FSMOne SG - Research Highlights

2022-03-24 04:37:41 ETF Idea

Why China Big Four banks are still attractive despite softening economic growth and tighter margins

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• While China may be facing softening economic growth, it is still one of the fastest-growing economies in the world. Double-digits loan growth in FY2022 will be a key factor that help to support the banks’ net interest income despite pressured net interest margins.

• January 2022 loan growth data marks the end of the contraction of the mid-to-long-term corporate loans that lasted throughout 2H21. 

• The China Big Four banks remain to be very well-capitalised despite the challenges faced. 

• They are also one of the most attractive yield-plays in the market. At current share prices, they are offering investors a dividend yield of 7.8% per annum in the next two years. 

• While there may still be certain levels of volatility within the China banking industry, we continue to favour the China Big Four banks, especially when they are trading at an average PB ratio of just 0.4X. 

: Read the full article here
: ChinaAMC Hong Kong Banks ETF (HKEX:3143) Open / Comment

2022-03-23 07:00:57 Stock Idea

Amidst rising interest rates, here’s our view on OUE Commercial REIT

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• Despite another challenging year, OUECT announced a distribution of SGD 142.0 million for FY21, which translates into a year-on-year increase of 7.0% in DPU of SGD 2.60 cents.

• Looking ahead, we expect the REIT’s near-term performance to stabilise on the back of positive office leasing momentum and improved consumer sentiment.

• Meanwhile, the relaunched Hilton Singapore Orchard is anticipated to capture corporate clients through Hilton’s strong brand recognition and global network.

• However, with an above-average gearing ratio of 38.7%, we think OUECT likely faces greater pressure from a higher-than-expected rise in interest rates as compared to the broader sector.

• We maintain our target price of SGD 0.40. While we are neutral on OUECT, income-seeking investors can look forward to an average yield of around 6.3% over the next two years based on our estimates.

: Read the full article here
: OUE Commercial REIT (SGX:TS0U) Open / Comment

2022-03-21 10:24:28 Fund Idea

The case for Asia - 3 Asian Equity Funds to consider in 2022

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• It has been an eventful start to the year, with the Russian-Ukraine conflict already exacerbating market concerns regarding inflation prints and the pace of market tightening.

• Asia was no exception to said volatility and has been affected by various issues, including (i) risk-off sentiment; (ii) inflation due to stronger USD and energy prices; (iii) fears of Omicron disruptions due to more conservative policies and lower vaccination rates.

• Despite the aforementioned headwinds and risks, we remain positive on Asia moving forward due to the following four reasons: (i) A good diversification option; (ii) a potential reopening in 2022; (iii) China’s commitment to market stability; and (iv) relatively lower valuations.

• Investors can then consider the following three funds for exposure to an attractive investment opportunity.

: Read the full article here Open / Comment

2022-03-20 05:02:26 In search of bond investment ideas? Here are some names that investors are buying into on Bond Express: https://bit.ly/3JwlNd2 Open / Comment

2022-03-18 05:01:26 Fund Idea

High oil prices are here to stay, with oil possibly reaching USD 150

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• Russia’s energy exports had initially been spared from sanctions by the US, but this has since changed. On 8 March 2022, President Biden signed an Executive Order to ban the import of Russian oil, liquefied natural gas, and coal to the US.

• While the world remains fixated by how the Russia-Ukraine conflict has pushed up oil prices, we think that oil prices would have rallied even without this event.

• The oil market was tight even before Russia invaded Ukraine. Years of under-investment in the sector, coupled with OPEC+’s reluctance and inability to increase oil supply, means that there are likely no buffers against high oil prices.

• Moreover, with oil being a major beneficiary of a continued economic reopening over the course of 2022, oil prices could reach USD 150 per barrel.

• Investors can consider the Blackrock World Energy Fund A2 USD and JPMorgan Funds - Global Natural Resources A (acc) USD Fund to get exposure to the booming oil and gas industry.

: Read the full article here
: Blackrock World Energy Fund A2 USD, JPMorgan Funds - Global Natural Resources A (acc) USD Fund Open / Comment

2022-03-17 15:37:58 Chip Eng Seng has one of the better credit metrics compared to its peers. In today’s rising interest rate environment, we remain cautiously optimistic of the Group’s liquidity position: https://bit.ly/3vX7336 Open / Comment

2022-03-17 04:30:32 ETF Idea

Europe: The luxury sector trumps inflation

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• Europe is a strategic place to be in right now given the constructive growth outlook, and among the sectors, consumer discretionary (luxury) is a bright spot with the strongest earnings growth at 90% in 2022.

• In an inflationary environment, the luxury sector is attractive given its strong pricing power which should translate into earnings resilience.

• The consumption appetite should continue given the continued momentum of the post-pandemic euphoria, strong spending power, and rising income.

• Our 2023 target price for EMLES Luxury Goods ETF is USD 36, translating to an upside potential of 53%, based on the last closing price of USD 23.74 on 10 March 2022.

: Read the full article here
: EMLES Luxury Goods ETF (BATS: LUXE) Open / Comment

2022-03-16 10:32:01 Fund Idea

Here’s our preferred way to invest in the healthcare sector

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• The healthcare sector is set for growth, given that secular trends such as an ageing population and increasing healthcare expenditure would drive up the demand for healthcare services.

• We like the Blackrock World Healthscience Fund A2 USD, as its active approach to asset allocation, has contributed to its outperformance over the years. It remains our preferred choice for exposure to the global healthcare sector.

• The fund has an overweight allocation to the medical devices & supplies sub-sector, in anticipation of a recovery in elective procedures as the world returns to some level of normalcy.

: Read the full article here
: Blackrock World Healthscience Fund A2 USD Open / Comment

2022-03-14 09:00:34 [FSMOne.com Webinar] - 16 March (Wed), 7pm

The Russia-Ukraine situation is igniting even more concerns for investors and global markets.

Is it still possible to invest at such a time?

Register and join FSMOne.com on Wednesday, 16 March 2022 at 7pm as we share the latest insights into the impact the war in Ukraine is having, how inflation and interest rates are likely to respond and offer you a few ways as to how you as an investor can position your portfolio for what is to come.

: Find Out More and Register Open / Comment

2022-03-14 07:18:16 The crisis engulfing the Chinese property sector deepened sometime late last year. Fantasia, Sinic, Evergrande – property developers started defaulting one after another.

In 2021, Moody’s, Fitch and S&P downgraded Chinese developers’ ratings 43, 54 and 30 times respectively, compared with six, 12 and 11 in 2020. How have the developers' ratings changed since then?

Here's a list of prominent Chinese property developers that have been downgraded since Oct 2021. Open / Comment