|05 June 2018|
|Consumer Durables Led May Sector Performances with 3% Total Returns|
STI’s 5M18 Total Returns at +2.5% Builds on the +22.0% in 2017
The Straits Times Index (“STI”) generated a dividend inclusive return of 2.5% for the first five months of 2018 (“5M18”) following on from its 22.0% total return in 2017. The comparatively subdued performance over the first five months of the year compared to the benchmarks of Australia, Hong Kong and Japan averaging a 1.2% total return in SGD terms.
More volatility in global stocks of the five months has provided more short-term trading opportunities:
Consumer Durables the Strongest of the Sectors in May with 3.1% Total Returns
The Consumer Discretionary Sector generated a capitalisation weighted 3.1% total return in May, trimming its decline over the first five months of 2018 to 3.9%.
Net institution inflows into the consumer Sector totalled S$106 million. This represented a monthly record, since SGX Research began reporting these flows in January 2016. Click here for more.
This Sector is largely made up of manufacturers of durable goods in addition services such as hotels, restaurants and consumer retailing. Consumer Discretionary Stocks that saw the strongest net institutional inflows over the course of May are tabled below.
Source: SGX, Bloomberg & SGX StockFacts (data as of 31 May 2018).
Genting Singapore was the second best performing STI stock in May with a 7.7% price gain, after Industrials stock ComfortDelGro Corporation’s 9.3% gain. Over the first five months of 2018, Genting Singapore generated a 2.1% decline in total return, Singapore Press Holding generated a 4.9% total return and the Hour Glass declined 0.8%.
On 22 May The Hour Glass reported its FY18 (ended 31 Mar) revenue amounted to S$691.6 million while profit after taxation rose 2 per cent YoY to $50.7 million. In its outlook, management noted it will continue operating its 38 boutiques in ten key cities throughout the Asia Pacific region while working to improve its retail network, brand portfolio and customer engagement and experience.
On 28 May The Hour Glass’ Executive Chairman Henry Tay acquired almost 10 million shares of the company for a consideration of S$6.6 million. This increased Dr Tay’s total stake in the company to 63.097 per cent. Dr Tay has been the Executive Chairman of the leading specialist luxury watch retailer since October 1987 and served as an Executive Director since August 1979.
The 10 largest capitalised actively traded consumer discretionary stocks averaged a 1.9% total return in May.
May Indicative Sector Performances
The Straits Times Index (STI) generated a 4.3% decline in total return in May. As illustrated in the Sector Heatmap below, Consumer Discretionary was the strongest of the sectors in May with a 3.1% market capitalisation total return. This was followed by Healthcare and the Materials Sector with 0.1% returns.
May 2018 was the first month since January 2016 that only three or less Sectors generated gains in market capitalisation weighted total returns for the month.
The Indicative sum of the best performing sector for each of the past 12 months was 92.3%. As illustrated above, the 92.3% total return, weighed to market capitalisation, started with the Telecommunication Services Sector returning 3.1% in June 2017 and ended with the Consumer Discretionary Sector adding 3.1% in May 2018. The Consumer Discretionary Sector last represented the strongest Sector of the month back in December 2015.
The combined decline for the least performing Sector of each of the last 12 months was 56.8%. By comparison, over the 12 months the STI generated a total return of 10.5%. Note this does not include any transactions fees which would be associated with sector rotations. Defensive Sectors were amongst the least performing sectors for nine of the 12 past months.
Materials the Strongest of the Sectors in 2018 YTD with 17.2% Total Returns
The Materials Sector has generated a 17.2% market capitalisation weighted return over the first five months.
The majority of these returns are attributed to two stocks of the Sector that rank as the second and fourth largest capitalised stocks of the Materials Sector:
The next best performing Sectors for the first five months of 2018 were the Information Technology Sector and Banks.
Did You Know
In Singapore, the majority of the stocks that represent the Materials Sector have businesses relating to chemicals and metals and maintain international operations. In addition, a number of the longer serving companies of the Sector, such as Straits Trading and NSL have diversified their business streams. On that note the Indicative Materials Sector total return of 17.2% in the year thus far does not include the outlier returns of Rich Capital Holdings formerly known as Infinio Group.
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