Best Blue Chip Stocks in Singapore
Like aforementioned, ETFs track the performance of a particular index. Particularly, the Strait Times Index tracks the stocks of the 30 best companies on SGX. With the attractiveness of the Nikko AM Singapore STI ETF, it implies that the equities are also performing pretty well. In this light, the following are the best Blue Chip stocks to invest in starting Q1 of 2019.
DBS Group Holdings Ltd
This year has been exceptional for DBS. Interestingly, DBS Group Holdings is the most recognizable bank worldwide. The Motley Fool reports that the institution boasts 280 branches across 18 markets. Further, the publication notes that DBS approximately 16% of the Singapore stock market benchmark. However, the bank has had a dramatic year where it started well and now the st0ck price is nearing $24.00.
On the contrary, this is not to say that the shares are not a buy. The bank has become the best employer in Singapore for another consecutive year. Also, there is rising good sentiment regarding its business model and the Singapore economy as a whole. Therefore, it is prudent that one puts the DBS shares as a high priority for 2019. Again, the institution is backed up by Temasek Holdings which owns about 29% of its shares. This implies that with the expected growth in the city-state’s economy in 2019, the shares will also grow in value.
Venture Corporation Ltd
Announcing returns for Q2 of 2018, the company revealed a growing trend in profits. This goes against many competitors that are making losses. To be precise, the company has performed far better this year than last year. Interestingly, there are better times ahead. With positive estimates for the Singapore economy for 2019, it is apparent that Venture Corp will still see growth. The profit before tax of SGD 115,181,000 reported in Q2 might be a far cry from 2019’s figures.
Interestingly, what makes Venture Corp’s shares a good buy is a fact that they are currently undervalued. The Business Times reports that there was a major sell-off in the early weeks of September, an issue that led the share price to drop to S$15.86. However, great numbers are making the share price rebound.
Further, Venture Corporation introduced the IQOS (I quit ordinary smoking) smoke-free electronic devices that are expected to see experience high sales in 2019. Already, there are approximately 1.8 million IQOS units sold in the second quarter of 2018. In addition, The Edge Singapore notes that 1.7 million units were sold in the first two months of Q3 of 2018. Therefore, this puts the sales at a higher pedestal come 2019.
For this reason, UOB Kay Hian puts a higher premium on the Venture Capital shares. The global investment bank maintains that the target price for the shares in 2019 is $18.20. In part, The Edge Singapore reads:
“Nonetheless, the analyst believes the 3Q18 pick-up in IQOS sales volume points to an encouraging 2019 for Venture Corp, the manufacturer, as it could spur replacement demand and translate to higher next-generation IQOS device production volumes – namely IQOS 3 and IQOS 3 Multi – in the following year.”
CapitaLand Commercial Trust
Singapore’s office sector outlook is said to improve beginning in late 2019 and beyond. Vijay Natajan, an analyst at RHB Banking Group in Singapore observes that most real estate companies will benefit from the positive effects of the outlook. In a sense, this is to say that CapitaLand, which has made substantial investments in property developments will benefit from the attendant positive sentiment.
According to Natarajan, there is an expected rent reversion since a good number of trust’s leases will be expiring. It is possible that the high vacancy rates witnessed last year and even this year will go down. The lesser rents will afford more business space and as a result, there will be increased income. Subsequently, there is an expected higher distribution per unit (DPU) which definitely implies higher financial returns.
Speaking to The Edge Singapore, Natajan explains:
“While we expect office rents to rebound by 5-10% for 2018, we believe that consensus is looking at more than 10% rent increase for this year. We also note that while Grade A office rents have picked up by 5% (based on CBRE data) over the last two quarters, vacancy rates (Grade A) remain on the high side at 6.2% (5- year average – 5.4%).”
United Overseas Bank Ltd
With consistently growing revenue, United Overseas Bank (UOB) is one of the three best banks in Singapore. Also, the bank boats of a strong foothold in foreign markets like China, Malaysia and Hong Kong. Over the past few months, the bank has had a flurry of activity in acquiring smaller banks across the ASEAN region. At the centre of the acquisitions is the desire to increase the asset base and to also expose its services to a larger customer base.
Data available on Singapore Exchange Limited (SGX) indicates that the corporation is performing well by all metrics available. In agreement, The Asian Nikkei Review indicates that based on the historical data, UOB is one of the best shares to buy in 2019. The company exhibits a stubbornly growing income even during global downturns.
Blue chip companies are generally on the upwards trend in terms of the share price. This is for the reason that the economy is growing as a whole. According to Singapore’s Department of Statistics, the economy grew by 2.6% in the third quarter of 2018. Further, per-sector growth was significant in the same quarter.
The numbers for Q3 represent a substantial fall from both Q2 and Q3 of 2018. However, the Ministry of Trade and Industry (MTI) estimates that Q4 2018 and the subsequent quarters will experience higher growth. Generally, the consensus is that the economy is on an upward trajectory and that every sector will experience growth.
Most important is the fact that the Blue Chip companies will be at the forefront driving the growth. Therefore, it is prudent to say that the above-mentioned companies are not the only ones that will experience growth.