Our retail research team has created 3 stock lists, namely Growth, Value and Yield.
|The Growth List comprises of small-mid capitalisation companies with business catalysts which will potentially grow their earnings in the near future. The Growth portfolio would be suitable for investors looking for higher returns and are willing to tolerate the risk of higher short-term volatility of stock prices.|
|The Value List focuses on companies which are undervalued based on their share prices as compared to the company fundamentals. It would be suitable for conservative investors who prefer price stability and have a longer investment horizon.|
|The Yield List comprises of stocks that provide consistent dividend pay-out. It would be suitable for investors whose primary focus is to gain regular dividend income from their investments.|
June Market Overview
The Singapore market (STI) rose 6.5% in June '19 on news of the US Federal Reserve's more accommodative policy outlook and optimism ahead of the G20 Trump-Xi meeting.
Ytd, the STI rose 8.2%, giving a total return (including dividends) of 10.5%. On an equal weighted basis, the average gain of the 30 constituent stocks was 12.4% with six stocks in the red, while eighteen chalked double digit returns.
Against this backdrop, Market Insight’s Growth, Value, Yield (GVY) basket of stocks achieved an average total return of 10.7%. However, this underperformed the benchmark index by 1.7ppt, partly due to the strong rally by Thai Beverage (+38.8%), which happens to be in our restricted list.
Growth List +12.5% YTD
The Growth portfolio had held up well due to our timely exit of Venture Corp in Apr’19 in view of the short-term headwinds amid broad slowdown in customers’ demand caused by increased global geopolitical tensions and sluggish economic growth.
We also switched ST Engineering from Value to Growth basket on positive earnings prospects, underpinned by record order book of $14.1b, as well as greater contribution from the full integration of MRA Systems acquisition plus a number of project milestones in 2H19. MKE has a Buy with TP of $4.30.
Value List +7.5% YTD
The Value portfolio was weighed by poor performance of Japfa on weaker-than-expected 1Q19 results, crimped by combination of higher raw material costs and working capital requirements. In addition, fears of the African swine flu outbreak in Vietnam contaminating its swine stock rattled investor sentiment.
However, MKE still retains its Buy call with a lower TP of $0.93 as tight biosecurity in its Vietnam industrialised swine farms should provide some comfort and long-term outlook remains intact especially on news that Indonesia will cull 3m chickens in a bid to boost prices.
Yield List +11.8% YTD
The strong showing by REITs boosted our yield portfolio, which came on the back of growing investor interest amid volatile equity markets. Moreover, the recent US Federal Reserve's dovish stance on interest rates amid slowing global growth also lead to the hunt for higher yield stocks.
Note: * Priced in USD
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