Overall, SGX-listed stocks have booked S$2.8 billion of net institutional fund outflow and S$1.4 billion of net retail inflow in the year to Jul 18. 

WITHIN the Singapore stock market, Sembcorp Industries : U96 +0.18% and Seatrium : S51 -1.36% have booked the most net institutional fund inflows in the year to Jul 18.

 

Both stocks have been associated with pivots to sustainable infrastructure and have also ranked among Singapore&rsquo s most traded stocks over the period.

 

Seatrium has been Singapore&rsquo s sixth most traded stock, while Sembcorp Industries has ranked among the 15 most traded stocks, up from ranking among the 30 most traded stocks in 2022.

 

The next two stocks that have seen the next highest net institutional inflow, Genting Singapore : G13 -1.58% and Singapore Airlines : C6L +0.41% (SIA), have been associated with the new value the globe has put on travel and leisure following Covid, with SIA ranking as Singapore&rsquo s fifth most traded stock so far this year and Genting Singapore keeping its place among the 10 most actively traded.

 

At the same time, stocks that have booked the highest net institutional outflow included DBS : D05 +0.58%, UOB : U11 +0.7%, Singtel : Z74 +1.17%, OCBC : O39 +0.4% and Keppel Corporation : BN4 -2.44%.

 

Overall, Singapore Exchange-listed stocks have booked S$2.8 billion of net institutional fund outflow and S$1.4 billion of net retail inflow in the 2023 year to Jul 18.

 

By comparison, the same period in 2022 saw around S$200 million of net institutional outflow and S$1.1 billion of net retail inflow.

 

This indicative flow has been aggregated at an account level for both retail and institutional participants. The net amounts are derived from subtracting the total sell amount from the total buy amount for each of the institutional fund and retail fund segments.

 

The fund flow does not include net buying and net selling by market makers and active traders. Rather, this segment of flow bridges the difference between net institutional and net retail fund flow.

 

Fund flow & the impact of market capitalisation

While S$2.8 billion of net institutional fund outflow and S$1.4 billion of net retail inflow might insinuate that stocks were mostly net sold by institutions, with maybe half as many stocks net bought by retail investors, these dollar amounts should also be measured against the size of the stocks to give an idea of the subsequent scale of the flow.

 

Stocks that lead the inflow and outflow tallies are typically those that maintain larger market capitalisation, in addition to daily turnover.

 

For instance, DBS and UOB, which rank as the largest and third-largest stock by market capitalisation in the Singapore market, have, as noted above, drawn the highest net institutional fund outflow and highest net retail inflow in the year to Jul 18.

 

While DBS has booked S$1.4 billion of net institutional fund outflow, this represented some 1.7 per cent of its market capitalisation on Jul 18.

 

Similarly, the S$819 million of net institutional outflow booked by UOB represented 1.8 per cent of its market capitalisation on Jul 18.

 

On a sector market-capitalisation-weighted basis, banks and real estate investment trusts (Reits) led the net institutional outflow for the year to Jul 18, with the trio of banks seeing combined net institutional outflow at 1.3 per cent of their combined market capitalisation, and Reits seeing net institutional outflow at 0.5 per cent of their combined market capitalisation.

 

As many as 30 of the 40 trusts in the Singapore Reit sector booked net institutional outflow.

 

US office Reits Prime US Reit : OXMU -4.05% and Manulife US Reit : BTOU -0.88% booked the highest net institutional outflow proportionate to their respective Jul 18 market capitalisations.

 

This has coincided with continued weakening of occupancy performance across the United States office market due to a slowdown in demand and leasing activity, as Manulife US Reit noted recently.

 

On a sector market-capitalisation-weighted basis, the sectors that saw the highest net institutional inflow proportionate to their market capitalisations were utilities, energy/oil & gas, and then consumer cyclicals.

 

All in all, the net institutional flow in the year to Jul 18, represented 0.3 per cent of the total market capitalisation of the Singapore stock market as at Jul 18, while the net retail inflow represented less than 0.2 per cent.

 

There were also multiple stocks that booked both net institutional inflow and net retail inflow for the year to Jul 18, which included four actively traded stocks: ESR-Logos Reit : J91U 0%, CapitaLand China Trust : AU8U 0%, Nio : NIO -1.05% and Emperador : EMI -0.98%, that together averaged a 0.9 per cent decline in total returns over the period.

 

A caveat on fund flow & performances

When comparing flow and returns, investors must be mindful not to interpret net fund flow as stock performance indicators, just as much as past performance has no bearing on future returns of a stock.

 

Fund flow simply indicates how investor genres such as institutions and retail investors are moving funds.

 

There can be a myriad of strategies applied by portfolio managers to achieve returns and attempt to mitigate market risks, including portfolio balancing techniques.

 

These techniques could see such an institution turn from being a net buyer to a net seller of a stock, sector, or country index because of its comparative outperformance to the rest of the portfolio. Such rebalancing can be a part of the typical processes that shape portfolios thus, context matters.

 

For instance, as discussed above, DBS and UOB have booked a combined S$2.2 billion of net institutional outflow in the year to Jul 18.

 

As an educative example, earlier this year an investor may have anticipated interest rates were near highs and thus reduced previous overweight exposure to banks.

 

In addition, some outperformance in Singapore in 2022 saw both DBS and UOB average 9 per cent total returns even as Asia-Pacific banks generated average declines in the vicinity of 2 per cent.

 

This context could indicate that portfolio rebalancing could have been a contributing factor to the net institutional outflow.

 

Similarly, currency moves may also prompt rebalancing. From the end of 2022 through to Jul 18, 2023, for instance, a Singapore dollar (SGD) appreciation saw the USD/SGD fall from 1.340 to 1.323, which may have impacted the size of the net institutional outflow for the period.

 

By comparison, SGD depreciation, with the USD/SGD rising from 1.349 to 1.396 for the first 28 weeks of 2022 may have resulted in significantly less net institutional outflows.

 

Significant corporate actions can also impact the flow.

 

For instance, coinciding with the completion of the combination of Sembcorp Marine and Keppel Offshore & Marine in February, the first two months of 2023 had seen Keppel Corporation book S$188 million of net institutional fund outflow, while Seatrium, then Sembcorp Marine, booked S$46 million of net institutional fund inflow.

 

Ong had joined Singtel as an independent director in April 2014, making this her ninth year in the role. 

CHRISTINA Ong, an independent director of Singtel : Z74 +1.17%, is still eligible to be retained in her role despite exceeding nine years of service this year, due to a transitional period implemented by the Singapore Exchange.

 

Singtel disclosed this in a bourse filing on Sunday (Jul 23), in response to a shareholder query ahead of its upcoming annual general meeting (AGM) on why Ong is still being retained as a director.

 

Ong is chairman and a senior partner of law firm Allen & Gledhill. She joined Singtel as an independent director in April 2014. Under a new rule introduced in January, SGX introduced a nine-year tenure limit for independent directors, exceeding which the director must resign or be designated as &ldquo non-independent&rdquo .

 

However, the deadline for this is no later than the AGM for the financial year ending on or after Dec 31, 2023, Singtel said in its filing. The company&rsquo s 2023 financial year had concluded in March.

 

&ldquo Therefore, on the recommendation of the corporate governance and nominations committee of the company, the board continues to consider Mrs Ong to be an independent director,&rdquo Singtel said.

 

Queries on strategy, SingPost

The company also addressed several other shareholder queries on its business strategy and investments.

 

One shareholder asked how Singtel&rsquo s new infrastructure unit, Digital InfraCo, could better unlock the latent value of the telco&rsquo s assets.

 

Singtel in April announced the formation of Digital InfraCo to house its regional data centre business, subsea cable and satellite carrier businesses. The unit will also include Paragon, Singtel&rsquo s platform for 5G and cloud-related technology.

 

The company said that grouping these assets under Digital InfraCo &ldquo will allow it to be valued at its proper market value, instead of the telco multiples it is trading under today&rdquo . This gives Singtel the option to &ldquo illuminate the value&rdquo of the assets should opportunities arise.

 

Singtel also outlined its strategy for the data centre business, with demand for data storage expected to surge with the rise of generative artificial intelligence.

 

It has three key projects: It will be breaking ground on a 58 MW data centre in Tuas in the coming months, and is also building 17 MW and 20 MW data centres in Indonesia and Thailand, respectively.

 

&ldquo The three projects, which double our data centre capacity when operational in 2025, will help us capture greater growth and further entrench our position as the region&rsquo s leading sustainable data centre player,&rdquo Singtel said.

 

The company is exploring more data centre opportunities in other regional markets, including Malaysia and Vietnam.

 

Separately, Singtel addressed a query on whether the decline in the market value of its associate SingPost : S08 0% has any financial impact. In response, Singtel said that SingPost&rsquo s contribution is &ldquo not significant&rdquo to the group.

 

It added: &ldquo We constantly review our portfolio of assets and are open to monetising assets that do not fit in with our strategy or if we feel will lead to greater shareholder value.&rdquo