Singapore 4Q20 Equity Strategy Outlook Questions

[Research Department]

Replying to #36838

Question: How to search for the building material companies?

Answer: Some building material stocks with large market share in Singapore are Pan United (ready mixed concrete) and BRC Asia (steel rebars and wire mesh).

[Research Department]

Replying to #36840

Question: Micro Mechanics is China based?

Answer: Around 1/3 of sales is from China. Bust these sales are to serve customers in China. The impact from trade war or tariffs is further mitigated by their manufacturing presence in SE Asia including Malaysia, Philippines and Singapore.

[Research Department]

Replying to #36842

Question: Phillip is still having a trading restriction on UG Healthcare and you have a recommendation. Why is this so?

Answer: The decisions by credit department includes in general the exposure of the company to the stocks. Research department views relate specifically to the fundamentals of the company. The recent purchase of substantial stake in the company by Malaysian pension fund EPF is another endorsement of the company, in our opinion.

[Research Department]

Replying to #36844

Question: How does UG compare with Riverstone?

Answer: UG Healthcare produces both latex and nitrile gloves whereas Riverstone is almost entirely nitrile. UG Healthcare products are mainly produced under their own brand and distributed by their own channels to emerging markets namely China, Brazil and Nigeria.

In comparison, around half Riverstone products are distributed under theor own brand but targeted to the electronics and semiconductor industries.

[Research Department]

Replying to #36846

Question #1: i have followed Absolute 10 very closely, but MoM my investment looks disappointed, when will there be light ahead.

Answer #1: We share the disappointment. Most of the losses came in March. When the pandemic hit, our hospitality exposure, in particular Ascot REIT was hit hard and that dragged the whole portfolio.

 

Question #2: Where can we find your list of  “Absolute 10” ?

Answer #2: Our Absolute 10 model portfolio is in our 4Q20 Strategy report here and in Stocksbnb thematic portfolio that can be found here

[Research Department]

Replying to #36848

(US Sector)

Question #1: I like to know your view on  the USA finance sector. Particularly the banks: Wells fargo, BoA and Citigroup

Answer #1: For the finance sector, stress tests conducted by the Fed reinforced the fact that the banking sector is able to better weather the storm this time round. Surge in loan defaults and weak loan growth may lead to downward revision in earnings expectations, but I believe that much of the negativity may have been factored into valuation already. Moving forward, economic recovery will continue, albeit at a slow pace. So this sector is by and large, playing a long waiting game.

 

Question #2: hi what about Airlines?

Answer #2: I think airlines can only recover when there is a viable vaccine and travel restrictions can be lifted, therefore near-term performance will be suppressed. Before all these happen, the sector will be heavily dependent on government fiscal aid and may have to resort to cost-cutting measures.

 

Question #3: Is eCommerce still a sector that we can enter now ?

Answer #3: I think e-commerce will be a trend to stay. Even with economies re-opening, we can see that online sales in July and August still deliver strong y-o-y growth, which suggests that there is a permanent switch in preferences towards online shopping.

 

Question #4: what are the re-opening plays you’re positive? Not airline and hotel stocks right?

Answer #4: I think airlines and hotels can only recover when there is a viable vaccine and travel restrictions can be lifted. Personally, I am positive on starbucks and disney as reopening plays. Prolonged closure and clamping down of mobility restrictions will be a key risk to reopening, as we can see in the case of Disney.

 

Question #5: If Biden win, do u think oil n gas will dive south further?

Answer #5: I think near-term, the energy sector may remain suppressed with a Biden win. However, if there is any strong downside overreaction with a Biden win, I believe that it can be a good time to accumulate because a lot of negativity has already been factored into its valuation and can be discounted. I will favour stronger names such as XOM and CVX.

[Research Department]

Replying to #36850

Question #1: What is the president condition get worst?

Answer #1: I believe this will impact the U.S election because the Republican party may consider a swapping of presidency candidate. With the uncertainty, there may be a flock to safe haven assets in the near term which points to a fall in the equities market.

 

Question #2: if us market is volatile, would buying chinese stocks on US safe perhaps?

Answer #2: The U.S market will be volatile with the upcoming U.S elections. Chinese stocks may be gaining traction, considering that there is a greater shift in sentiments towards a Biden win with Trump contracting Covid. However, if Trump condition were to deteriorate (which is hard to predict), there will be a shift in capital towards safe haven assets and I will think that Chinese equities listed on U.S may take a hit during panic selling too.

 

Question #3: will trumps situation now have a huge impact to the stock market and causes dip drop of stock market?

Answer #3: I believe the market will be very news-focused in the near term, revolving around his condition and also whether the treatment he has taken actually works. If he is able to recover successfully, it will greatly boost optimism in the markets, as it highlights the fact that there is a viable treatment and the virus can be kept under control. However, if his condition worsens, there will be a flock to safe haven assets as his candidancy for the U.S elections may be replaced.

 

Question #4: What time frame you think it is good to enter market. Before, After electron?

Answer #4: I think it is good to stay in the equities market, considering the hunt for yield at current interest rate environment. If you want to enter before the elections, you have to be prepared for volatility.

 

Question #5: if US market corrects, will this benefit say Asian markets?

Answer #5: It depends on the reason of correction. If the correction is due to a risk-off approach towards equities, Asian markets may follow the U.S in the downward trend.

 

Question #6: what’s your view on US debt?

Answer #6: I believe that the U.S debt will continue to increase, regardless of whoever becomes President, due to continued stimulus. The concern may come when we are looking at higher taxes in future and it will be highly dependent on the economic recovery aka I do not think they will start to raise taxes when they are not confident of the economic progress moving forward. Therefore, I find it less of a concern.

[Research Department]

Replying to #36883

(SG 4Q20 Technical questions)

All technical questions posed during the Outlook event on the 3rd of October are answered in the video here.

[Author]

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