Recent Swings of Singapore's Biggest Industrial Stocks
OREANDA-NEWS. Singapore’s 10 largest capitalised Industrial stocks have averaged a 4.2% year to date total return, ranging from a 32.5% gain for SATS to a 15.2% decline for Keppel Corp. The MSCI Asia Pacific Ex Japan Industrial Index generated a comparative -0.1% decline in year to date total return, while the MSCI AC Asia Industrials Index gained 3.2% in SGD terms.
The 10 largest capitalised Industrial stocks listed in Singapore have a combined market capitalisation of S$160 billion. This represents more than 15% of the combined market capitalisation of the primary and secondary stocks listed on Singapore Exchange (SGX). Industrials is somewhat of a mega-sector due to its span of sub-sectors, the combined number of stocks (more than 200 in Singapore) and the combined market capitalisation.
Using the GICS® sub-industry categorisations, Singapore’s 10 largest Industrial stocks are split evenly between Capital Goods and Transportation. The five capital good stocks, Jardine Matheson Holdings, Jardine Strategic Holdings, Singapore Tech Engineering, Keppel Corp and Sembcorp Industries have averaged a 4.9% total return in the year thus far. The five transportation stocks, Singapore Airlines, ComfortDelGro Corp, SATS, Hutchison Port Holdings Trust and SIA Engineering Company have averaged a 3.4% gain in the year this far.
In the year thus far, Capital Goods stocks Sembcorp Industries and Keppel Corp have seen the biggest price swings of the 10 Industrial stocks (as crude oil prices of below US$50 a barrel continue to weigh on the marine and offshore sector) while transportation stocks, SATS and SIA Engineering have seen the least price swings.
Of the 10 Industrial stocks, the stock that was most aligned with the moves of the MSCI AC Asia Pacific Ex Japan Industrial Index in the year thus far was Hutchison Port Holdings Trust. However, Hutchison Port Holdings Trust was slightly more aligned with the MSCI AC Asia Pacific Ex Japan Consumer Discretionary Index. Regional consumer sentiment which might show more in a Consumer Discretionary Index, than an Industrials Index, can obviously have an association with industrial businesses involved in transportation and capital goods.
The day-to-day share price moves of Jardine Strategic Holdings were also slightly more aligned with the MSCI AC Asia Pacific Ex Japan Consumer Discretionary Index, while the moves of Singapore Airline shares were equally aligned with the MSCI AC Asia Pacific Ex Japan Consumer Discretionary Index and MSCI AC Asia Pacific Ex Japan Industrial Index.
The below table details the raw beta of the 10 Industrial stocks to the regional sector indices in the year thus far – which spanned just over 180 trading sessions. A raw beta coefficient of 1.00 would indicate that the day to day price moves of the Industrial stock were largely in tandem with the respective index.
As detailed in the table below, the day-to-day moves of the 10 Industrial stocks, were comparatively most aligned with the region’s Industrial Index, then closely followed by Consumer Discretionary Sector. All 10 Industrial stocks had comparatively less association with the moves of the MSCI AC Asia Pacific Ex Japan Energy Index.
Raw Beta (2 Jan 2016 to 27 Sep 2016)
Source: SGX & Bloomberg (data as of 27 September 2016)
While the day-to-day share price moves of most of the 10 Industrial stocks had the closest semblance to the MSCI Singapore Index, the price moves of SATS were more aligned with the MSCI China Index, and the price moves of SIA Engineering Company were more aligned with the moves of the MSCI South East Asia Index.
SATS is certainly not considered a China play and the 0.18 Raw Beta coefficient to the MSCI China Index is also the lowest Raw Beta coefficient to the MSCI China Index for the 10 Industrial stocks tabled above.
Nevertheless strength or weakness in the China economy can impact the industrial sector. For instance, when noting non-aviation industry challenges in the FY2015-2016 Annual Report, the SATS Chairman firstly noted decelerating growth in China; followed by falling oil prices; the weakening Japanese Yen; and declining manufacturing exports and a slowing economy in Singapore. Through its wholly-owned subsidiary, Singapore Food Industries, has in Jan 2016 entered into two conditional joint venture agreements with Yihai Kerry Investments Co. Ltd to supply high quality and safe food to the Chinese market.
While SIA Engineering Company reports all its revenue to Singapore, it provides line maintenance services to more than 50 airlines passing through Singapore. Beyond Singapore, its growing network of line maintenance support is extended to airports in Australia, United States, Hong Kong, Indonesia, Philippines and Vietnam.
The 10 largest industrial stocks are tabled below. To see the full profile of each stock in SGX StockFacts please click on the stock name.