Market Review and Trends
10 Biggest US Exposure Plays Generated 35.6% YTD Weighted Returns
By SGX My Gateway  •  October 31, 2017
US 3Q GDP will be released on Oct 27 (Fri). Focus will be on economic impact from hurricane Harvey and Irma, President Trump’s push for US tax reforms and decision on the Federal Reserve Chair replacement. The 10 largest capitalized stocks with at least 20% of their revenue from US have averaged a market capitalisation-weighted total return of 35.6% in the year to date. This compares with the Dow Jones Industrial Average and S&P 500 Index’s 13.2% and 9.2% respectively in SGD terms.  The six non-inverse US equity ETFs listed on SGX have averaged a total return of 12.5% in the year thus far. There are 10 US ETFs listed on SGX. Seven track equity indices (including one S&P 500 Inverse Daily (-1x), two fixed-income assets, and one that tracks the money market. The advance estimate of third-quarter United States (“US”) GDP will be released on October 27. Economists from Goldman Sach and Moody’s have cut their forecast by 0.8% (New est: 2.0%) and 0.5% (New est: 2.5%) respectively following twin hurricanes Harvey and Irma. However, the economists see the fourth quarter getting a boost as rebuilding begins as well as the first quarter of next year once repairs are done. Prior to the hurricanes, second-quarter US GDP grew at its quickest pace in more than two years, up 3.1% versus 3.0% expected, supported by strong growth in consumer spending. According to a quarterly survey of 85 economists published by the National Association for Business Economics, most business economists predict that US economic growth will surpass 2% over the next year, despite softening in some business conditions. US growth came in at 1.5% in 2016 and 2.9% in 2015. Source: SGX, Bloomberg (data as of 25 Oct 2017) US Monetary Policy and Tax Reforms in Focus  President Trump is expected to soon announce the Chair of the Federal Reserve taking effect in 2018.Expectations are for the Fed Chair Janet Yellen to either be re-nominated, or for Board Governor Jerome Powell or Stanford Professor John Taylor to be nominated. Last Friday night, the Fed Chair reiterated that the two key tools of US Monetary Policy were large scale asset purchases and forward guidance about the intentions for the future of short-term interest rates. The Fed has commenced the roll-off of those asset purchases from its balance sheet this month. Monetary policy and its leadership was not the only policy in focus last week. Expectations have been built in that US tax reforms, which would widen the US Federal Deficit by US$1.5 trillion over 10 years, could find passage this year or in early 2018. Should the US see a non-hawkish Fed Chair for the next four years, combined with the taxation overhaul finding passage, its economy will enter a new phase of balanced policy coordination to drive its economic stability. 10 Biggest US Exposure plays generated average 35.6% YTD weighted returns The US is the largest foreign investor in Singapore and conversely, Singapore is among the largest investors from Asia in the US. In the joint statement following their meeting on October 23, President Trump and Prime Minister Lee affirmed the robust economic relations between the US and Singapore. Bilateral trade has almost doubled from pre-Free Trade Agreement levels to reach more than US$68 billion in 2016. 20 of SGX-listed companies generated at least 20% of their revenue from the US last year. Half of the 18 companies generate more than 50% of their revenue from the US. In the 2017 year to date, the 10 biggest primary listed US exposure plays have averaged a market capitalisation-weighted total return of 35.6%, compared to the 13.2% and 9.2% in SGD terms (16.1% and 20.3% in USD terms) for the Dow Jones Industrial Average (Dow Jones) and S&P 500 Index (S&P 500) respectively. The five best performers among the 10 stocks in the year thus far were: Hi-P (+286.1%), Chuan Hup (+46.8%), Singhaiyi (+45.4%), Sembcorp Marine (+36.0%) and Manulife US REIT (+29.4%) with an average +88.8% total return and an average ROE of 8.6%.
Name SGX Code Market Cap S$M Last Price*  Total Return YTD % P/E (x) P/B (x) ROE % US Geo Seg Rev % GICS Sector
ST Engineering S63 10,688 3.430 10.5 23.1 5.1 22.4 24 Industrials
Olam Intl O32 7,243 2.400 25.9 18.1 1.4 8.9 23 Consumer Staples
Sembcorp Marine S51 3,876 1.855 36.0 67.2 1.5 2.3 20 Industrials
Hi-P Intl H17 1,382 1.710 286.1 16.8 2.3 15.0 25 Information Technology
Manulife US REIT** BTOU 986 0.915 29.4 12.0 1.1 10.0 100 Real Estate
K1 Ventures BLT 336 0.775 -6.1 2.2 1.0 55.4 100 Financials
Singhaiyi Group 5H0 370 0.129 45.4 8.1 0.7 9.4 78 Real Estate
GP Industries G20 339 0.700 22.6 17.9 1.0 5.5 25 Information Technology
Chuan Hup Hldgs C33 320 0.345 46.8 13.2 0.8 6.2 38 Information Technology
CSE Global 544 175 0.340 -20.5 N/A 0.8 -0.3 50 Information Technology
Market Cap Weighted Average 35.6 19.7@ 3.0 14.3
Source: SGX, Bloomberg (data as of 25 Oct 2017) *Last price of companies are denoted in their respective trading currencies **Note Manulife US REIT is traded in USD. Except for Last Price, SGD equivalents are shown in table. Market Capitalization calculation of Manulife US REIT includes Rights units, according to Bloomberg. @Calculation of the market cap weighted average P/E excludes Sembcorp Marine’s PE of 67.2 From a valuation perspective, SGX’s 10 biggest US exposure plays maintain a market capitalisation weighted price-to-earnings (P/E) and price-to-book (P/B) ratios of 19.7x and 3.0x respectively, lower than Dow Jones and S&P 500’s average of 20.7x and 3.5x. While the market capitalisation-weighted average Return on Equity (ROE) for the 10 biggest US exposure plays of 14.3% is lower than the Dow Jones’ 18.9%, the ROE for the 10 stocks is higher than the S&P 500’s 13.9%. Source: SGX, Bloomberg (data as of 25 Oct 2017) Note: Calculation of Weighted PE for 10 biggest US exposure plays excludes Sembcorp Marine’s PE of 67.2 Six non-inverse US equity ETFs generated average 12.5% YTD returns There are 10 US ETFs listed on SGX. Seven track equity indices, two fixed-income assets, and one tracks the money market. Of the seven equity indices, the db x-trackers S&P 500 Inverse Daily (-1X) is a Fund that takes an inverse position on the S&P 500 Index. The other six ETFs track the S&P 500 Index, MSCI USA Index, Dow Jones Industrial Average (DJIA) and Nasdaq 100 Index. The six non-inverse equity ETFs averaged a total return of 12.5% in the year thus far, bringing their one-year and three-year returns to 23.7% and 54.8% respectively. Details of the seven equity ETFs are tabled below.
Name Stock Code Total Return MTD % Total Return YTD % Total return 12M % 3 Year Total Return % 3 Year Total Return Annualised %
Inverse
db x-trackers S&P 500 Inverse Daily UCITS ETF HD6 -1.9 -18.1 -19.9 -27.9 -10.3
Non-Inverse
Lyxor ETF Dow Jones Industrial Average JC6 5.6 12.6 29.2 58.0 16.5
SPDR® Dow Jones Industrial Average ETF D07 5.3 19.5 30.0 61.3 17.3
SPDRs® S&P 500® ETF S27 2.7 9.0 20.2 48.7 14.1
db x-trackers S&P 500 UCITS ETF K6K 2.6 8.8 20.0 48.6 14.1
db x-trackers MSCI USA Index UCITS ETF KF8 2.5 8.9 19.8 47.3 13.8
Lyxor ETF Nasdaq-100 H1Q 2.3 16.0 22.9 64.9 18.1
Average* 3.5  12.5  23.7  54.8  15.7 
Source: SGX, Bloomberg & SGX StockFacts (data as of 25 October 2017) *Calculation of average only includes the Non-Inverse Funds Note: All ETFs stated in the table are Specified Investment Products (SIP) Apart from the seven equity ETFs, there are three other ETFs which track money market and fixed-income instruments. The db x-trackers US Dollar Cash UCITS ETF tracks the performance of the Fed Funds Effective Rate Total Return Index, which reflects the performance of a daily rolled deposit earning the federal funds effective rate. The db x-trackers II USD Treasuries Inflation-Linked UCITS ETF (DR) and db x-trackers II iBoxx $ Treasuries UCITS ETF (DR) reflect the performance of tradeable debt issued by the US government. The three ETFs averaged a total return of -2.7% in the past 12 months, bringing their three-year total return to 9.5%. Details of the three  ETFs are tabled below.
Name Stock Code Total Return MTD % Total Return YTD % Total return 12M % 3 Year Total Return % 3 Year Total Return Annualised %
db x-trackers II iBoxx $ Treasuries UCITS ETF (DR) KF7 -0.4 -4.2 -3.7 10.9 3.5
db x-trackers US Dollar Cash UCITS ETF IH4 0.4 -5.3 -1.4 7.6 2.5
db x-trackers II USD Treasuries Inflation-Linked UCITS ETF (DR) KF5 -0.1 -4.2 -2.9 9.8 3.2
Average 0.0 -4.6 -2.7 9.5 3.1
Source: SGX, Bloomberg & SGX StockFacts (data as of 25 October 2017) *Excluded Investment Products (EIP) ETFs To read more about the individual ETFs please visit the following websites
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