How to invest in Singapore blue chip stocks

The mighty STI is officially the worst performing stock index in Asia. Google and you read many post about this. Let me first explain why I think the STI is such a laggard.

Banks

  1. DBS
  2. UOB
  3. OCBC

SREITS

  1. Ascendas
  2. MCT
  3. MLT
  4. MIT
  5. CICT
  6. Keppel DC

Old economy businesses

  1. City Dev
  2. UOL
  3. HongkongLand
  4. Jardine C&C
  5. JMH
  6. JSH
  7. DairyFarm
  8. Genting
  9. Thaibev
  10. Venture
  11. Wilmar
  12. Yzj

Gov related businesses

  1. SIA
  2. Comfort Delgro
  3. ST Engrg
  4. SGX
  5. Singtel
  6. SATS
  7. Semb Corp
  8. Keppel Corp
  9. Capitaland

The banks and the SREITS have done well. Remove these 9 stocks, and the STI chart will look much worse!

Business is not as usual nowadays. It is not easy to make money as in the past. Customers have a lot more choices – online and offline. They expect good service. They expect them cheap or free. And it got to be cool 😉

Companies that succeed are those that create innovative products or services that meets the felt needs of the market. Traditional companies, especially those that employs generals, try as they might, but they cannot duplicate the success of entrepreneurial market leaders.

So how do I invest in Singapore blue chip companies? Invest in Singapore banks and blue chip REITS only! These forms my core portfolio for dividend income.  

I shall reveal my top 9 stock holdings by weightage:

The next image shows my equity returns vs the STI since June 2019.

My objective is to outperform the STI by investing in a diversified portfolio of local banks, REITS, tech stocks, and bonds.

The tech stocks I invest are listed in US and HK. I strongly believe we are in an age of renaissance for technology for the next 5 years at least. Look out for my next blog on tech stocks. I shall share about a little known Singapore company that is bigger than DBS!

My Reits plan for 2021

The Reits landscape in 2021 will probably see:

  1. More acquisitions
  2. More rights issues
  3. Reits that recover their pre-Covid DPU will increase in price
  4. Sector rotation plays:
    • We have already see taking profit in Industrial to buy Covid affected Retail and Hospitality.
    • When vaccinations and air travel about to resume, will see profit taking in Retail to rotate to Hospitality.
    • From large caps to small caps

I am now holding the following Reits:

  1. Ascendas Reit
  2. Capitaland Retail China Trust
  3. Capitaland Intergrated Commercial Trust
  4. Frasers Centrepoint Trust
  5. Keppel DC Reit
  6. Link Reit (HK)
  7. Mapletree Commercial Trust
  8. Mapletree North Asia Trust

I would like to buy back Mapletree Ind Trust and Mapletree Log Tr this year, having sold them last year. I would also like buy more of the above stocks.

I am intentionally Retail Reit sector heavy, and I also intentionally stay away from tourism related reits.

My preference of reit sector : Retail > Industrial > Office > Hospitality

Personally I think LippoMalls and First Reit are good buys now when the price are near the rights issue prices. However, there are so many other Reits to choose from, and with less risk too. Furthermore, Indonesia will probably be struggling with Covid for some time.

Why I like Frasers Centrepoint Trust

One of my most common confusion among investors is to think that The Centrepoint at Orchard Road is owned by Frasers Centrepoint Trust (J69U.SI). It is not. The Centrepoint is owned by Frasers Property. What are the shopping malls owned by Frasers Centrepoint Trust (FCT)?

Read more

Elite Commercial Reit IPO

I have been wanting to invest in UK properties for some time, as I have the view that Brexit is good for UK. I was looking for Reits listed in UK, but did not find any that I like. This latest IPO will give me the opportunity to put my thoughts into action, and without hassle of managing lawyers, real estate agents, bankers, and renovation contractors.

Read more

Comparing Debt to Earnings

I always compare my leveraged returns against the best practices in the market, such as professional REIT managers borrow banks to make money for their Real Estate Investment Trusts (REIT). This allows me to evaluate the risks that I am taking vs the potential returns.

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My Reit watchlist : Reits with increasing DPU

The following are Reits with increasing DPU. Some of them have pretty low dividend yield, which I have to wait for a major correction before collecting.

  1. Heathcare
    1. Parkway Life (wait for major correction)
    2. First Reit
  2. Industrial
    1. Mapletree Ind
    2. Keppel DC (wait for major correction )
  3. Office
    1. Capita Com
  4. Retail
    1. Mapletree Com
    2. Mapletree GCC
    3. Fortune (wait for major correction)
  5. Hospitality
    1. Ascendas HTrust

Read more