SGX Market Strategist, Equity & Fixed Income, Singapore Exchange Ltd (SGX)

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

Asia’s leading multi-asset exchange

Singapore Exchange Ltd (SGX)

Singapore Exchange is Asia’s leading and trusted market infrastructure, facilitating the exchange of capital and ideas to create value for people, businesses and economies. As a multi-asset exchange operating equity, fixed income and derivatives markets to the highest regulatory standards, SGX is a vertically integrated business that provides listing, trading, clearing, settlement, depository and data services.

With about 40% of listed companies and over 80% of listed bonds originating outside of Singapore as well as established linkages across the region and in Europe, SGX is Asia’s most international and connected exchange. Offering a full suite of derivatives products across Asian equity indices, commodities and currencies, SGX is the world’s most liquid international market for the benchmark equity indices of China, India, Japan and ASEAN.

As Asia’s pioneering central counterparty, SGX is globally recognised for its risk management and clearing capabilities, and was one of the first globally to adopt the Principles for Financial Market Infrastructure.

Headquartered in AAA-rated Singapore, SGX has over 800 employees including offices in Beijing, Chicago, Hong Kong, London, New York, Mumbai, San Francisco, Shanghai and Tokyo.

Equity Bottom-Up

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Consumer Cyclicals was among the top net buy sectors on SGX in Oct – garnering institutional inflows of S$18.5 million – after Telecommunications, the top net buy sector that attracted net inflows of S$55.9 million. This was the second straight month of net inflows for Consumer Cyclicals, after S$11.5 million net inflow in Sept. 
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Among the Consumer Stocks with more cyclical businesses, at least 24 have a market cap of S$200 million and above. The 10 best performers among them operate in the consumer retail, luxury retail, café/restaurant, leisure/tourism, as well as hotel/hospitality segments, both in Singapore and the region. 
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Among these 10 plays, the three best performers in 10M2019 were: Department store operator Isetan (Singapore) (+48.4%), as well as luxury watch retailers Cortina Holdings (+44.5%) and The Hour Glass (+33.7%). The trio averaged a total return of 42.2%. 
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Consumer Cyclicals was among the top net buy sectors on SGX in October 2019 – garnering institutional inflows of S$18.5 million – after Telecommunications, the top net buy sector that attracted net inflows of S$55.9 million. This was the second straight month of net inflows for Consumer Cyclicals, after S$11.5 million net inflow in September.
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 <img src='https://api2.sgx.com/sites/default/files/2019-11/Insti%20flow%20for%20CC.png' alt='net inflows for Consumer Cyclicals' />
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 <div class='content-caption'>net inflows for Consumer Cyclicals</div>
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Source: SGX data

 

Among these Consumer Stocks with more cyclical businesses, at least 24 have a market cap of S$200 million and above. The 10 best performers among them have a combined market cap of nearly S$7 billion, and operate in the consumer retail, luxury retail, café/restaurant, leisure/tourism, as well as hotel/hospitality segments, both in Singapore and the region.

Over the January-October 2019 period, these 10 best-performing consumer cyclical plays have averaged a total return of 21.6%, bringing their three-year and five-year total returns to 28.0% and 23.3% respectively.

Among these 10 plays, the three best performers in the 10M2019 period were: department store operator Isetan (Singapore) (+48.4%), as well as luxury watch retailers Cortina Holdings (+44.5%) and The Hour Glass (+33.7%). The trio have averaged a total return of 42.2%.

The table below details the 10 best-performing consumer cyclical plays with market cap of S$200 million and above, sorted by 10M19 total returns.

<table class="table table-striped"><tbody>
<tr>
<td>
			Name
			</td>
			<td>
			SGX Code
			</td>
			<td>
			Market Cap (S$M)
			</td>
			<td>
			Total Return 10M19 (%)
			</td>
			<td>
			Total Return 3Y (%)
			</td>
			<td>
			Total Return 5Y (%)
			</td>
		</tr>
<tr>
<td>
			ISETAN (SINGAPORE)
			</td>
			<td>
			I15
			</td>
			<td>
			201
			</td>
			<td>
			48.4
			</td>
			<td>
			42.2
			</td>
			<td>
			13.6
			</td>
		</tr>
<tr>
<td>
			CORTINA HLDGS
			</td>
			<td>
			C41
			</td>
			<td>
			219
			</td>
			<td>
			44.5
			</td>
			<td>
			113.6
			</td>
			<td>
			110.7
			</td>
		</tr>
<tr>
<td>
			THE HOUR GLASS
			</td>
			<td>
			AGS
			</td>
			<td>
			564
			</td>
			<td>
			33.7
			</td>
			<td>
			35.3
			</td>
			<td>
			51.0
			</td>
		</tr>
<tr>
<td>
			KOUFU GROUP
			</td>
			<td>
			VL6
			</td>
			<td>
			413
			</td>
			<td>
			23.9
			</td>
			<td>
			0.0
			</td>
			<td>
			0.0
			</td>
		</tr>
<tr>
<td>
			ACCORDIA GOLF TRUST
			</td>
			<td>
			ADQU
			</td>
			<td>
			643
			</td>
			<td>
			18.4
			</td>
			<td>
			14.7
			</td>
			<td>
			6.2
			</td>
		</tr>
<tr>
<td>
			AMARA HLDGS
			</td>
			<td>
			A34
			</td>
			<td>
			259
			</td>
			<td>
			11.9
			</td>
			<td>
			29.1
			</td>
			<td>
			4.1
			</td>
		</tr>
<tr>
<td>
			STRACO CORP
			</td>
			<td>
			S85
			</td>
			<td>
			648
			</td>
			<td>
			10.5
			</td>
			<td>
			6.1
			</td>
			<td>
			19.1
			</td>
		</tr>
<tr>
<td>
			HOTEL GRAND CENTRAL
			</td>
			<td>
			H18
			</td>
			<td>
			959
			</td>
			<td>
			8.8
			</td>
			<td>
			10.1
			</td>
			<td>
			27.0
			</td>
		</tr>
<tr>
<td>
			HOTEL PROPERTIES
			</td>
			<td>
			H15
			</td>
			<td>
			1,959
			</td>
			<td>
			8.3
			</td>
			<td>
			19.2
			</td>
			<td>
			4.5
			</td>
		</tr>
<tr>
<td>
			GL LTD
			</td>
			<td>
			B16
			</td>
			<td>
			1,094
			</td>
			<td>
			7.5
			</td>
			<td>
			9.4
			</td>
			<td>
			-3.0
			</td>
		</tr>
<tr>
<td>
			Average
			</td>
			<td>
			 
			</td>
			<td>
			 
			</td>
			<td>
			21.6
			</td>
			<td>
			28.0
			</td>
			<td>
			23.3
			</td>
		</tr>
</tbody></table>
 Source: Bloomberg &amp; StockFacts (data as of 31 Oct 2019)

 

Outlook for Hospitality and Tourism Sectors

Between January and June 2019, overall spending by tourist arrivals in Singapore declined 3% YoY to S$13.1 billion, according to <a href="https://www.stb.gov.sg/content/dam/stb/documents/statistics-marketing-insights/Quarterly-Tourism-Performance-Report/STB%20Q2%202019_FINAL.pdf">data</a> from the Singapore Tourism Board (STB). They spent 13% less on accommodation, 5% less on food and beverage, as well as 2% less on sightseeing, entertainment and gaming. However, retail spend increased by 2% to reach S$2.8 billion during the first half of the year.

However, the STB noted that Singapore continues to be an attractive tourism destination despite these headwinds, with robust growth seen in key markets such as China (+5%), the US (+12%), Japan (+7%) and Germany (+10%).

From January to September 2019, international tourist arrivals in the city-state reached 14.3 million, up 2.1% year on year, recently released STB <a href="https://www.stb.gov.sg/content/dam/stb/documents/statistics-marketing-insights/international-visitor-arrivals/excel/Time%20Series%20-%20International%20Visitor%20Arrival%20Statistics_Sep_19.xlsx">data</a> showed. For full-year 2019, the STB has projected tourism receipts to grow 1%-3% to between S$27.3 billion and S$27.9 billion. International arrivals are expected to increase by 1%-4% to between 18.7 million and 19.2 million.

Looking ahead, analysts expect Singapore’s hospitality sector to enjoy a cyclical upturn in 2020. “We believe we are at the cusp of a sustained turn in the performance of the Singapore hospitality sector,” DBS Group Research said in a sector <a href="https://www.dbs.com.sg/treasures/aics/templatedata/article/generic/data/en/GR/102019/191031_insights_singapore_hospitality.xml">report</a> dated 31 October 2019.

“With a robust line-up of returning and inaugural conferences in 2020, we anticipate a higher number of visitors to translate into stronger demand for rooms. With supply growth falling back to only c.1.5% in 2020 and average hotel occupancies at close to c.90%, the next leg of growth will be driven by room rates,” the report noted.

Key events scheduled to be held in the city-state next year include the Singapore Airshow, Food and Hotel Asia, The International Trademark Association Conference, The Lions Club International Convention, Industrial Transformation Asia Pacific and Gamescom Asia.
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Consumer Cyclicals was among the top net buy sectors on SGX in Oct – garnering institutional inflows of S$18.5 million – after Telecommunications, the top net buy sector that attracted net inflows of S$55.9 million. This was the second straight month of net inflows for Consumer Cyclicals, after S$11.5 million net inflow in Sept. 
	 
	
Among the Consumer Stocks with more cyclical businesses, at least 24 have a market cap of S$200 million and above. The 10 best performers among them operate in the consumer retail, luxury retail, café/restaurant, leisure/tourism, as well as hotel/hospitality segments, both in Singapore and the region. 
	 
	
Among these 10 plays, the three best performers in 10M2019 were: Department store operator Isetan (Singapore) (+48.4%), as well as luxury watch retailers Cortina Holdings (+44.5%) and The Hour Glass (+33.7%). The trio averaged a total return of 42.2%. 
	 

Consumer Cyclicals was among the top net buy sectors on SGX in October 2019 – garnering institutional inflows of S$18.5 million – after Telecommunications, the top net buy sector that attracted net inflows of S$55.9 million. This was the second straight month of net inflows for Consumer Cyclicals, after S$11.5 million net inflow in September.



      
    
    net inflows for Consumer Cyclicals


Source: SGX data

 

Among these Consumer Stocks with more cyclical businesses, at least 24 have a market cap of S$200 million and above. The 10 best performers among them have a combined market cap of nearly S$7 billion, and operate in the consumer retail, luxury retail, café/restaurant, leisure/tourism, as well as hotel/hospitality segments, both in Singapore and the region.

Over the January-October 2019 period, these 10 best-performing consumer cyclical plays have averaged a total return of 21.6%, bringing their three-year and five-year total returns to 28.0% and 23.3% respectively.

Among these 10 plays, the three best performers in the 10M2019 period were: department store operator Isetan (Singapore) (+48.4%), as well as luxury watch retailers Cortina Holdings (+44.5%) and The Hour Glass (+33.7%). The trio have averaged a total return of 42.2%.

The table below details the 10 best-performing consumer cyclical plays with market cap of S$200 million and above, sorted by 10M19 total returns.




			Name
			
			
			SGX Code
			
			
			Market Cap (S$M)
			
			
			Total Return 10M19 (%)
			
			
			Total Return 3Y (%)
			
			
			Total Return 5Y (%)
			
		


			ISETAN (SINGAPORE)
			
			
			I15
			
			
			201
			
			
			48.4
			
			
			42.2
			
			
			13.6
			
		


			CORTINA HLDGS
			
			
			C41
			
			
			219
			
			
			44.5
			
			
			113.6
			
			
			110.7
			
		


			THE HOUR GLASS
			
			
			AGS
			
			
			564
			
			
			33.7
			
			
			35.3
			
			
			51.0
			
		


			KOUFU GROUP
			
			
			VL6
			
			
			413
			
			
			23.9
			
			
			0.0
			
			
			0.0
			
		


			ACCORDIA GOLF TRUST
			
			
			ADQU
			
			
			643
			
			
			18.4
			
			
			14.7
			
			
			6.2
			
		


			AMARA HLDGS
			
			
			A34
			
			
			259
			
			
			11.9
			
			
			29.1
			
			
			4.1
			
		


			STRACO CORP
			
			
			S85
			
			
			648
			
			
			10.5
			
			
			6.1
			
			
			19.1
			
		


			HOTEL GRAND CENTRAL
			
			
			H18
			
			
			959
			
			
			8.8
			
			
			10.1
			
			
			27.0
			
		


			HOTEL PROPERTIES
			
			
			H15
			
			
			1,959
			
			
			8.3
			
			
			19.2
			
			
			4.5
			
		


			GL LTD
			
			
			B16
			
			
			1,094
			
			
			7.5
			
			
			9.4
			
			
			-3.0
			
		


			Average
			
			
			 
			
			
			 
			
			
			21.6
			
			
			28.0
			
			
			23.3
			
		

 Source: Bloomberg &amp; StockFacts (data as of 31 Oct 2019)

 

Outlook for Hospitality and Tourism Sectors

Between January and June 2019, overall spending by tourist arrivals in Singapore declined 3% YoY to S$13.1 billion, according to data from the Singapore Tourism Board (STB). They spent 13% less on accommodation, 5% less on food and beverage, as well as 2% less on sightseeing, entertainment and gaming. However, retail spend increased by 2% to reach S$2.8 billion during the first half of the year.

However, the STB noted that Singapore continues to be an attractive tourism destination despite these headwinds, with robust growth seen in key markets such as China (+5%), the US (+12%), Japan (+7%) and Germany (+10%).

From January to September 2019, international tourist arrivals in the city-state reached 14.3 million, up 2.1% year on year, recently released STB data showed. For full-year 2019, the STB has projected tourism receipts to grow 1%-3% to between S$27.3 billion and S$27.9 billion. International arrivals are expected to increase by 1%-4% to between 18.7 million and 19.2 million.

Looking ahead, analysts expect Singapore’s hospitality sector to enjoy a cyclical upturn in 2020. “We believe we are at the cusp of a sustained turn in the performance of the Singapore hospitality sector,” DBS Group Research said in a sector report dated 31 October 2019.

“With a robust line-up of returning and inaugural conferences in 2020, we anticipate a higher number of visitors to translate into stronger demand for rooms. With supply growth falling back to only c.1.5% in 2020 and average hotel occupancies at close to c.90%, the next leg of growth will be driven by room rates,” the report noted.

Key events scheduled to be held in the city-state next year include the Singapore Airshow, Food and Hotel Asia, The International Trademark Association Conference, The Lions Club International Convention, Industrial Transformation Asia Pacific and Gamescom Asia.



Trio of Best-Performing Consumer Cyclical Plays Returned 42% in 10M19      

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Isetan (Singapore) Limited operates department stores and trades general merchandise with wholesale and retail operations.

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Isetan Singapore (ISET SP)

Trio of Best-Performing Consumer Cyclical Plays Returned 42% in 10M19

Consumer Cyclicals was among the top net buy sectors on SGX in Oct – garnering institutional inflows of S$18.5 million – after...

Singapore Exchange Ltd (SGX)

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