UOB Kay Hian has added Ascott Residence Trust (ART), Singapore Telecommunications (Singtel) and Wilmar International to its alpha picks portfolio on Oct 5.
“[We added] ART as a play on the European Union (EU) and UK’s Covid-19 recovery; Singtel as we like its Australian tower asset monetisation plans; and Wilmar, which should benefit from soybean meal price increases,” writes the Singapore research team.
During the 3QFY2021, UOB Kay Hian’s alpha picks portfolio marginally underperformed the Straits Times Index (STI), as it declined 2.2% q-o-q on an equal-weighted basis, compared to the STI’s 1.4% q-o-q decline.
In September, the brokerage’s portfolio fell 3.5% m-o-m versus the STI’s 1% m-o-m increase. According to the team, the biggest negative impact to its portfolio came from Yangzijiang Shipbuilding, which fell 15.9% m-o-m.
This is in contrast to the brokerage’s alpha picks update for the month of August, where its portfolio “handily beat” the STI’s performance partly thanks to the 19.7% m-o-m growth from Yangzijiang Shipbuilding.
The underperformance for the team’s alpha picks portfolio in September was also due to ComfortDelGro and Genting Singapore, which fell 6.8% m-o-m and 5.9% m-o-m respectively.
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That said, the STI’s relative strength in September was “significantly helped” by share buybacks conducted by Hongkong Land.
The company, on Sept 6, announced that it would be spending up to US$500 million ($679.78 million) to buy back shares from the market from then till Dec 31, 2022.
Hongkong Land’s parent company, Jardine Matheson also announced a US$250 million share buyback on Sept 30.
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UOB Kay Hian has removed OCBC and Singapore Airlines (SIA) from its alpha picks portfolio.
“In the lead up to Sea doubling its weighting within the MSCI Singapore index (from 11% currently to 20%) at end-November, we believe that bank stocks may perform in-line in October and have thus removed OCBC from our Alpha Picks,” writes the team.
“In addition, we have removed SIA as we believe downside is limited at this stage,” it adds.
As at 2.37pm, the STI is trading 27.97 points higher or 0.91% up at 3,111.85 points.