Materials Sector saw strongest start to the year
OREANDA-NEWS. In January 2018, the Materials Sector was the strongest of the Sectors as categorised by the Global Industry Classification Standard (GICS®). The Sector is known to consist of stocks involved in the processing of raw materials, with a cyclical element that has formed above average historical volatility.
In Singapore, the majority of the stocks that represent the Materials Sector have businesses relating to chemicals and metals and maintain international operations. In addition, a number of the longer serving companies of the Sector, such as Straits Trading and NSL have diversified their business streams.
On a market capitalisation basis, the Materials Sector generated an 11.6% market capitalisation total return over the first month of 2018. Of the 20 largest stocks of the Sector, there were 16 gainers, two stocks unchanged and two stocks that declined in price. The average total return of the 20 stocks was 10.7%. Price performances for yesterday’s session on 1 February, have taken the average total return for the 20 stocks to 11.0%.
The performances of the 20 stocks which make up more than four-fifths of the S$5.8 billion combined market capitalisation of the Materials Sector are tabled below. To see the profile of each stock in SGX StockFacts, click on the stock name.
Of the 20 stocks tabled above the three strongest performers were Midas Holdings, Delong Holdings and China Sunsine Chemical Holdings.
On 3 January, Midas Holdings announced that its joint venture company, CRRC Nanjing Puzhen Rail Transport Co., Ltd. (“NPRT”) secured three metro train car supply contracts worth RMB2.68 billion in China. Midas has a 32.5% equity stake in NPRT, a Sino-foreign joint venture, engaged in the development, manufacture and sale of metro trains, bogies and their related parts. The contract wins are to be delivered progressively between 2018 and 2020.
For its 3QFY17 (ending 30 Sep) Midas’ net profit increased 6.6% YoY to RMB 24.1 million. Midas maintains it is the leading manufacturer of aluminium alloy extrusion products for the passenger rail transportation sector in China. The company is expected to reports its FY17 results by early March.
Over the month of January, the Straits Times Index (STI) generated a 3.9% total return. As illustrated in the Sector Heatmap below, Materials was the strongest of the sectors in January with an 11.6% market capitalisation total return. This was closely followed by the Energy Sector with an 11.0% return, and then the Information Technology (“IT”) Sector with a 7.8% return.
The indicative sum of the best performing sector for each of the past 12 months was 92%. As illustrated above, the 92% total return, weighed to market capitalisation, started with the IT Sector returning 7.0% in February 2017 and ended with the Materials Sector adding 11.6% in January 2018.
The combined decline for the least performing Sector of each of the last 12 months was 36%. By comparison, over the 12 months the STI generated a total return of 19.8%. Note this does not include any transactions fees which would be associated with the sector rotation.