Looking back on 2017: Best Performing Blue Chip Stocks in Singapore
The Singapore market had a good recovery in 2017, as oil and gas prices stabilised and Singapore’s GDP reported a good fourth quarter. The STI recovered strongly from 2880.76 points at end 2016 to finish the year at 3402.92 index points, inking a handsome gain of 18%.
The market recovery coincided with the recovery in global markets, as Japan’s Nikkei 225, UK’s FTSE 100 and US S&P 500 surged past their historical highs seen before the GFC in 2007.
Singapore GDP grew 3.5% for the full year for 2017, and stock market gains followed suit from the strong GDP growth. Blue chip stocks, which are the main component stocks for the STI index, have done well overall, with some blue chip stocks outperforming other laggards. The table below summarised the top performing blue chip stocks in Singapore.
|Singapore Blue Chip Stocks||2017 price gain|
Global Logistic Properties
The best performing blue chip stocks goes to Global Logistic Properties, with a market beating returns of 53% for the year 2017. The main drive for the stock price gains was due to a privatisation scheme by private equity players and management. Stock trading for the shares will be suspended effective 5 January 2018 and investors will be receiving their cash and surrendering the shares to the buyout offeror. Logistics sector has been touted the main growth sector due to rapid e-commerce adoption and corporate actions involving acquisitions of logistics players has been very active. Investors can look towards other listed logistics players in the market after the delisting of GLP.
Genting Singapore has seen a reversal of fortunes in 2017 since the local gaming sector suffered a hit due to Chinese policy of strict capital controls. Share price were up a whopping 45% in 2017, backed by uplift of 3Q 2017 gaming revenue growth. Premium VIP gaming revenue recovered strongly in 2017 and investors are looking past the slump in 2016 into the potential success of gaming license bidding from the Japanese government. Genting Singapore has rewarded investors handsomely in 2017 and is an undisputed top performing blue chip.
DBS Group, Singapore’s largest bank by assets was up 43% for the whole of 2017, underpinned by rising interest environment, which bodes well for its net interest profit margins and stabilization of the oil and gas sector. DBS bank provided large provisions in Q3 2017 for its oil and gas loan books, and is set to focus on other business segments to recover from the fall in net profits. 2018 will see 3 more expected interest rate hike by the Federal Reserve, and DBS Bank can ride on the this tailwind for net interest margin expansion.
OCBC was no slouch as well, delivering a 39% price gains for 2017. 2017 was generally a good year for banking stocks, with the bad patch being the continued lingering stress in the oil and as sector. OCBC Bank wealth management department and insurance segment delivered the growth on top of core interest income earned. 2017 saw 3 interest rate hikes as US economy improves and local interest rate ticked up as well. OCBC has been a beneficiary of rising interest rate environment.
UOB outperformed the general market as well with a record 30% price gains in 2017. Net interest margin expansion was the main profit growth contributor, as evidenced from its Q3 2017 net earnings release. UOB Bank has benefitted from the Asian economy recovery, and remained focused on providing customers the best banking products to support their Asian operations.
Keppel Corporation was hit badly in the 2015 oil and gas price plunge and subsequent sectorwide downturn, with slowing orders and project pipelines. 2017 was a year of recovery, rising from its slump to record a 27% gain in share price. Keppel Corp is no longer solely reliant on its oil and gas rig building revenue for profit contribution, but has property development division to sustain in its future earnings. Q3 2017 property division contributed around 50% of total revenue. Oil and gas orderbook recovery has propelled its share price throughout 2017.
2017 has shown that individual blue chip stocks have the ability to outperform the broader market performance. However, here’s a fair warning: Past performance is not an indicator of future performance.
Will you be investing in the same stocks this year? And should you? The newsflow is changing constantly, including some of the stocks in our list (Keppel). Investors would do best to monitor the market before making an investment decision.