SGX Market Strategist, Equity & Fixed Income, Singapore Exchange Ltd (SGX)

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

Asia’s leading multi-asset exchange

Singapore Exchange Ltd (SGX)

Singapore Exchange is Asia’s leading and trusted market infrastructure, facilitating the exchange of capital and ideas to create value for people, businesses and economies. As a multi-asset exchange operating equity, fixed income and derivatives markets to the highest regulatory standards, SGX is a vertically integrated business that provides listing, trading, clearing, settlement, depository and data services.

With about 40% of listed companies and over 80% of listed bonds originating outside of Singapore as well as established linkages across the region and in Europe, SGX is Asia’s most international and connected exchange. Offering a full suite of derivatives products across Asian equity indices, commodities and currencies, SGX is the world’s most liquid international market for the benchmark equity indices of China, India, Japan and ASEAN.

As Asia’s pioneering central counterparty, SGX is globally recognised for its risk management and clearing capabilities, and was one of the first globally to adopt the Principles for Financial Market Infrastructure.

Headquartered in AAA-rated Singapore, SGX has over 800 employees including offices in Beijing, Chicago, Hong Kong, London, New York, Mumbai, San Francisco, Shanghai and Tokyo.

Equity Bottom-Up

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<li>
In May, 18 SGX primary-listed stocks bought back shares for a total consideration of S$15 million, lower than the S$36 million in consideration for April 2020, and seasonally lower than the S$123 million buyback consideration reported in May 2019. 
	 </li>
	<li>
ST Engineering led the May buyback consideration tally, buying back 2 million shares on a new mandate which began on 15 May. The shares were bought back at an average price of S$3.15 per share, with a total consideration of S$6.3 million. 
	 </li>
	<li>
Sing Press Hldgs and Global Investments also led the May consideration tally. Global Investments has now bought back 7.8% of its issued shares (excluding treasury shares) on the current mandate, and has seen its share price decline 2.8% over the first five months of 2020. 
	Total share buyback consideration for month of May totaled S$14.9 million, down from S$36.3 million in April (click <a href="https://www.sgx.com/research-education/market-updates/20200504-share-buyback-activity-normalised-april-sti-rebounded-6">here</a> for more) and S$501.5 million in March (click <a href="https://www.sgx.com/research-education/market-updates/20200401-market-declines-saw-65-stocks-conduct-share-buybacks">here</a> for more). This has brought the total consideration of share buybacks for SGX primary-listed stocks to S$650 million for the first five months of 2020, up from S$590 million in consideration for the entire calendar year of 2019. </li>
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The Straits Times Index (STI) declined 4.3% in April, to 2510.75, as its 10-day historical volatility remained between 22% and 14% for the month, ending at 18%. For context, back in the month of March, STI 10-day historical volatility reached as high as 80%. 
Dividend distributions in the month of May by heavyweight constituents, such as DBS Group Holdings and Oversea-Chinese Banking Corp, boost May’s total return to a decline of 3.3%, This brought the STI’s decline in total return for the first five months of 2020 to 20.8%, with the FTSE ASEAN All-Share Index declining 19.5%. 
Together, the SPDR® STI ETF and Nikko AM STI ETF garnered net creations of S$387 million over the first five months of 2020 as investors accumulated units amidst the market declines. The S$387 million was is up 120% from the total net creations of S$176 million for the entire 2019 year. 
 

May 2020 Buyback Consideration Led by ST Engineering, SPH &amp; Global Investments 
A total of 18 primary-listed stocks conducted buybacks in Singapore in May, down from 39 in April, down from 65 in March, and similar to 17 stocks in February. Global Investments’ current mandate has now seen the company buy back 7.76% of its issued shares excluding treasury shares as of the date of the approved buy back resolution on 25 April 2019. The company has seen its share price decline by 2.8% in the first five months of 2020, and has also proposed the renewal of the Share Buyback Mandate at the AGM, currently scheduled by ways of electronic means, on 19 June 2020 at 4.00pm. 
The table below summarises the buyback considerations in May 2020. The table is sorted by the value of the total consideration amount for the month, which combines the amount of shares or units purchased and the purchasing price of the transactions. The two companies that commenced new buyback mandates, Singapore Technologies Engineering and The Straits Trading Company are in bold. 
 

<table class="table table-striped"><tbody>
<tr>
<td>
			Primary-listed Stocks that conducted Share Buybacks in May 2020
			</td>
			<td>
			Number of Shares/units Authorised for Purchase in Current Mandate
			</td>
			<td>
			Total Number of Shares/units Purchased in May 2020
			</td>
			<td>
			Total Buyback Consideration  (including stamp duties, clearing changes etc.) paid or payable for the shares in May 2020
			</td>
			<td>
			Average Share Price Paid (including stamp duties, clearing changes etc.) in May 2020
			</td>
			<td>
			Cumulative Number of Shares/units purchased in Mandate to 31 May 2020
			</td>
		</tr>
<tr>
<td>
			SINGAPORE TECHNOLOGIES ENGINEERING 
			</td>
			<td>
			62,429,441
			</td>
			<td>
			2,000,000
			</td>
			<td>
			$6,307,338
			</td>
			<td>
			$3.15
			</td>
			<td>
			2,000,000
			</td>
		</tr>
<tr>
<td>
			SINGAPORE PRESS HOLDINGS
			</td>
			<td>
			159,456,338
			</td>
			<td>
			2,080,500
			</td>
			<td>
			$3,120,383
			</td>
			<td>
			$1.50
			</td>
			<td>
			4,698,100
			</td>
		</tr>
<tr>
<td>
			GLOBAL INVESTMENTS
			</td>
			<td>
			168,741,864
			</td>
			<td>
			18,484,200
			</td>
			<td>
			$2,530,249
			</td>
			<td>
			$0.14
			</td>
			<td>
			131,002,600
			</td>
		</tr>
<tr>
<td>
			SINGAPORE TELECOMMUNICATIONS
			</td>
			<td>
			816,457,915
			</td>
			<td>
			463,886
			</td>
			<td>
			$1,179,153
			</td>
			<td>
			$2.54
			</td>
			<td>
			945,055
			</td>
		</tr>
<tr>
<td>
			KEPPEL CORPORATION
			</td>
			<td>
			36,340,188
			</td>
			<td>
			65,024
			</td>
			<td>
			$391,838
			</td>
			<td>
			$6.03
			</td>
			<td>
			1,575,124
			</td>
		</tr>
<tr>
<td>
			STARHUB
			</td>
			<td>
			173,022,009
			</td>
			<td>
			200,000
			</td>
			<td>
			$286,367
			</td>
			<td>
			$1.43
			</td>
			<td>
			2,136,553
			</td>
		</tr>
<tr>
<td>
			HONG FOK CORPORATION
			</td>
			<td>
			86,147,124
			</td>
			<td>
			335,300
			</td>
			<td>
			$245,033
			</td>
			<td>
			$0.73
			</td>
			<td>
			13,422,300
			</td>
		</tr>
<tr>
<td>
			CHUAN HUP HOLDINGS
			</td>
			<td>
			92,827,285
			</td>
			<td>
			1,016,900
			</td>
			<td>
			$198,669
			</td>
			<td>
			$0.20
			</td>
			<td>
			2,991,700
			</td>
		</tr>
<tr>
<td>
			GRP
			</td>
			<td>
			18,789,481
			</td>
			<td>
			1,066,600
			</td>
			<td>
			$180,831
			</td>
			<td>
			$0.17
			</td>
			<td>
			6,134,100
			</td>
		</tr>
<tr>
<td>
			GKE CORPORATION
			</td>
			<td>
			78,853,189
			</td>
			<td>
			3,009,000
			</td>
			<td>
			$178,076
			</td>
			<td>
			$0.06
			</td>
			<td>
			7,059,300
			</td>
		</tr>
<tr>
<td>
			THE STRAITS TRADING COMPANY 
			</td>
			<td>
			40,694,407
			</td>
			<td>
			50,000
			</td>
			<td>
			$78,800
			</td>
			<td>
			$1.58
			</td>
			<td>
			50,000
			</td>
		</tr>
<tr>
<td>
			KSH HOLDINGS
			</td>
			<td>
			56,813,564
			</td>
			<td>
			262,500
			</td>
			<td>
			$77,749
			</td>
			<td>
			$0.30
			</td>
			<td>
			3,635,900
			</td>
		</tr>
<tr>
<td>
			TUAN SING HOLDINGS
			</td>
			<td>
			118,414,021
			</td>
			<td>
			218,200
			</td>
			<td>
			$50,640
			</td>
			<td>
			$0.23
			</td>
			<td>
			338,200
			</td>
		</tr>
<tr>
<td>
			SINGAPORE REINSURANCE CORPORATION
			</td>
			<td>
			60,521,978
			</td>
			<td>
			163,200
			</td>
			<td>
			$45,747
			</td>
			<td>
			$0.28
			</td>
			<td>
			7,911,800
			</td>
		</tr>
<tr>
<td>
			SARINE TECHNOLOGIES
			</td>
			<td>
			35,059,572
			</td>
			<td>
			150,000
			</td>
			<td>
			$35,334
			</td>
			<td>
			$0.24
			</td>
			<td>
			763,800
			</td>
		</tr>
<tr>
<td>
			ELLIPSIZ
			</td>
			<td>
			16,712,818
			</td>
			<td>
			60,100
			</td>
			<td>
			$18,942
			</td>
			<td>
			$0.32
			</td>
			<td>
			459,900
			</td>
		</tr>
<tr>
<td>
			SHOPPER360
			</td>
			<td>
			11,440,000
			</td>
			<td>
			36,200
			</td>
			<td>
			$3,439
			</td>
			<td>
			$0.10
			</td>
			<td>
			2,717,700
			</td>
		</tr>
<tr>
<td>
			OKP HOLDINGS
			</td>
			<td>
			30,762,939
			</td>
			<td>
			14,500
			</td>
			<td>
			$2,489
			</td>
			<td>
			$0.17
			</td>
			<td>
			18,600
			</td>
		</tr>
<tr>
<td>
			Total
			</td>
			<td>
			 
			</td>
			<td>
			29,676,110
			</td>
			<td>
			$14,931,077
			</td>
			<td>
			 
			</td>
			<td>
			 
			</td>
		</tr>
</tbody></table>
 Source: Bloomberg, SGX (Data as of 31 May 2020). 
 

Share buyback transactions involve share issuers repurchasing some of their outstanding shares from shareholders through the open market. Once the shares are bought back, they can be converted into treasury shares, which means they are no longer categorised as shares outstanding. Motivations for share buybacks can include employee compensation plans (such as share option schemes or employee share purchase plans) or long term capital management. Buybacks can pick up amidst market declines that are driven by broader moves on international macroeconomic developments. 
The date of the relevant share buyback mandate is also provided in the table above, in addition to the amount of shares authorised to be bought back under the mandate. The total number of shares purchased under the mandate is also provided. 
Share buyback information can be found on the company disclosure page on the SGX website, using the Announcement category and sub-category of Share Buy Back-On Market (click <a href="http://www.sgx.com/wps/portal/sgxweb/home/company_disclosure/company_announcements">here</a>). As best practice, companies should refrain from buying back their shares during the two weeks immediately before its quarterly financial statements and one month immediately before the full-year financial statements.
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In May, 18 SGX primary-listed stocks bought back shares for a total consideration of S$15 million, lower than the S$36 million in consideration for April 2020, and seasonally lower than the S$123 million buyback consideration reported in May 2019.  
	 
	
ST Engineering led the May buyback consideration tally, buying back 2 million shares on a new mandate which began on 15 May. The shares were bought back at an average price of S$3.15 per share, with a total consideration of S$6.3 million. 
	 
	
Sing Press Hldgs and Global Investments also led the May consideration tally. Global Investments has now bought back 7.8% of its issued shares (excluding treasury shares) on the current mandate, and has seen its share price decline 2.8% over the first five months of 2020.  
	Total share buyback consideration for month of May totaled S$14.9 million, down from S$36.3 million in April (click here for more) and S$501.5 million in March (click here for more). This has brought the total consideration of share buybacks for SGX primary-listed stocks to S$650 million for the first five months of 2020, up from S$590 million in consideration for the entire calendar year of 2019. 



      
    
    capture


The Straits Times Index (STI) declined 4.3% in April, to 2510.75, as its 10-day historical volatility remained between 22% and 14% for the month, ending at 18%. For context, back in the month of March, STI 10-day historical volatility reached as high as 80%.  
Dividend distributions in the month of May by heavyweight constituents, such as DBS Group Holdings and Oversea-Chinese Banking Corp, boost May’s total return to a decline of 3.3%, This brought the STI’s decline in total return for the first five months of 2020 to 20.8%, with the FTSE ASEAN All-Share Index declining 19.5%.  
Together, the SPDR® STI ETF and Nikko AM STI ETF garnered net creations of S$387 million over the first five months of 2020 as investors accumulated units amidst the market declines. The S$387 million was is up 120% from the total net creations of S$176 million for the entire 2019 year. 
 

May 2020 Buyback Consideration Led by ST Engineering, SPH &amp; Global Investments  
A total of 18 primary-listed stocks conducted buybacks in Singapore in May, down from 39 in April, down from 65 in March, and similar to 17 stocks in February.  Global Investments’ current mandate has now seen the company buy back 7.76% of its issued shares excluding treasury shares as of the date of the approved buy back resolution on 25 April 2019. The company has seen its share price decline by 2.8% in the first five months of 2020, and has also proposed the renewal of the Share Buyback Mandate at the AGM, currently scheduled by ways of electronic means, on 19 June 2020 at 4.00pm.  
The table below summarises the buyback considerations in May 2020. The table is sorted by the value of the total consideration amount for the month, which combines the amount of shares or units purchased and the purchasing price of the transactions. The two companies that commenced new buyback mandates, Singapore Technologies Engineering and The Straits Trading Company are in bold. 
 




			Primary-listed Stocks that conducted Share Buybacks in May 2020
			
			
			Number of Shares/units Authorised for Purchase in Current Mandate
			
			
			Total Number of Shares/units Purchased in May 2020
			
			
			Total Buyback Consideration  (including stamp duties, clearing changes etc.) paid or payable for the shares in May 2020
			
			
			Average Share Price Paid (including stamp duties, clearing changes etc.) in May 2020
			
			
			Cumulative Number of Shares/units purchased in Mandate to 31 May 2020
			
		


			SINGAPORE TECHNOLOGIES ENGINEERING 
			
			
			62,429,441
			
			
			2,000,000
			
			
			$6,307,338
			
			
			$3.15
			
			
			2,000,000
			
		


			SINGAPORE PRESS HOLDINGS
			
			
			159,456,338
			
			
			2,080,500
			
			
			$3,120,383
			
			
			$1.50
			
			
			4,698,100
			
		


			GLOBAL INVESTMENTS
			
			
			168,741,864
			
			
			18,484,200
			
			
			$2,530,249
			
			
			$0.14
			
			
			131,002,600
			
		


			SINGAPORE TELECOMMUNICATIONS
			
			
			816,457,915
			
			
			463,886
			
			
			$1,179,153
			
			
			$2.54
			
			
			945,055
			
		


			KEPPEL CORPORATION
			
			
			36,340,188
			
			
			65,024
			
			
			$391,838
			
			
			$6.03
			
			
			1,575,124
			
		


			STARHUB
			
			
			173,022,009
			
			
			200,000
			
			
			$286,367
			
			
			$1.43
			
			
			2,136,553
			
		


			HONG FOK CORPORATION
			
			
			86,147,124
			
			
			335,300
			
			
			$245,033
			
			
			$0.73
			
			
			13,422,300
			
		


			CHUAN HUP HOLDINGS
			
			
			92,827,285
			
			
			1,016,900
			
			
			$198,669
			
			
			$0.20
			
			
			2,991,700
			
		


			GRP
			
			
			18,789,481
			
			
			1,066,600
			
			
			$180,831
			
			
			$0.17
			
			
			6,134,100
			
		


			GKE CORPORATION
			
			
			78,853,189
			
			
			3,009,000
			
			
			$178,076
			
			
			$0.06
			
			
			7,059,300
			
		


			THE STRAITS TRADING COMPANY 
			
			
			40,694,407
			
			
			50,000
			
			
			$78,800
			
			
			$1.58
			
			
			50,000
			
		


			KSH HOLDINGS
			
			
			56,813,564
			
			
			262,500
			
			
			$77,749
			
			
			$0.30
			
			
			3,635,900
			
		


			TUAN SING HOLDINGS
			
			
			118,414,021
			
			
			218,200
			
			
			$50,640
			
			
			$0.23
			
			
			338,200
			
		


			SINGAPORE REINSURANCE CORPORATION
			
			
			60,521,978
			
			
			163,200
			
			
			$45,747
			
			
			$0.28
			
			
			7,911,800
			
		


			SARINE TECHNOLOGIES
			
			
			35,059,572
			
			
			150,000
			
			
			$35,334
			
			
			$0.24
			
			
			763,800
			
		


			ELLIPSIZ
			
			
			16,712,818
			
			
			60,100
			
			
			$18,942
			
			
			$0.32
			
			
			459,900
			
		


			SHOPPER360
			
			
			11,440,000
			
			
			36,200
			
			
			$3,439
			
			
			$0.10
			
			
			2,717,700
			
		


			OKP HOLDINGS
			
			
			30,762,939
			
			
			14,500
			
			
			$2,489
			
			
			$0.17
			
			
			18,600
			
		


			Total
			
			
			 
			
			
			29,676,110
			
			
			$14,931,077
			
			
			 
			
			
			 
			
		

 Source: Bloomberg, SGX (Data as of 31 May 2020). 
 

Share buyback transactions involve share issuers repurchasing some of their outstanding shares from shareholders through the open market. Once the shares are bought back, they can be converted into treasury shares, which means they are no longer categorised as shares outstanding. Motivations for share buybacks can include employee compensation plans (such as share option schemes or employee share purchase plans) or long term capital management. Buybacks can pick up amidst market declines that are driven by broader moves on international macroeconomic developments.  
The date of the relevant share buyback mandate is also provided in the table above, in addition to the amount of shares authorised to be bought back under the mandate. The total number of shares purchased under the mandate is also provided.  
Share buyback information can be found on the company disclosure page on the SGX website, using the Announcement category and sub-category of Share Buy Back-On Market (click here). As best practice, companies should refrain from buying back their shares during the two weeks immediately before its quarterly financial statements and one month immediately before the full-year financial statements.



ST Engineering Leads Buyback Consideration Tally on New Mandate 

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Real Estate Managers & Developers Led the STI in 2017 YTD

Partner, River Valley Asset Management

River Valley Asset Management

Partner

Singapore-based boutique asset management firm

River Valley Asset Management is a Singapore-based boutique asset management firm. Our team at RVAM strongly believes in being a trusted steward of our clients' wealth across generations.

Each of our fund managers has years of rich portfolio management experience over multiple market cycles at world-class investment houses. We bring our clients the combined strength of our investment team to manage their financial portfolios and to provide bespoke guidance on all aspects of their financial health.

We offer multi-asset class expert investment advice to accredited investors who are family offices, high net worth individuals and institutional investors to preserve and grow our clients' wealth.

The fund management team of the company includes Homiyar Vasania, Anand Ramachandran and Jamshed Desai.

Thematic (Sector/Industry)

As a mature economy with stable businesses, Singapore's equity benchmarks are dominated by Banks &amp; Government Linked Companies (GLC's) which have grown large over time. The large listed companies in Singapore (private as well as GLC’s) are now facing headwinds from tight labour markets resulting in rising costs and, in the absence of growth, the need to focus on raising productivity.  It is therefore not surprising that the Singapore markets do not excite the average investor. However, within this space we have been finding many hidden gems which have consistently delivered and increasingly fit the needs of a Singaporean investor looking for stable returns in a low growth environment: the REIT marketplace. Over the last seven years the REIT index has delivered over 10% p.a. annualized return which stands in stark contrast to the meagre 4% returns from benchmark STI index.

As a mature economy with stable businesses, Singapore's equity benchmarks are dominated by Banks &amp; Government Linked Companies (GLC's) which have grown large over time. The large listed companies in Singapore (private as well as GLC’s) are now facing headwinds from tight labour markets resulting in rising costs and, in the absence of growth, the need to focus on raising productivity.   It is therefore not surprising that the Singapore markets do not excite the average investor. However, within this space we have been finding many hidden gems which have consistently delivered and increasingly fit the needs of a Singaporean investor looking for stable returns in a low growth environment: the REIT marketplace. Over the last seven years the REIT index has delivered over 10% p.a. annualized return which stands in stark contrast to the meagre 4% returns from benchmark STI index.

Singapore

Tuan Sing Holdings Limited an investment holding company with interest mainly in property development, property investment and hotel ownership.

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ST Engineering Leads Buyback Consideration Tally on New Mandate

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Real Estate Managers & Developers Led the STI in 2017 YTD

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As a mature economy with stable businesses, Singapore's equity benchmarks are dominated by Banks & Government Linked Companies (GLC's) which...

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