Alpha Picks
Strategy – Alpha Picks: Large Caps Pulling The Weight
Highlights
- Our Aug 26 Alpha Picks beat the FSSTI by 2.4ppt and 3.3ppt on a price-weighted and market-cap-weighted basis respectively. Unfortunately, we underperformed by 6.9ppt on an equal-weighted basis due to losses sustained by UGAI, HUAGL and BKM.
- For Sep 26: Add SATS; remove HLA and UGAI.
- Sep 26 Alpha Picks: BKM, CIT, FEH, HUAGL, KEP, NTTDCR, OCBC, OTEK, RSTON, SATS, SIE, UIBREIT, VALUE and VMS.
Analysis
- Market review. Singapore equities rose 2.3% mom in Aug 26. Shipyard (+8.6% mom), plantation (+6.9% mom), and technology (+5.6% mom) led the gains. Finance (+4.2% mom), telecoms (+2.0% mom) and property (+1.8% mom) also advanced. Shipyard gains were driven by Yangzijiang’s record 1H26 earnings and strong orderbook, while plantations benefitted from firmer CPO prices. Technology rebounded on stronger AI-related demand, while financials remained supported by solid bank earnings. In contrast, REITs (-3.8% mom), land transport (-3.7% mom) and aviation (-2.8% mom) lagged. Singapore stocks remained largely stable in Aug 26 amid ongoing results announcements, and as investors continued to assess broader market conditions amid rising bond yields.
- Portfolio beat on a market-cap-weighted basis. Our Alpha Picks portfolio returned 5.6% mom on a market-cap-weighted basis, outperforming the FSSTI’s 2.3% gain by 3.3ppt. The price-weighted portfolio also beat the benchmark, rising 4.7% mom. However, the equal-weighted portfolio fell 4.6% mom, underperforming by 6.9ppt, as strong performance from larger-cap picks masked sharp declines across several smaller-cap names.
- Gains led by OCBC, VMS and CIT; UGAI, HUAGL and BKM languished. OCBC (+9.8%), VMS (+7.4%), and CIT (+6.8%) led gains on stronger earnings and dividends, with OCBC reporting record net profit and VMS supported by accelerating AI-related infrastructure demand. NTTDCR (+3.8%), HLA (+3.1%), KEP (+2.4%), and SIE (+0.3%) also gained, while UIBREIT remained flat. Conversely, UGAI (-42.9%) plunged on concerns over increased competition in the US market, while HUAGL (-23.4%) and BKM (-16.2%) declined on margin pressure and project mix recognition. OTEK (-9.0%), RSTON (-5.4%), FEH (-4.9%) and VALUE (-1.1%) also weakened.
Highlights
- Our Aug 26 Alpha Picks beat the FSSTI by 2.4ppt and 3.3ppt on a price-weighted and market-cap-weighted basis respectively. Unfortunately, we underperformed by 6.9ppt on an equal-weighted basis due to losses sustained by UGAI, HUAGL and BKM.
- For Sep 26: Add SATS; remove HLA and UGAI.
- Sep 26 Alpha Picks: BKM, CIT, FEH, HUAGL, KEP, NTTDCR, OCBC, OTEK, RSTON, SATS, SIE, UIBREIT, VALUE and VMS.
Analysis
- Market review. Singapore equities rose 2.3% mom in Aug 26. Shipyard (+8.6% mom), plantation (+6.9% mom), and technology (+5.6% mom) led the gains. Finance (+4.2% mom), telecoms (+2.0% mom) and property (+1.8% mom) also advanced. Shipyard gains were driven by Yangzijiang’s record 1H26 earnings and strong orderbook, while plantations benefitted from firmer CPO prices. Technology rebounded on stronger AI-related demand, while financials remained supported by solid bank earnings. In contrast, REITs (-3.8% mom), land transport (-3.7% mom) and aviation (-2.8% mom) lagged. Singapore stocks remained largely stable in Aug 26 amid ongoing results announcements, and as investors continued to assess broader market conditions amid rising bond yields.
- Portfolio beat on a market-cap-weighted basis. Our Alpha Picks portfolio returned 5.6% mom on a market-cap-weighted basis, outperforming the FSSTI’s 2.3% gain by 3.3ppt. The price-weighted portfolio also beat the benchmark, rising 4.7% mom. However, the equal-weighted portfolio fell 4.6% mom, underperforming by 6.9ppt, as strong performance from larger-cap picks masked sharp declines across several smaller-cap names.
- Gains led by OCBC, VMS and CIT; UGAI, HUAGL and BKM languished. OCBC (+9.8%), VMS (+7.4%), and CIT (+6.8%) led gains on stronger earnings and dividends, with OCBC reporting record net profit and VMS supported by accelerating AI-related infrastructure demand. NTTDCR (+3.8%), HLA (+3.1%), KEP (+2.4%), and SIE (+0.3%) also gained, while UIBREIT remained flat. Conversely, UGAI (-42.9%) plunged on concerns over increased competition in the US market, while HUAGL (-23.4%) and BKM (-16.2%) declined on margin pressure and project mix recognition. OTEK (-9.0%), RSTON (-5.4%), FEH (-4.9%) and VALUE (-1.1%) also weakened.
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This report is provided subject to, and must be read together with, the full Disclosures / Disclaimers available at this link, which are incorporated by reference into this report. In particular, this report is intended for general circulation and informational purposes only and does not constitute personal investment advice or a recommendation to buy or sell any investment product or security. You should independently evaluate the information and, where necessary, seek advice from a qualified financial adviser regarding the suitability of any investment. Analyst certifications required under applicable regulations, including SEC Regulation AC (where relevant), are included in this report. By accessing, receiving or using this report, you acknowledge that you have read, understood and agreed to be bound by the Disclosures / Disclaimers, as may be amended, supplemented or updated from time to time.
