WILL SATS SOAR WITH NEW TERMINAL AT CHANGI?



Shares of SATS Ltd have performed strongly during the past few years. Investors who bought shares of SATS five years ago and held them till today would have more than doubled their investment, when dividends are included. Recently, SATS has fallen by more than 10% from its all time high of $5.39 back in January. This correction seems to be a good opportunity to invest in a business with good growth potential.

SHOULD WE INVEST IN REIT ETFs?

Last October, the Phillip SGX APAC Dividend Leaders REIT ETF was listed on the SGX, the first REIT ETF to be available here. It aims to track the performance of the 30 highest total dividend-paying REITs in the Asia Pacific Region. At the end of this month, another REIT ETF, the Nikko AM Asia ex-Japan REIT ETF would be listed, giving investors an additional investment option. With their high and consistent dividend payouts, REITs generally appeal to investors seeking regular passive income.

Some investors may be deciding between investing in individual REITs or the REIT ETF. We believe that REIT ETFs are more suitable for investors seeking diversification, with smaller capital available and with limited time to research thoroughly on individual REITs. On the other hand, investors with more capital may want to select a few individual REITs, given their higher dividend yields compared to the REIT ETFs.

HOW INTEREST RATES AFFECT REITS



The Federal Reserve has decided to raise interest rates for the third time since the 2009 financial crisis. While higher interest rates would usually depress prices of stocks with high dividend yields, such as REITs and utilities, their share prices held steady or went up after the decision for the interest rate hike was announced last week. The last two rate hikes negatively affected the markets, but this time, investors were relieved that the Federal Reserve did not indicate a more hawkish outlook.

However, rising interest rates will still affect REITs, due to their business model. REITs are often heavily reliant on debt to fund their properties, and rising rates would increase the cost of borrowing. In addition, investors usually include REITs in their portfolios as a proxy to bonds, and bonds tend to perform poorly in periods of rising interest rates.

IMPROVING VOLUMES FOR SGX



February has seen some heavy volume in the local market, as the Trump rally continues pushing markets to new highs. Securities daily average value (SDAV) in February was 1.409 billion, as reported by SGX. SGX provides monthly information on market statistics and weekly institutional and retail fund flows.



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SDAV
($ Million)


9849341,3329961,0471,409


SHENG SIONG STABLE AMID WEAK RETAIL INDUSTRY




Most of us Singaporeans would be familiar with the Sheng Siong supermarket chain. In my estate alone, there are two Sheng Siong supermarkets, conveniently located just a few bus stops away. Sheng Siong Group's financial performance has been phenomenal - investors who held Sheng Siong's shares from its IPO in 2011 till today would have tripled their initial investment, when dividends are included. Sheng Siong's presence in Singapore has also increased greatly - from 25 outlets at its IPO to 42 outlets today.

After such a strong run up in share price over the past five years, many of us wonder if Sheng Siong can continue to grow its profits for shareholders. Sheng Siong has been consistently trading at P/E ratios of above 20, which indicates that the market expects Sheng Siong to deliver strong growth. However, while I believe that Sheng Siong's fundamentals are good, there may be limited potential for further earnings growth.

SINGTEL STANDS OUT AMONG RIVALS



Investors have been closely watching for details regarding the 4th telco operator in Singapore. Shares of telcos have fallen after TPG Telecom was selected to become Singapore's 4th service provider.

Both StarHub and M1 are currently trading just above their 52-week lows of $2.73 and $1.90 respectively. Meanwhile, SingTel remains relatively stable, well above its 52-week low. The main reason why SingTel has been least affected compared to the other service providers is because net income from Singapore only makes up 29% of its total net profits. The upcoming 4th service provider for Singapore, TPG Telecom, would affect SingTel the least among the incumbents.