• Singapore’s five most traded companies by turnover this year that are not a part of the STI are ComfortDelGro, UMS, AEM, Frencken and Golden Agri-Res. All five stocks booked positive total returns in the 2023 year to 26 Oct, ranging from a 0.6% gain for AEM to an 18.4% gain for Frencken. The average total return of the five stocks was 11.5%.
   
• Each of the five stocks has booked net institutional inflow for the 2023 year to 26 Oct, ranging from S$8.9 million for Frencken to S$56.9 million for UMS. The five stocks booked S$197 million in combined net institutional inflow for the period, which represented 2.3% of their combined market value as of 26 Oct.
   
• For the month of Oct (through to 26 Oct), the five stocks also averaged a 0.4% decline, versus the STI’s 4.5% decline. This is despite the five stocks maintaining 5-year beta coefficients above 1.0, with beta measuring the common stock price volatility relative to the market.

Growing global geopolitical risks in October have seen the STI book a 4.5% decline for the month through to the 26 Oct close. In tandem, the FTSE ASEAN Extended 60 Index generated a 3.7% decline and the FTSE APAC Index declined 4.3%. At the same time, APAC Semiconductor stocks have bucked the trend and generally booked low single-digit gains.

Three of Singapore’s five most traded companies that are NOT part of the STI service the Semiconductor Sector. While only one of the trio booked a marginal gain in October through to 26 Oct, they were more defensive than the above-mentioned STI decline, with an average decline of 1.6%. As shown in the table below, ComfortDelGro Corporation and Golden Agri-Resources are also among the five most traded companies this year that are not a part of the STI.

Source: SGX, Refinitiv (Data as of 26 Oct 2023). Note ADT is Average Daily Turnover.
 

The five stocks tabled above have seen combined average daily turnover of S$29.2 million in the year thus far, while maintaining a combined market capitalisation of S$8.64 billion as 26 October. All five stocks have booked net institutional inflows in the 2023 year through to 26 Oct, with combined inflows of S$197.1 million. These combined inflows for the year represented 2.3% of the total market capitalisation of the five stocks as of 26 Oct. By comparison, the broader Singapore stock market has booked S$2.71 billion in net institutional outflows for the 2023 year through to 26 Oct. This represented 3.6% of the total S$763 billion market capitalisation of the Singapore stock market as of 26 Oct.

All five stocks also outpaced the STI total returns in the 2023 year to 26 Oct with 11.5% average total returns, compared to the STI decline in total return of 1.3%.  Frencken led the five stocks in the 2023 year to Oct 26 with an 18.5% total return.

In the month of Oct through to 26 Oct, the five stocks were also comparatively more defensive than the STI, with the five averaging decline in total return of 0.4%. Rather than being low beta stocks, the five all maintain 5-year beta co-efficient above 1.0. These ratios are sourced from the SGX Stock Screener, with Reuters maintaining that the Beta coefficients measure the company's common stock price volatility relative to the market. Statistically, Reuters Beta is the slope of the 60-month regression line of the percentage price change of the stock relative to the percentage price change of the STI.

For institutional flows, on Oct 18, abrdn plc increased its deemed interest in AEM above the 9% threshold, after its deemed substantial shareholding fell below the 9% threshold on July 3. UMS booked the highest net institutional inflow of the five stocks in the year thus far, with its 13.5% total return in the 2023 year to 26 Oct attributed to its 2Q23 earnings report which highlighted that it had renewed its Integrated System contract with its key customer until end 2025. For the trio of semiconductor-related companies tabled above, recent months have seen these companies and investors increasing and determinedly look towards 2024, including looking for affirmation that the semiconductor inventory glut may be drawing to an end.  

As SEMI noted last month, softening chip demand and elevated inventory of consumer and mobile devices have contributed to the 15% decline in global fabrication equipment spending for front-end facilities in 2023, and yet is expected to rebound 15% YoY to US$97 billion in 2024. Longer term, most Semiconductor associations project semiconductor sales to be in the vicinity of US$1 trillion by 2030, up from Semiconductor Industry Association’s gauge of ~US$575 billion in 2022, with Applied Materials noting in its 3QFY23 presentation that the IoT + AI era is driving a new wave of industry growth and innovation.

Yesterday, Singapore’s September Industrial Production narrowed significantly to -2.1% YoY from August’s revised reading of -11.6% YoY. This improvement was driven by an upturn in electronics production, expanding 10.2% YoY in September, which reversed an 18.9% YoY contraction in August. The strong reading in electronics production was driven by semiconductors which expanded 13.5% YoY in Sep, in addition to Infocom & Consumer Electronics which accelerated further to 21.6% YoY in September.

Note that while the trio of Semiconductor-related stocks have averaged 10.8% total returns in the year through to 26 Oct, growing global geopolitical risks remain an overarching downside risk to global stocks going into 2024, in addition to ongoing risks of further weakening of external demand and tighter global financial conditions.  

Enjoying this read?

• Subscribe now to the weekly SGX My Gateway newsletter for a compilation of latest market news, sector performances, new product release updates, and research reports on SGX-listed companies.
• Stay up-to-date with our SGX Invest Telegram channel.