CIMB Singapore Strategy: We are in a safety bubble!

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#1
Bubble where got safe one? Analyst talking rubbish but its certainly TINA

19 May 2013
Singapore
Strategy Note
Strategy |PDF

We are in a safety bubble!
UNDERWEIGHT - Maintained
Author(s): Kenneth NG, CFA,

________________________________________
▊ While the Singapore market scales new highs, like stockmarkets around the world, it is the yield stocks and the stocks with earnings predictability that have outperformed. The results season showed just why – earnings for cyclical sectors continue to see cuts. In contrast, earnings were upgraded for banks, telcos and REITs. When investors look for stocks today, they want yield and earnings visibility. We see no reason for this to change. Yes, we are in a “safety” bubble and it looks likely to inflate further. We maintain an Undeweight on the FSSTI, with de-rating catalyst being full valuations for Index stocks. Our end-CY13 bottom-up target is raised by 2% to 3,460.

We are in a safety bubble!
In the late 1990s, we had the tech bubble. In the mid-2000s, developed markets had their own property bubble. With a 2008 crisis and an unresolved Europe debt problem as a backdrop now, QE is only good enough to encourage investors to go for yield and stocks with earnings certainty. In Singapore, REITs, consumer names, STE and SIAEC have hit peak valuations but continue to attract interest. As with all bubbles, this one will burst eventually also but in the meantime, as the names go up, it will be painful to sit it out.

Negatives outnumber positives
Data points from the 1Q13 results season do not provide any meat to stray from the safety bubble anyway. The number of misses outnumbers the outperformers. Tellingly, EPS cuts are coming from most of the externally exposed sectors. We provide a Corporate Singapore trendbook here, identifying three most distinct trends in each sector, gleaned over 1Q. We are incrementally positive on telcos, financials, property and consumer but more negative on capital goods, commodities and transport.

Top picks
Our index top picks are DBS, Thai Beverage, UOL, GLP, Capitaland and ST Engineering. Our non-index picks are SATS, Tat Hong, Biosensors, Courts Asia, Ezion and Vard. For sectors, we raise financials to Overweight and telcos and REITs to Neutral. We chop commodities and transport back to Underweight.
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#2
Quote:As with all bubbles, this one will burst eventually also but in the meantime, as the names go up, it will be painful to sit it out.

laugh... might as well don't say.
Making a prediction may make you a clown but making useless prediction will make you into an instant clown.
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#3
Brokerages often have nothing better to do than to come up with such brainless b/s.

Oh yes, I forgot - their aim is to make you churn, so it will be risk-on, risk-off alternately and therefore they must try to sound intelligent.
My Value Investing Blog: http://sgmusicwhiz.blogspot.com/
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#4
Everyone had used the word "yield", so they have to find a new word. But it sure sound funny.

Their picks surely don't sound like all going for "safety". Maybe they are trying to avoid it.
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#5
(20-05-2013, 09:14 AM) Wrote: ..... In Singapore, REITs, consumer names, STE and SIAEC have hit peak valuations but continue to attract interest.

.....Our index top picks are DBS, Thai Beverage, UOL, GLP, Capitaland and ST Engineering.


I wonder who help to generate the interest? No prize for the correct guess Big Grin
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#6
(20-05-2013, 09:14 AM)greengiraffe Wrote: Bubble where got safe one? Analyst talking rubbish but its certainly TINA
I think the analyst is referring to safety as in those shares which have predictable earnings and yields. And these type of shares is in a bubble state now.

M1, Starhub, SingTel, banks etc... are shares with predictable earnings and yields and those shares are hitting new high. Thats why the term "safety" bubble.

One half year ago, my mama friend already ask me how to open a brokerage account. He has intention of pumping in money into Starhub as he is fed up with the low interest rate bank is giving.
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#7
> Brokerages often have nothing better to do than to come up with such brainless b/s.

They do make some right judgments. Everyone of them called for investing in REITs then.

The materials are there to help us or mislead us. Investors beware is the name of the game.
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#8
The term "safety bubble" kinda oxymoronic.
It's bubble yet it's safe? Or there's a bubble in safe counters like telecoms, REITs?

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#9
These analysts must have aced their GP paper during 'A' Levels.......
My Dividend Investing Blog
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#10
Hot ice kachang ?
“risk comes from not knowing what you’re doing.”
I don’t look to jump over 7-foot bars: I look around for 1-foot bars that I can step over.
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