Singapore Fund Flow - UOB Kay Hian 2021-04-13: Banking & Shipbuilding Sectors Saw The Most Fund Inflows By Institutions In March 2021

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YANGZIJIANG SHIPBLDG HLDGS LTD (SGX:BS6) OVERSEA-CHINESE BANKING CORP (SGX:O39) SINGAPORE AIRLINES LTD (SGX:C6L) JARDINE STRATEGIC HLDGS LTD (SGX:J37) CAPITALAND LIMITED (SGX:C31)

Singapore Fund Flow - Banking And Shipbuilding Sectors Saw The Most Fund Inflows By Institutions In March 2021

• In March, the banking and shipbuilding sectors saw the most fund inflows by institutional investors; however retail investors were net sellers. In particular, DBS (SGX:D05) remained a heavily-traded stock for both groups of investors.
• 5 notable stocks with institutional and retail investors taking opposing views were DBS (SGX:D05), Singapore Airlines (SGX:C6L), OCBC (SGX:O39), Yangzijiang Shipbuilding (SGX:BS6) and Ascendas REIT (SGX:A17U).

A busy start to the month of March.

• We note that the first two weeks of March saw the most movement in net buys and sells (week of 1 Mar 21 and week of 8 Mar 21).
• Interestingly, institutional investors were active throughout the month while retail investors’ activity tailed off markedly after the first two weeks of March. In addition, retail investors appeared to take a risk-off mentality based on trading value of the top 25 stocks, buying S$741m worth of stocks but selling S$1.5b, whereas institutional investors were more balanced, buying S$1.27b and selling S$1.35b.
• (see SGX Market Fund Flow Overview; SGX Cumulative Fund Flow By Sector; SGX Weekly Fund Flow By Sector.)

Where did institutional and retail opinions diverge?

• Key divergences in stock calls were:
  1. DBS (SGX:D05) with institutional net buying S$292m worth of stock and retail selling of S$545m,
  2. Singapore Airlines (SGX:C6L) with net institutional selling S$131m in stock and retail buying of S$172m,
  3. OCBC (SGX:O39) with S$77m in net purchases from institutions and net sales from retail of S$240m, and
  4. Yangzijiang Shipbuilding (SGX:BS6) with institutional buying S$136m worth of stock while retail investors sold S$100m.
• Singapore Airlines remains a favourite among retail investors as it was consistently bought by retail investors for the whole of March, and net buying of S$172m was three times higher than the second most bought stock, Ascendas REIT (SGX:A17U) with S$58m.
• With the global adoption of vaccination programmes accelerating and Singapore’s acceptance of IATA’s COVID-19 travel pass, aviation stocks have attracted positive sentiment. However, we believe investors should be cautious given recent newsflow on new variants of COVID-19 and even restrictions on Singapore Airlines’s flights to Hong Kong. We believe that border openings will probably occur in late-3Q21 at best, and even then it will likely be gradual.

Notable actively-traded stocks in March 2021

• Apart from financial and shipbuilding stocks, some of the most actively-traded companies for both the institutional and retail segments were
  • Ascendas REIT (SGX:A17U) with S$85m worth of stock sold by institutions and S$58m bought by retail investors, and
  • ComfortDelGro (SGX:C52) where institutional buying of S$46m in stock almost mirrored that of retail selling S$49m of stock.
• In addition, we note that retail investors bought S$40m in Top Glove (SGX:BVA) which may be a response to the uneven pace of COVID-19 vaccinations as well as new variants of the virus that have been occurring globally.

M&A activity and its effect on trading

• We highlight two deals:
  1. 8 Mar 21: Jardine Matheson (SGX:J36) offered to buy out the 15% minority holding of Jardine Strategic (SGX:J37) that it does not already own at US$33/share.
     • This led to institutional selldown of Jardine Strategic to the tune of S$149m.
  2. 22 Mar 21: CapitaLand (SGX:C31) proposed to privatise its property development arm.
     • This resulted in institutional buying of S$24.5m of CapitaLand while retail took the opposite view and sold S$39.8m worth during the week of 22 Mar 21.

Changes to STI constituent companies.

• As a result of the Jardine Matheson acquisition mentioned above, FTSE Russell announced on 9 Apr 21 that Frasers Logistics & Commercial Trust (SGX:BUOU) will join the STI on 13 Apr 21 to replace Jardine Strategic (SGX:J37). This increases the total number of REITs on the STI to 7 with their combined weighting at around 13- 14%.
• We also highlight that the next 4 companies that are on the reserve list that would replace any constituents that become ineligible to remain on the STI are either REITs or business trusts. These are
  • Frasers Centrepoint Trust (SGX:J69U),
  • Suntec REIT (SGX:T82U),
  • Keppel REIT (SGX:K71U) and
  • NetLink Trust (SGX:CJLU).

Singapore stock picks.

• Our top picks for Singapore large-cap stocks are
  • Ascendas REIT (SGX:A17U),
  • Frasers Logistics & Commercial Trust (SGX:BUOU),
  • Genting Singapore (SGX:G13),
  • OCBC (SGX:O39),
  • Thai Beverage (SGX:Y92).
  • SingTel (SGX:Z74), and
  • Yangzijiang Shipbuilding (SGX:BS6),
• In the small/mid-caps, we like
  • China Sunsine Chemical (SGX:QES),
  • Food Empire (SGX:F03),
  • CSE Global (SGX:544) and
  • InnoTek (SGX:M14).
• See also recent report: Singapore Stock Alpha Picks (April 2021) - UOB Kay Hian 2021-04-06: Adding UMS, Removing Frencken.
• (See SGX top active stocks with fund flow information at SGX Top Active Stocks By Week.)

Adrian LOH UOB Kay Hian Research | Singapore Research UOB Kay Hian | https://research.uobkayhian.com/ 2021-04-13

SGX Stock Analyst Report BUY MAINTAIN BUY 1.360 SAME 1.360

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HOLD MAINTAIN HOLD 4.470 SAME 4.470

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