SINGAPORE STRATEGY ALPHABET PICKS: SGX, Hong Leong Asia; China Sunsine, Thai Beverage With a 6.0 percent mom gain on April 21, our portfolio outperformed the FSSTI’s 1.7 percent mom gain by 4.3 percentage points.
Innotek (+28.7% mom), Yangzijiang (+11.7% mom), and UMS (+8.3% mom) were notable outperformers in our portfolio, but our short call on SIA also performed nicely (-8.8 percent mom). For May, we’ve added SGX and Hong Leong Asia, as well as removing China Sunsine and Thai Beverage.
NEW ADDITIONS
• On April 21, he outperformed. On April 21, our Alpha Picks portfolio outpaced the STI by 4.3 percentage points, gaining 6.0 percent vs 1.7 percent for the STI. Singapore’s recent data, such as the manufacturing Purchasing Managers’ Index (PMI) on April 21 and 7.6% year-on-year growth in March industrial production, conceals nearer-term threats such as the country’s and region’s rising COVID-19 infection rate, which might put a halt to recovery aspirations. Nonetheless, given our short call on SIA and our long call on Yangzijiang, which earns all of its revenue in China, we believe our portfolio effectively hedges against such risks.
• SGX and Hong Leong Asia have been included. We have added Singapore Exchange (SGX) to our portfolio because we forecast increased cash equities trading volumes and higher fee per contract for equity derivatives in 2HFY21, and its valuation metrics are lower than its global rivals. We also include Hong Leong Asia because of its proven track record and the expectation of a significant comeback in the construction materials sector. Furthermore, due to a new product version, its diesel-engine market should profit from increased demand, while its new energy solutions area should generate long-term growth.
• Thai Beverage and China Sunsine have been removed. We have removed Thai Beverage from our portfolio due to a lack of near-term catalysts, particularly considering the company’s decision to postpone its anticipated beer division IPO. We’ve decided to sell China Sunsine after a 14.1 percent return since its launch.
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