Best-Performing IT Stocks Averaged 95% Total Return in YTD
OREANDA-NEWS. Singapore’s Information Technology (IT) sector comprises companies that offer software and IT services, manufacturers and distributors of technology hardware and equipment such as communications equipment, cellular phones, computers & peripherals, electronic equipment as well as related instruments and semiconductors.
Vibrant Sector, Strong Support
The domestic IT sector has seen strong government support, and is also the third-most popular technology destination for professionals. The government plans to invest a sum of US$14 billion in the smart nation programme over the next five years. Investments in advanced manufacturing and engineering also reached US$2.4 billion, while funding for innovation and technology research totalled US$2.1 billion.
Singapore recently ranked number one in the Network Readiness Index as published in the Global Information Technology Report 2016. The Networked Readiness Index 2016 measures how well an economy is using information and communications technology to improve competitiveness and welfare. In PwC’s Cities of Opportunity Index, Singapore came in second, while in technology readiness, which is a sub-index of the Cities of Opportunity Index, the city-state took pole position.
According to a MarketLine report published in August 2016, client computing & peripherals is the largest segment of Singapore’s IT hardware market, accounting for 58.5% of the market's total value. The IT hardware market includes all physical components and equipment essential to computing, such as network infrastructure , security hardware and appliances, computing and peripherals and storage infrastructure. Singapore’s IT hardware segment is forecast to grow to S$2.4 billion in 2020, reflecting an increase of 20.2% from 2015. Of the 77 stocks in Singapore’s IT sector, 51 stocks or 66.2% are categorised as technology hardware and equipment under the Global Industry Classification System (GICS®).
Strong Relative Performance
Singapore’s IT sector, which comprises 77 stocks, averaged a total return of 5.8% in the September month-to-date. In comparison, the MSCI AC Asia ex-Japan IT Index generated a total return of 2.7% in Singapore dollar terms over the same period.
For the month of July and August 2016, the IT sector averaged market cap-weighted total returns of 4.6% and 7.8% respectively, bringing total returns in the year thus far to 7.6%. The IT industry previously generated a market cap-weighted total return of 14.8% in the first eight months, making it the third-best performing sector behind Consumer Staples (+25.1%) and REITs (+15.6%) as illustrated below.