FSMOne SG - Research Highlights

2022-05-28 06:31:09 Stock Idea

Ping An Bank: An attractive retail bank as China transits to a domestic consumption-driven economy

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• Unlike the Big Four banks, Ping An Bank’s focus is on its retail business, which we believe will be its key earnings driver going forward.

• For its FY2021 results, PAB announced that it managed to deliver a set of strong results, recording a positive growth of 25.6% YoY in net income.

• We believe there is still untapped potential within the consumer credit space, a trend which PAB can benefit from.

• PAB’s wealth management segment is also expected to grow as wealthy investors are constantly looking for more avenues to park and grow their assets.

• The positive effects of investments in technology can be seen in PAB’s improved efficiency and lower cost-to-income ratio over the years.

• Based on a fair PB of 1.2X, we arrived at a target price of CNY 25.2, which represents an upside potential of over 70%.

: Read the full article here
: Ping An Bank (SHE:000001) Open / Comment

2022-05-27 06:30:35 ETF Idea

ETF Insights: Worried about stagflation? Check out this new stagflation ETF (May 2022)

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• Check out this ETF that aims to protect investors from stagflation.

• If you are in the MOOD for a sentiment-driven ETF, look no further.

• An ETF which invests in the cross-section between agriculture and emerging technologies debuts.

• A next-gen ETF covering robotics and 3D printing has been launched.

• A new ETF aims to fly high with drone and aerospace companies. Discover the latest happenings in the ETF industry.

: Read the full article here Open / Comment

2022-05-23 03:15:06 Macro Research

From soaring inflation to the Russian-Ukraine war, what’s next for global banks?

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• The world is anticipating an aggressive rate hike cycle. It is evident that short-term rates are moving up, and with higher interest rates, comes higher net interest income.

• Several of the major banks’ managements shared that they are still expecting to see loan growth in 2022 as corporations continue to ramp up capital expenditure to meet rising consumer demand.

• Consumer spending is likely to remain resilient, generally supported by the demand for services as international borders reopen again.

• Majority of global banks have been significantly reducing exposure to Russia ever since the invasion of Crimea in 2014, and they continue to maintain strong capital positions despite risk-weighted assets (RWA) inflation due to higher market risk.

• Recession risk remains to be the biggest risk that global banks are facing now. A recession will materially affect the banks’ outlook given the cyclical nature of the banking industry.

• Overall, we believe that the global economic outlook will remain constructive for the global banks, and investors can expect almost 30% upside potential from them by the end-2024.

: Read the full article here
: iShares Global Financials ETF (NYSE:IXG); Blackrock World Financials A2 USD Open / Comment

2022-05-22 05:04:25 Decade-high inflation is driving SGD bond issuers to tap capital markets before further rate increases. Let our Fixed Income Analyst Wang Hoong Wei take you through three trends investors should watch out for in The Business Times: https://bit.ly/3wCimMR Open / Comment

2022-05-20 07:30:08 Macro Research

Global Healthcare: Still in the pink of health despite some challenges

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• The healthcare sector is made up of many moving parts, and is bolstered by growth from long-term secular drivers such as an ageing and chronically ill population.

• Higher rates and inflationary pressure created a de-risking environment, and are amongst some of the factors contributing to a massive sell-off in the biotech segment.

• While drug pricing reforms have been talked about, we think that massive drug pricing reforms are unlikely given the divided nature of the congress.

• An improving Covid-19 situation, driven by higher global vaccination rates and a milder Omicron variant, has brought much optimism to the outlook for medical devices, as elective surgeries are expected to pick back up.

• We maintain a 3.0 Stars “Attractive” rating for the healthcare sector. Based on our estimations, the industry has an upside potential of 19% by 2024.

: Read the full article here
: iShares Global Healthcare ETF (NYSE:IXJ)/ Blackrock World Healthscience A2 USD Open / Comment

2022-05-19 07:30:28 Macro Research

The Asian high yield bond market is presenting attractive value for long-term investors

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• Asian high yield bonds have gone through rough times, posting a return of -12.6% in 2021 due to China’s property crisis.

• On 16 March 2022, China has pledged more support for the property sector, which we believe should paint a better picture for the outlook of Chinese property credits, and hence the Asian high yield bond market.

• With Chinese property credits trading at distressed levels and the widen spreads in the Asian high yield bond market, we think that heavy risks of default are likely already priced in, and the risk-reward is skewed to the upside.

• Moreover, Asian high yield bonds provide one of the highest yield per unit of duration, which can potentially provide some buffer to offset the rise in interest rates.

• All things considered, we continue to hold a positive view on Asian high yield bonds.

: Read the full article here
: Eastspring Investments - Asian High Yield Bond ASDM SGD-H / Blackrock Asian High Yield Bond A8 SGD-H / Premia China USD Property Bond ETF (HKEX:9001) Open / Comment

2022-05-19 05:21:02 Your cheat sheet for the highly anticipated Astrea bonds – pricing, credit highlights and investment risks: https://bit.ly/3LnUG4m

P/S: Class B bonds are available to retail investors for the first time! Open / Comment

2022-05-09 04:00:19 1Q22 Market Report Card

Can ASEAN and Brazil continue to outperform?

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• Global equities had a rough start to 2022, as seen by the -4.8% decline of the MSCI ACWI index in 1Q22. On a country level, the top-performing markets in 1Q22 (in SGD terms) were Brazil (+34.7%), Singapore (+9.6%), and Indonesia (+7.8%).

• Brazil: We continue to hold a positive view on Brazilian equities, as earnings are likely to see further positive revisions due to higher commodity prices. Elevated commodity prices tend to improve market sentiment and consequently inflows for commodity exporters such as Brazil, thus supporting the market.

• Singapore: We remain optimistic on the STI’s ability to outperform its peers in the current macro environment. Banks and REITs, which make up about 60% of the index are expected to benefit from rising interest rates and the continuing economic recovery in the near term.

• Indonesia: Indonesia has started to relax domestic restrictions and more recently travel restrictions, which should have a positive impact on its economy. Strong export growth and consumption should also contribute positively to the economy.

: Read the full article here Open / Comment

2022-05-07 04:58:54 Macro Research

Consider Singapore as a tactical allocation in this rising rate environment

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• With inflation rising in nearly every part of the world, many central banks have started to raise rates or have announced plans to do so. Rising rates favours a shift from growth to value.

• Singapore’s equity market, which is heavy on financials and real estate, has a natural value tilt, making it an attractive opportunity in a rising rate environment.

• The three local banks, which collectively make up roughly 40% of the Straits Times Index (STI), stand to benefit from widening net interest margins and robust loan growth.

• The easing of domestic and travel restrictions is expected to have a positive impact on S-REITs, especially the hospitality, office, and retail sub-segments.

• We project an upside potential of roughly 30% for the STI by end-2024, with an attractive dividend yield of 4.5% on average over the next two years.

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

2022-05-05 15:49:52 The Fed just announced a half-point rate hike. Before this, issuers were tapping the SGD bond market in April. Here are the top traded SGD issues on Bond Express: https://bit.ly/3sfUe17 Open / Comment