Clash of the Big Brains!

It is customary for our 3 local banks to provide investment outlook for the upcoming year every year-end. How have their 2017 strategies fare year-to-date? Do they really add value? Which bank – DBS, OCBC or UOB – is the big winner so far?

DBS Equity Strategy for 2017

Recall that DBS Research Head Janice Chua issued her strategy piece on 14 Dec 2016, calling the Singapore market “inexpensive” and expecting a recovery in corporate earnings in 2017 after 2 years of contraction.

While she expects external headwinds to drive volatility, she identified 4 themes that are likely to perform in this volatile environment:

  • Companies with growth and earnings turning around: Genting Singapore, Ezion, OCBC and mm2
  • Companies with sustainable dividend yields and cash flows: ComfortDelGro
  • Beneficiaries of US recovery and USD strength: ST Engineering and Venture Corp
  • M&A plays: Global Logistics and Thai Beverage

She also added that City Developments was undervalued and would be re-rated if the government relaxes the property cooling measures. Assuming if we hold these 10 names in a portfolio with equal weightings, the total return year-to-date would be a whopping 17.9%!

OCBC Equity Strategy for 2017

OCBC Head of Research Carmen Lee issued her 2017 strategy report 2 weeks earlier, also with a view that the Singapore stock market was inexpensive. However, her views were slightly skewed towards the cautious end, as she expects the sentiment to remain lacklustre at least in the first half of 2017.

As a result, she adopted a bottom-up stock-picking approach, picking a number of REITs (Ascendas REIT, Frasers Centrepoint Trust, Frasers Logistics & Industrial Trust, Keppel DC REIT), developers (CapitaLand, OUE, Global Logistics), and defensive names (Raffles Medical, Sheng Siong and SingTel). Her portfolio would have generated a 12.2% return year-to-date.

UOB Equity Strategy for 2017

Around the same time, UOB Research Head Andrew Chow also gave his take on 2017 investment outlook. He was hopeful that corporate earnings would recover in 2017, but acknowledged that there are headwinds in sight. His views were also relatively cautious, as he expects another challenging year ahead with volatility to remain elevated. His strategy was to buy on weakness and prefers laggard blue chips with earnings visibility and dividend yield. His top picks were Ascendas REIT, CapitaLand Commercial Trust, CapitaLand, Frasers Logistics & Industrial Trust, OCBC, Raffles Medical, Sembcorp Industries, SingTel, ST Engineering and Venture Corp. His portfolio would have yielded 14.7% YTD.


It is commendable that all 3 investment strategies by our local banks would have helped investors earn double-digit returns for the year-to-date. However, the findings would not be complete if the returns are not compared to the benchmark returns over the same period. This is because the returns may be just mirroring the strength of the Singapore stock market, and not reflective of the good judgement and investment recommendations by the banks. Hence, we do a head-to-head comparison of the portfolio returns and benchmark returns, as shown below.

It is now clear that the Singapore stock market has been buoyant since the start of 2017, returning 12.8% based on the Straits Times Index and 13.8% based on MSCI Singapore YTD. In this light, it is also obvious that the top picks by OCBC would have underperformed the benchmarks’ returns, UOB marginally ahead, and DBS would have comfortably outperformed the benchmark returns. Kudos to DBS for the good judgement and investment recommendations!