04 April 2017

• The Information Technology (IT), Materials and Real Estate Management & Development Sectors were again ranked as the best three performing Sectors last month, following the same rankings for the three Sectors in February.

• Alliance Mineral Assets, China Sunsine Chemical and Kingboard Copper Foil led the Materials Sector Leaders higher in March. Alliance Mineral Assets announced Lithium and Tantalum drilling results in late January and China Sunsine Chemical reported FY2016 profit growth.

• Yanlord Land, Hongkong Land and City Developments led the Real Estate Management & Development Sector Leaders higher in March. Yanlord Land and Hongkong Land reported FY 2016 profit growth while City Developments’ share price remained firm on news of relaxation of some cooling measures in the Singapore residential market.

In Singapore, the Information Technology (IT), Materials and Real Estate Management & Development Sectors were again ranked as the best three performing Sectors last month, following similar rankings in February. IT led the Sectors in March with a capitalisation weighted 10.9% total return in March, with Materials gaining 9.1% and Real Estate Management & Development gaining 7.0%.

Sector Drivers

A common thread of the three sectors is that they are each classified by GICS® as Cyclical, while the three least performing Sectors in March were classified as Defensive. Businesses within the three cyclical Sectors are highly sensitive to the market prices of their respective inventories and services. These prices can change with a degree of cyclicality that coincides with macroeconomic outlooks for the respective regions.

More specific drivers for the three Sectors include semiconductor prices and electronics manufacturing output for IT, commodity prices and industrial-led growth for Materials and for real estate, private and commercial property construction, prices and sales.

Recent Rotation Opportunities 

The monthly market capitalisation total returns of the respective Sectors over the past year are illustrated in the table above using Global Industry Classification Standard (GICS®) Sector and Industry definitions.

Combined, the indicative total returns of the best performing Sector for each month of the past 12 months amounted to 71.2% and the indicative decline in total return for the least performing sector for each month of the past 12 months amounted to 36.2%.

Indicative Sector Total Returns (Market Capitalisation Weighted) 

Source: SGX, Bloomberg & SGX StockFacts (data as of 31 March 2017)
Indicative GICS ® Sector performance weighed to market cap at each month end, in SGD and dividend inclusive.
GICS® Banks Industry used in place of GICS® Financials Sector & GICS® Real Estate Management & Development Industry and REIT Industry used in place of GICS® Real Estate Sector. 

IT Sector

Singapore’s 10 biggest IT stocks have averaged a 25.7% total return in 1Q17. All of the 10 stocks generated gains over the period, with eight of the 10 stocks generating double digit gains. The top gainers in March were TPV Technology, UMS Holdings and Hi-P International. TPV Technology and Hi-P International both reported FY2016 profit growth.  

As discussed in yesterday’s market update, the electronics and semiconductor business segments within Singapore’s manufacturing output both saw consistent double-digit expansion since 2015. To read more about Singapore’s biggest IT stocks, click here.

Materials 

Singapore’s 10 biggest Material stocks have averaged a 39.4% total return in 1Q17. This average return was largely impacted by the return of Lithium & Tantalite Miner, Alliance Mineral Assets. On a market capitalisation basis the entire Material Sector in Singapore generated a total return of 24.4% over the quarter as discussed here.

Alliance Mineral Assets,  China Sunsine Chemical Holdings And Kingboard Copper Foil Holdings led the Materials Sector Leaders higher in March. Seven of the 10 Materials Sector Leaders generated gains in March. Alliance Mineral Assets drilling results were discussed here.

China Sunsine Chemical announced at the end of February that FY 2016 net profit was RMB 221.7 million or 47.66 cents per share against RMB 195.2 million or 41.93 cents per share a year ago. Meanwhile the parent of Kingboard Copper Foil tabled an unconditional cash offer to take the stock private offering 40 cents a share, after ending the month of February at a share price of 32 cents.

For more details on each stock, click on the stock name below.

Source: SGX, Bloomberg & SGX StockFacts (data as of 31 March 2017)

Real Estate Management & Development

Singapore’s 10 biggest Material stocks have averaged a 19.8% total return in 1Q17. Yanlord Land Group, Hongkong Land Holdings and City Developments led the Real Estate Management & Development Sector Leaders higher in March.

On 1 March, Yanlord Land reported FY2016 profit attributable to owners of the company of RMB 2.7 billion or 138.56 cents per diluted share compared to RMB 1.5 billion or 75.36 cents per diluted share for the same period of last year.

The following day – 2 March – saw Hongkong Land report its FY2016 results. Hongkong Land reported FY2016 profit attributable to shareholders of the company was US$ 3.3 billion or 142.23 cents per diluted share, compared to US$ 2.0 billion or 85.50 cents per diluted share for the same period a year ago.

City Developments reported FY2016 profit attributable to owners of the company was S$ 653.2 million against S$ 773.4 million a year ago. Share prices of Singapore-focused Real Estate Developers firmed following the Singapore Government’s 10 March announcement on the relaxation of some cooling measures in the Singapore residential market.

Based on the latest 1Q17 property statistics by the Urban Redevelopment Authority (URA), Singapore’s overall private home prices declined 0.5% quarter-on-quarter in 1Q17. The decline was mainly driven by the landed property segment which declined 2.8% quarter-on-quarter. Non-land home prices were flat q-o-q with homes prices outside the central region posting a 0.1% quarter-on-quarter increase.

For more details on each stock, click on the stock name below.

Source: SGX, Bloomberg & SGX StockFacts (data as of 31 March 2017)

During 1Q17 the Straits Times Index (STI) generated a dividend-inclusive return of 10.7%, compared to a 6.1% gain for the Hang Seng Index and a 5.7% gain for the MSCI AC Asia Pacific Index.

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