FSMOne SG - Research Highlights

2022-01-21 13:46:11 Macro Research

Digital economy: Will rising rates be a whammy for tech stocks?

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• The Fed announced in December 2021 that it will double the pace of tapering its bond purchase program and will be increasing the number of interest rate hikes, as a response to rising inflation.

• The relationship between interest rates and tech stocks is not so clear, as there have been periods when the two move in tandem and periods when the two move in the opposite direction.

• Interest rates alone do not give the full picture of tech stocks price movements. Rather, earnings results and future earnings expectations play a big part in tech stock prices.

• With the current macroeconomic backdrop of inflation and rising interest rates, certain companies potentially do better, such as those with pricing power and lower debt ratios.

: Read the full article here
: O’Shares Global Internet Giant (BATS: OGIG) Open / Comment

2022-01-19 12:44:52 In this week’s Bond Market Monitor, Asian issuers start 2022 with a number of ESG bond issuances, and other updates: https://bit.ly/3FuSLYx

Offering pawnbroking and money lending services, Maxi-Cash finds itself with a high net debt to equity, and aims to upsize its 3Y SGD 6.05% bonds: https://bit.ly/3GF1GrS Open / Comment

2022-01-19 03:51:23 Here are our Bond Picks for 1H2022!

Prepare your portfolio for bouts of volatility and rate hikes with our report, as our fixed income analysts share their thoughts on Asian, European and US high yield credits!

Read the full report here: https://bit.ly/1H2022BondPicks Open / Comment

2022-01-12 14:19:39 Fund Idea

Top Equity Funds of 4Q21: Equities face a reality check

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• Equity Funds faced a double whammy in 4Q21, with a resurgent pandemic in the form of the Omicron variant and an impending tightening of the global monetary environment.

• As a result, equity funds had a relatively weak quarter, although developed market funds continue to outperform their emerging market peers.

• The Nikko AM ARK Disruptive Innovation Fund was the worst-performing fund in 4Q21 by a significant margin, while another Tech fund, the Threadneedle (Lux) Global Technology Fund, was the best performing fund last quarter.

• Finally, we look but at 2021’s top-performing funds, and with monetary tightening on the cards, investors should keep an eye out for quality and value – opportunities that are available in today’s market after an uneven 2021.

: Read the full article here Open / Comment

2022-01-11 13:10:12 Stock Idea

Facebook: Now called Meta

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• Meta has had multiple backlashes with the most recent whistleblowing incident by Frances Haugen. We think that earnings will not be impacted and view this heightened scrutiny positively as it pushes the company to take steps towards creating a safer internet space.

• Apple’s privacy policy changes and the supply chain bottlenecks have posed as headwinds to Meta Platforms (NASDAQ: FB), which we expect to be temporary bumps as Meta maintains its strong moat in digital advertising.

• The metaverse vision is big, but if Meta can pull it off, it will be a huge growth driver. We like that the company continues to be a visionary tech company with plans to break boundaries in innovation.

• Applying a fair PE of 23X on 2023 earnings per share, we arrive at a target price of USD 410, giving investors an attractive upside potential of 25% at the closing price of USD 328 as of 10 January 2022.

: Read the full article here
: Meta Platforms (NASDAQ: FB) Open / Comment

2022-01-11 03:46:27 In this week’s Bond Market Monitor, Cromwell European REIT expands portfolio in the UK and Netherlands: https://bit.ly/3HSWlx9

Heard of Shriram Transport Finance Company? The flagship company of Shriram Group, a large financial services group in India with more than 24k employees and 1,825 branches, has just issued a social bond: https://bit.ly/3HMc4hC

The silver lining in rate hikes – bonds with reset rates may see their coupons pushed higher. Here’s how Frasers Property’s perps will be influenced: https://bit.ly/3HMGFvp Open / Comment

2022-01-10 13:44:12 Macro Research

European Equities 2022 Outlook – Attractive Pick among Developed Markets

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• Europe’s growth outlook remains strong despite a 5th wave of COVID-19. Cases have peaked, but economic data shows signs of turning, while pandemic data suggests Omicron may not be as severe as Delta.

• ECB is likely to keep monetary policy relatively dovish. This is mainly due to relatively benign inflation, and we think ECB has more time to tighten policy compared to the US.

• As a result, earnings should remain supported. We expect robust earnings growth in 2022 and 2023 due to a combination of domestic and global economic recovery. We also look at some sectors that could outperform the rest of the index.

• Valuations remain appealing, with the Euro Stoxx 600’s P/E ratio slightly above its historical average but nothing too steep. In fact, valuations have dropped steadily since last year due to improving earnings. More notably, valuations are very appealing compared to the S&P 500, which now sees steep valuations.

• With the growth and policy outlook remaining bright, we think that the Euro Stoxx 600 is well-placed for the economic recovery as it contains both Cyclical and Growth elements. We see an upside potential of 14% over the next 2 years and remain positive on European equities. Therefore, we maintain our 3.0 Stars “Attractive” rating on European equities.

: Read the full article here Open / Comment

2022-01-10 04:41:13 Singapore 2022 Outlook

Can the Straits Times Index continue to deliver?

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• Following the Singapore economy’s return to growth, the STI chalked up a total return of 13.6% in 2021.

• Looking ahead, while the manufacturing sector will remain as the key engine of growth, its momentum is likely to soften in 2022 as the global demand for semiconductors normalises.

• The Fed is likely to kick-start its rate hike cycle in 2022. One of the prime beneficiaries of higher interest rates is the Singapore banks, given that more than 50% of their revenue comes from net interest income.

• We reckon that the uneven recovery of S-REITs will continue into 2022. Industrial and data centre REITs are likely to deliver resilient growth. At the same time, we expect the remaining sub-segments to experience a gradual recovery.

• We project an upside potential of 23% for the STI by end-2023, with an attractive dividend yield of 4.4% over the next two years. We maintain our 3.5 Stars “Attractive” rating for the Singapore equity market.

: Read the full article here
: Nikko AM Singapore Dividend Equity SGD / SPDR Straits Times Index ETF (SGX:ES3) Open / Comment

2022-01-08 12:30:52 Happy first weekend of the new year! Wrap up 2021 with these quick reads.

Will it be a bumpy ride for bonds with the upcoming interest rate hikes? Read this all-in-one 2022 outlook for SGD bonds: https://bit.ly/32KAhFU

Taking you through the New Year with these bond investment ideas for Chinese real estate, high yield and investment grade bond market: https://bit.ly/3lywMJk

Chinese real estate news was plastered across headlines last year. Here is a refresher on this sector and its credit indicators: https://bit.ly/3j57JMt Open / Comment

2022-01-05 03:51:57 SG Banks 2022 Outlook

Prospect of higher interest rates will be a major catalyst for Singapore banks in 2022

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• The Fed may kick-start its rate hike cycle in 2022 and we believe Singapore banks will be one of the main beneficiaries as a huge chunk of the banks’ revenue still come from net interest income.

• Loan growth is expected to continue in 2022, a factor that will boost net interest income.

• The three local banks’ fee income, particularly wealth management fees, will remain as a major earnings driver going forward.

• The Singapore banks’ strong capital positions will continue to support higher dividends and allow them to make potential acquisitions. 

• The Singapore banks have proven to be resilient during market downturns. We believe that they will be able to ride on the economic recovery in 2022 even as risks from the Omicron variant are starting to build. 

• Based on their fair PB ratios, we can expect an upside potential of about 15% on average and a dividend yield of approximately 5% per annum. 

: Read the full article here
: DBS (SGX:D05), UOB (SGX:U11), OCBC (SGX:O39) Open / Comment