Strategy
Strategy – Alpha Picks: Bank Stocks Continue To Pull Ahead
Highlights
- Our Jul 26 Alpha Picks beat the FSSTI by 1.4ppt on a market cap-weighted basis, with gains led largely by momentum in banks.
- For Aug 26: Add SIAEC; remove CAO.
- Aug 26 Alpha Picks: BKM, CIT, FEH, HLA, HUAGL, KEP, NTTDCR, OCBC, OTEK, RSTON, SIE, UGAI, UIBREIT, VALUE and VMS.
Analysis
- Market review. Singapore equities rose 8.9% mom in Jul 26. Financials (+13.0% mom), plantation (+8.1% mom) and property (+4.8% mom) led the gains, with momentum in bank stocks aided by a Singapore safe haven appeal. Shipyard (+4.0% mom), REITs (+2.8% mom) and telecoms (+1.0% mom) advanced while land transport remained flat. Gains were partially offset by weakness in the technology (-6.5% mom), healthcare (-3.8% mom) and aviation (-1.5% mom) sectors. Singapore stocks continued to draw safe-haven inflows amid geopolitical uncertainty (rising oil prices & rate hike expectations), with the start of the 2Q26 earnings season as the next key catalyst.
- Portfolio beat on a market cap-weighted basis. Our Alpha Picks portfolio saw a 10.3% mom return on a market cap-weighted basis, compared with the FSSTI's 8.9% mom gain. The beat of 1.4ppt was largely driven by momentum in banks stocks. On the other hand, the portfolio advanced 5.1% and 1.3% on a price-weighted and equal-weighted basis, respectively, as other positions in the portfolio diluted the influence of bank stocks.
- Gains led largely by OCBC; VMS, CAO and UGAI weighed. OCBC (+17.5%) led gains on continued momentum in Singapore banks. HUAGL (+6.6%) recovered following two months of weakness. KEP (+4.8%) also advanced on earnings recovery and capital recycling optimism. BKM (+4.2%), HLA (+4.0%), FEH (+2.5%), CIT (+1.0%), and OTEK (+0.7%) also gained, while UIBREIT was flat. Weakness in a mix of smaller caps weighed on performance, with VMS (-6.5%), CAO (-4.9%), and UGAI (-4.0%) the largest detractors, alongside NTTDCR (-2.1%), RSTON (-1.8%), and VALUE (-1.8%).
Action
- One new addition and one removal. We add SIA Engineering (SIE SP) on healthy fundamentals, higher capacity expansions, and expect a SMID-cap recovery after recent weakness. We remove China Aviation Oil (CAO SP) on share price weakness from normalising oil and jet fuel prices.
Highlights
- Our Jul 26 Alpha Picks beat the FSSTI by 1.4ppt on a market cap-weighted basis, with gains led largely by momentum in banks.
- For Aug 26: Add SIAEC; remove CAO.
- Aug 26 Alpha Picks: BKM, CIT, FEH, HLA, HUAGL, KEP, NTTDCR, OCBC, OTEK, RSTON, SIE, UGAI, UIBREIT, VALUE and VMS.
Analysis
- Market review. Singapore equities rose 8.9% mom in Jul 26. Financials (+13.0% mom), plantation (+8.1% mom) and property (+4.8% mom) led the gains, with momentum in bank stocks aided by a Singapore safe haven appeal. Shipyard (+4.0% mom), REITs (+2.8% mom) and telecoms (+1.0% mom) advanced while land transport remained flat. Gains were partially offset by weakness in the technology (-6.5% mom), healthcare (-3.8% mom) and aviation (-1.5% mom) sectors. Singapore stocks continued to draw safe-haven inflows amid geopolitical uncertainty (rising oil prices & rate hike expectations), with the start of the 2Q26 earnings season as the next key catalyst.
- Portfolio beat on a market cap-weighted basis. Our Alpha Picks portfolio saw a 10.3% mom return on a market cap-weighted basis, compared with the FSSTI's 8.9% mom gain. The beat of 1.4ppt was largely driven by momentum in banks stocks. On the other hand, the portfolio advanced 5.1% and 1.3% on a price-weighted and equal-weighted basis, respectively, as other positions in the portfolio diluted the influence of bank stocks.
- Gains led largely by OCBC; VMS, CAO and UGAI weighed. OCBC (+17.5%) led gains on continued momentum in Singapore banks. HUAGL (+6.6%) recovered following two months of weakness. KEP (+4.8%) also advanced on earnings recovery and capital recycling optimism. BKM (+4.2%), HLA (+4.0%), FEH (+2.5%), CIT (+1.0%), and OTEK (+0.7%) also gained, while UIBREIT was flat. Weakness in a mix of smaller caps weighed on performance, with VMS (-6.5%), CAO (-4.9%), and UGAI (-4.0%) the largest detractors, alongside NTTDCR (-2.1%), RSTON (-1.8%), and VALUE (-1.8%).
Action
- One new addition and one removal. We add SIA Engineering (SIE SP) on healthy fundamentals, higher capacity expansions, and expect a SMID-cap recovery after recent weakness. We remove China Aviation Oil (CAO SP) on share price weakness from normalising oil and jet fuel prices.
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