SGX Market Updates

Singapore’s Most Traded High-ROE & Low-Debt Stocks


16 April 2020

  • Singapore’s 20 most traded stocks with style factors of high Return-on-Equity (ROE) and low Debt-to-Assets have declined in-line with benchmarks in early 2020, however outperformed over the past 5 years by 5% per year. 

  • The 5 of these 20 stocks with the lowest Debt-to-Asset ratios contributed the 3 strongest performers of the 20 stocks over the past 5 years, with annualised total returns ranging from 18% for Venture Corp to 97% for AEM.  

  • ASEAN stocks with the same style criteria have also seen convergent performances to benchmarks in the 2020 YTD, yet longer-term 5 year outperformance. The 20 Singapore stocks have also seen net retail inflows totaling S$2.5 billion in the 2020 YTD.

As the US Federal Reserve Beige Book highlighted last night, no sector or district across the United States had been spared amidst abrupt economic contractions through to 6 April. Parallels in the global stock market saw every one of Singapore’s equity sectors in the red in both February and March.

Typically investors diversify portfolios over different stocks sectors, or where in the world stocks generate revenue or base their assets, however instances of major market swings and long term trends can also make a case for equity investors to select equities based on a style approach. 

Stock Styles & Smart Beta

By style, investors can be referring to the size and volatility of a stock, in addition to potential value stocks, growth stocks, high dividend stocks or quality stocks. Investors that use such style criteria are also known as Smart Beta investors. Quality stocks are adjudged according to the ‘quality’ of their financial reports, including operating statements, balance sheets and cash flow metrics.  Multiple screeners exist for investors to filter stocks for such criteria such as SGX StockFacts.

Investability criteria such as high Return-on-Equity (ROE) or comparatively low Debt-to-Asset Ratios are common criteria. Singapore Exchange lists close to 100 stocks with 12-month trailing ROE above 10% and a Debt-to-Asset Ratio below the local market average of 30%. Combining an element of tradability to these stocks, such as most actively traded stocks by turnover, can further refine the style criteria.

For the 2020 year through to 15 April, the 20 most traded SGX-listed stocks on 15 April that maintained ROE above 10% and a Debt-to-Asset Ratio below 30% had averaged declines of 19%. This was in-line with the 19% declines of the Straits Times Index (STI) and FTSE ST All Share Index.

Convergence was also observed across the ASEAN neighbours, with 20 stocks using the exact same criteria averaging a 21% decline in-line with the 21% decline of the FTSE ASEAN All Share Index.

20 most actively traded stocks returns

Note, while the 20 stocks have seen net institutional inflows totaling S$1.88 billion, they have been recipient of S$2.5 billion of net inflows by retail investors.

Longer-Term Performance Divergence

Over the 5-year period ending 15 April, the 20 Singapore stocks generated median returns that delivered median +3% annualised total returns, compared to -2% for the STI and FTSE ST All-Share Index.

Likewise, the 20 ASEAN stocks (excluding those listed in Singapore), generated median returns also generated median +3% annualised total returns, compared to -5% for the FTSE ASEAN All-Share Index.

In Singapore and Malaysia, there was significant deviation between the 5-year median and average total returns, with the applied criteria capturing stocks with a history of outlier performances. For Singapore, the 5 stocks of the group of 20 stocks that currently maintain the lowest debt-to-asset ratios contributed the 3 strongest performers of the 20 stocks over the past 5 years. These 3 stock also have a common sectorial theme, with AEM Holdings, UMS Holdings and Venture Corporation technology, manufacturing-related stocks.

The 20 stocks that fulfilled the criteria, confirmed through multiple information services are tabled below.

Name SGX
Mkt Cap
2020 YTD
2020 YTD
Net Insti Flow
2020 YTD
Net Retail Flow
2020 YTD
Jardine Matheson Hldgs J36 54,790 24.6 2.7 0.2 -2.0 -12.4 10 20
DBS Group Holdings D05 49,512 175.3 -24.7 2.9 -1,132.1 1,335.3 13 15
Oversea-Chinese Banking Corp O39 39,114 79.2 -18.9 -0.3 -324.5 499.3 11 8
United Overseas Bank U11 33,814 88.7 -23.2 0.8 -510.2 563.5 12 10
Singapore Tech Engineering S63 10,487 25.2 -14.7 2.0 67.4 -7.1 26 25
Singapore Exchange S68 10,390 42.6 10.5 6.6 274.5 -245.4 41 0
Jardine Cycle & Carriage C07 8,422 12.3 -29.2 -9.9 -32.3 55.4 14 29
Venture Corp V03 4,538 26.6 -3.0 18.3 112.6 -68.5 15 1
Yangzijiang Shipbuilding BS6 3,919 31.3 -10.7 -2.6 -44.6 74.0 10 11
SATS S58 3,364 17.5 -40.5 2.8 -120.8 125.4 14 11
ComfortDelGro Corp C52 3,293 24.0 -36.1 -8.9 -170.7 177.7 10 16
Sheng Siong Group OV8 2,030 4.0 8.9 15.3 7.9 -8.9 25 11
Ascendas India Trust CY6U 1,386 3.1 -21.7 12.1 6.6 -2.7 29 29
Frasers Commercial Trust ND8U 1,189 4.2 -20.5 3.8 11.7 -22.5 10 29
Sasseur REIT CRPU 833 3.3 -19.8 N/A -22.1 24.6 12 27
Hi-P International H17 753 4.0 -38.9 16.8 -14.4 14.3 14 11
AEM Holdings AWX 540 18.8 -1.5 97.2 11.5 -3.2 47 1
UMS Holdings 558 400 5.5 -27.2 19.6 5.6 5.1 14 5
Valuetronics Holdings BN2 259 1.7 -27.4 13.5 -4.3 10.0 19 0
Rex International Holding 5WH 151 9.6 -43.4 -19.6 -2.8 5.0 15 9
Average       -19.0 9.0        
Median       -21.1 2.9        

Source: SGX StockFacts, Thomson Reuters, Bloomberg (Data as of 15 April 2020).
Note ROE and Debt/Asset metrics can vary amongst data providers with Bloomberg measures applied to the majority of the stocks above.  

This article is provided by SGX My Gateway.

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