In a 26 August CNBC report, UBS Global Wealth Management’s Kelvin Tay was quoted as saying that Singapore’s market could be “undervalued”, given the sluggish performance of the Straits Times index since the Covid-19 selloff.
With the buoyant US stock market, I am starting to hear my peers – those in their mid-30s – getting tired of making paper losses (and real losses) in Singapore stocks and moving their funds to American companies and China companies. Myself included. I have since moved some of my funds into US ETFs through Syfe. But I remain hopeful of Singapore stocks.
Similarly, Dr Wealth’s CEO noted in a recent article that SG investors were angry with the local stock performances. He noted, separately, in the email newsletter that he has been hearing older investors complaining about their Singapore stock holdings. I guess it is across the board.
For many retail investors who have bought into the local Straits Times Index exchange trade fund – Nikko Am (SGX: G3B) and SPDR (SGX: ES3) – over the past 5 years, or so, would have seen mixed results. That said, most retail investors in Singapore buy dividend stocks and do not expect much growth.
Still, with over 700 stocks on the Singapore stock exchange (SGX), there are resilient gems. Here are some companies for retail investors and media observers to consider:
Banks DBS (D05.SI), OCBC (O39.SI) and UOB (U11.SI)
Singapore banks are the largest in Southeast Asia in terms of assets, with DBS holding top spot. I recall the blogger behind Investing Nook, who is a portfolio manager, explained how strong Singapore’s banks are because MAS had historically backed local banks; the example cited being the global financial crisis of 2009. This gave me a lot of confidence in Singapore’s banks. Hence, I invested some of my funds into OCBC. I chose OCBC because I have been a customer for so long and enjoy the bank’s customer service – the best of the local three. CEO Samuel Tsien is also an award-winning banker, with more than 30 years of experience in the industry.
Netlink Trust (CJLU.SI)
The trust is the owner and operator of Singapore’s fibre network infrastructure. I believe it is the sole operator of the infrastructure, making it a monopoly. The pandemic has resulted in heavier use of Internet-use. This meant that Netlink Trust rebounded very quickly during the March crash. It has recovered and remained steady since.
Singapore stock exchange (S68.SI)
As the sole stock exchange in Singapore, this business is essentially a monopoly. The stock was unaffected by the pandemic, but it crashed in May crash following the end of the MSCI license. At the end of July, SGX’s CEO announced an increase in the dividend because of an increase in profit. This caused SGX’s stock to spike.
The agrifood company has done very well since the March crash. I want to say that the food industry should do well even amid Covid-19, but another agribusiness company, Olam, hasn’t really recovered yet. One of Wilmar’s partners had sold of part of its stake, which triggered a 10% drop in price. It may be a good opportunity to invest in Wilmar now.
Ascendas REITs (A17U.SI) and Capitaland Mall Trust (C38U.SI)
REITs are the darlings of the Singapore retail investors. I believe this love for real estate was borne out of the reality that Singapore is a nation of home owners, thanks to HDB. Ascendas is, thus far, the biggest REIT in Singapore, having acquired a diversified portfolio of properties over the years. It has data centres, business parks, malls and industrial properties in countries around the world. It will soon be eclipsed by the merger of Capitaland Mall Trust and Capitaland Commercial Trust.
Capitaland Mall Trust is the first REIT in Singapore. I have always wanted this REIT in my portfolio because I frequent the malls under the REIT. These malls are well managed and located conveniently at MRT stations across Singapore. I was really eager to buy the stock when the price crashed. However, I do not like that it is merging with Capitaland Commercial Trust, a REIT managing office properties. I think work-from-home will become more normalised and rental yield at office properties are not likely to reap as much returns. I also do not fully understand how the merge will work and whether I’ll be getting fair value if I buy C38U.SI at this point.
Special spotlight: 3 media and entertainment stocks
MM2 is a media entertainment company that produces, distributes, and markets mostly East Asian language films. It also has its hands in talent management, post-production special effects, and movie theatre operations. The movie business is an exciting one and when the stock IPO-ed, it got a lot of attention. The company also made the news when it snagged a top Mediacorp executive, Chang Long Jong. The stock has been in decline since 2017, and I believe the pandemic would have hurt MM2’s theatre and production business, given the lockdowns.
As of last year, the company announced that it was launching its free-to-use video streaming service call mPlay this April. I haven’t heard since, but perhaps this service could be a gamechanger.
The company is known as the organiser and promoter for major concerts involving top Asia musicians like JJ Lin, Wang Lee Hom and Andy Lau. It goes without saying the pandemic should have hit the company hard, but with a vaccine in the works, their fortunes could change. Let’s hope so.
Kingsmen Creatives (5MZ.SI)
Kingsmen calls themselves a “communication design and production group”. The company’s service deliverables are in the following areas:
- Research and Design
- Retail and Corporate Interiors
- Exhibitions and Events
- Thematic and Museums
- Alternative Marketing
As and when a vaccine is mass produced, these creative companies would potentially see their stock rise, as their services will be back in demand. As always, please do your own research before investing.