SG Market Updates

Retail Investors Net Buy S$1 Billion of Singapore Stocks in Early 2024

MQ Trader
Publish date: Mon, 19 Feb 2024, 12:53 PM
Retail investors net buy S$1 billion of Singapore stocks in early 2024Retail investors net buy S$1 billion of Singapore stocks in early 2024

THE net institutional fund flows for the first six weeks of 2024 showed a similar trend as the same period in 2023, with net withdrawals of S$463 million. This was slightly higher than the net withdrawals of S$410 million recorded in the first six weeks of 2023. The net institutional fund flows indicate the direction and level of institutional investor activity across all stocks in the Singapore market.

For the 2024 year through to Feb 14, the STI generated a decline in total return of 2.8 per cent, compared to a 2.4 per cent gain in total return for the same period in 2023. STI constituents tend to lead net flow tallies given the comparative size of these stocks, in terms of market capitalisation. Thus, rather than compiling a stock’s net fund flows in absolute terms, expressing the net flows as a percentage of each stock’s market capitalisation can be equally useful.

Consultancy Acuity Knowledge Partners said there are a handful of aspects to interpreting institutional flows to keep in mind. The fund flow outlooks can be heavily influenced by short-term, even random factors and while outlooks can vary from optimism to cautiousness to uncertainty, regular rebalancing can also distort the ability for fund flows to act as a sentiment gauge. Also, the flows are seen more as a lagging indicator.

At the sector level, financial services and S-Reits led the net outflows from institutional investors in the 2024 year to Feb 14, versus technology and consumer cyclicals for the same period last year. To the daily observers of the local stock market, this may not be much of a surprise.

In Singapore, rotating net institutional flows in the S-Reit sector were demonstrated in the last two months of 2023 versus the first six weeks of 2024. From the Nov 1, 2023, Federal Open Market Committee (FOMC) meeting though to the end of 2023, the Singapore S-Reit sector booked S$19 million in what could be potentially labelled as “cautiously optimistic” net institutional inflow. Over those two months, the CME FedWatch expectations for a Fed funds rate (FFR) cut at the Mar 20, 2024, FOMC meeting went mostly one-way, from under 10 per cent to close to 90 per cent.

Contrast that to the first six weeks of 2024, and those expectations have returned to below 10 per cent. This has coincided with the S-Reits booking more than S$200 million in net institutional outflow. While it is fair for a market observer to interpret Federal Reserve signalling that there will be an FFR cut in 2024, net flows revealed that institutions became more uncertain of the timing of the rate cut over the past six weeks.

Retail investors

There was a more notable contrast in the net retail flows between the two periods. Retail investors added S$1.1 billion into Singapore stocks in the 2024 year up to Feb 14, while they withdrew around S$190 million in the same period last year.

The financial services and S-Reit sectors were the main beneficiaries of this trend, as they accounted for half of the 20 Singapore-listed stocks that attracted the most net retail inflow in the past six weeks. All 20 stocks saw declines in total return over the six weeks, averaging an 11.5 per cent fall in total return for the period. By comparison the 20 stocks that attracted the most net retail outflow over the past six weeks averaged a 3.1 per cent total return, with just four decliners among them.

The recently released 2023 Singapore Online Investing Report from Investment Trends, revealed that domestic stocks maintain their stronghold as the preferred investment product among online investors, with over 80 per cent actively using them for trading or investment purposes. This was the fourteenth edition of this report, based on a quantitative online survey of over 2,300 online investors in Singapore conducted by Investment Trends between August and September 2023.

The S$1.1 billion in net retail inflow into Singapore stocks in the 2024 year through to Feb 14 follows consistent net inflow by retail investors for each of the four preceding years. Over the four years, the most net retail inflow was generally observed during times of market or price weakness, with the least net inflow or net outflow in the sessions with stronger market or price performances.

Comparing recent net buying and selling

While net retail inflow for the 2024 year to Feb 14 amounted to S$1.1 billion, for every six stocks that booked net retail inflows, five booked net retail outflows. The ratio was higher for about 250 Singapore-listed stocks that have averaged more than S$10,000 in average daily turnover.

For these more active stocks, five booked net retail inflows for every three stocks that booked net retail outflows over the period.

Among these 250 most traded stocks in Singapore, the 20 of them with the highest net retail inflow relative to market capitalisation over the past six weeks are detailed in Table 1. Only six of these 20 counters were also among the top 20 stocks with the most net retail inflow in absolute dollar terms (that is, not market capitalisation weighted).

This shows that most of the 20 stocks with the highest relative inflow were mid to small-cap stocks, with 15 of them having a market capitalisation below S$1 billion and eight of them below S$100 million as at Feb 14.

The 20 stocks in Table 1 represented nine different sectors, and on average, saw 13.7 per cent declines in total return for the period. As many as 18 of the 20 stocks that booked the highest net retail inflow relative to market capitalisation also booked declines in total return, while Pacific Radiance and Asia Enterprises Holding were the exceptions, booking respective total returns of 7.2 per cent and 9.1 per cent over the six weeks.

During the period, Pacific Radiance raised S$23 million in a rights issue, with rights shares issued and allotted on Feb 1. This was to raise proceeds for general purposes, including but not limited to operating costs and making strategic investments and/or acquisitions if such opportunities arise, to further strengthen its financial and cash position.

Meanwhile, on Feb 8, Asia Enterprises Holding posted a 62 per cent jump in its FY23 (ended Dec 31) net profit to S$6.1 million, from S$3.7 million in FY22.

Highest net retail outflow

Table 2 details the 20 stocks that booked the highest net retail outflow as a percentage of each stock’s market capitalisation over the period that also ranked among the 250 most traded stocks. These 20 stocks averaged 4.9 per cent total returns over the period. They included 11 of the 20 Singapore-listed stocks that attracted the most net retail outflow in absolute terms. However, the 20 stocks only represented five sectors, with 11 of the 20 counters representing the industrials sector.

The 11 industrials stocks averaged 5.6 per cent total returns over the period and were led by Beng Kuang Marine with an 18.7 per cent total return and Jubilee Industries Holdings with a 12.8 per cent total return for the 2024 year through to Feb 14.

Note that 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 groups such as institutions and retail investors are moving funds.

The data report of the full list of 250 most traded Singapore stocks for the 2024 year through to Feb 14, with their respective net institutional and net retail flows for the period can be found at https://www.sgx.com/securities/data-reports.

 

Inside Insights is a weekly column on The Business Times, read the original version.

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