best performing sector in November 2016, with 11.4% during that month whilst the Consumer Discretionary sector was also the third best performing Sector in November 2016.
The combined decline for the least performing Sector of each of the last 12 months was 36%. By comparison, over the 12 months the STI generated a total return of 22.2%. Note this does not include any transactions fees which would be associated with the sector rotation.
Banks led the broad market in November 2017, with DBS Group Holdings ("DBS"), Oversea-Chinese Banking Corporation’s ("OCBC") and United Overseas Bank averaging 6.1% gains over the month. As discussed last week (click here), DBS recently overtook Singapore Telecommunications to maintain the highest market capitalisation of all primary-listed stocks in Singapore.
For the first nine months of 2017, the three banks averaged 40% year-on-year gains in wealth management fee income, ranging from 48% for OCBC to 33% for DBS. The banks also averaged 6% year-on-year growth in net profit and averaged an NIM of 1.7% over the period.
REITs were the second best performing sector in November, with 2.0% market capitalisation-weighted distribution-inclusive returns for the month. The five IPOs that debuted in November included two REITs - Keppel-KBS US REIT and Cromwell European REIT.
The three largest capitalised REITs generated mixed returns over the month, with Ascendas REIT declining 0.7% (including a distribution), and CapitaLand Mall Trust gaining 1.5% and CapitaLand Commercial Trust (“CCT”) gaining 8.9%. On 28 October CapitaLand Commercial Trust Management Ltd, the Manager of CCT, reported higher distributable income of S$73.1 million in 3Q 2017 compared to S$68.3 million in 3Q 2016.
Consumer Discretionary Sector
This was the fourth time that the cyclical Consumer Discretionary had ranked the third best performing Sector over the past 12 months. Preceding months that this sector ranked third in performance were April 2017, June 2017 and September 2017.
The five IPOs that debuted in November also included three Consumer Discretionary plays, with the Mainboard listing of Mindchamps representing Education Services, and the two Restaurant Holding companies - RE&S Holdings and No Signboard Holdings, listing on Catalist. Click here for more details.
The three largest Consumer Discretionary stocks – Genting Singapore, Jardine Cycle & Carriage and Shangri-La Asia averaged 7% gains in November:
Both Genting Singapore and Shangri-La Asia represent the GICS® Hotels, Restaurant and Leisure Industry. The 10 largest stocks of this Industry have averaged a 22.2% price gain in the 2017 year through to 1 December, with eight gainers and two decliners. This followed on from average price gains of 1.8% in 2016.
November PMI Released Tonight
Tonight, at 9pm, the Singapore Institute of Purchasing and Materials Management [“SIPMM”} will release the Singapore Purchasing Managers’ Index (PMI) for November. The manufacturing PMI stood at 52.6 in October, the highest recorded reading since December 2009, when the PMI was 53.3.
The manufacturing PMI has seen 14 months of consecutive expansion, and SIPMM note that a reading of the PMI above 50 indicates that the manufacturing economy is generally expanding and that the economy is generally declining when the reading falls below 50.
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