Institutional investors are typically large investors, such as fund managers, sovereign wealth funds and insurance companies. Unlike retail investors who invest their own money, institutional investors invest on behalf of others.
It’s worth observing what institutional investors are doing because the companies they choose to invest or exit their position from can be seen as a sign that they have identified some value propositions or challenges that cause them to adjust their position. While institutional investors are not always right, it’s fair to say that their investment decisions are carefully considered as they are held accountable by the people they are investing on behalf of.
In this week’s edition of 4 Stocks This Week, we look at 4 companies on the Straits Times Index (STI) that have received the most amount of net institutional inflow in 2022 thus far.
Note, information used in this article has been extracted from SGX Market Update. You can read their full commentary here.
OCBC (SGX: O39)
From 3 to 7 February 2022, OCBC (SGX: O39) saw a net institutional inflow of $124 million. This brings their net institutional inflow for the year to $520 million, which represents about 0.9% of their current market capitalisation.
Since the start of 2022, OCBC share prices have gone up by about 17%, and it’s now trading at $13.33. The bank, which has been hit by an unfortunate rise in phishing scams over the past two months, will be releasing its FY2021 results on 23 February.
UOB (SGX: U11)
UOB (SGX: U11) saw a net institutional inflow of $116 million from 3 to 7 February, bringing the total net institutional inflow for the year to $356 million, representing about 0.7% of its current market capitalisation of about $53 billion.
Since the start of the year, UOB share prices have gone up by about 21%, from $26.93 to $32.60 currently. This follows a very strong 2021 when the stock gave a total return of 24% to investors.
The big news for UOB investors is the major announcement last month that UOB will be acquiring Citigroup’s consumer business in Indonesia, Malaysia, Thailand and Vietnam for about $4.915 billion. Excluding one-off transaction costs, UOB believes the acquisition will be expected to immediately accretive to UOB’s earning per share (EPS) and return on equity (ROE).
UOB will be announcing its FY2021 results later this week on 16 February.
DBS (SGX: D05)
DBS (SGX: D05) share price has been on a tear since the early day of the pandemic when it was trading at about the $18 range for a short period ($18.16 on 20 March 2020). After recovering to about $25 at the end of 2020, it generated a total return of 35% in 2021, which is even more impressive considering that it’s already the company with the biggest market capitalisation on the Singapore Exchange. For 2022, share prices are up by about 13%. It’s now trading at $37.25.
From 3 to 7 February 2022, net institutional inflow for DBS was at $104 million with year-to-date inflow at $309 million, or about 0.3% of the company’s market cap.
Earlier this week, MAS imposed an additional capital requirement on DBS following the widespread unavailability of DBS’s digital banking services from 23 to 25 November 2021. MAS now requires DBS to apply a multiplier of 1.5 times to its risk-weighted assets for operational risk. This translates to an additional amount of approximately S$930 million in regulatory capital (based on reported financial statements as of 30 September 2021) that will be required for DBS.
Singtel (SGX: Z74)
Singtel (SGX: Z74) performance has been disappointing for investors over the past five years as the company has seen its share price, net profit and dividends decline.
Once considered a stable, defensive blue-chip company that can withstand crisis due to the nature of its business, Singtel took a hit on both its revenue and profit when global travel came to a halt, leading to a decline in revenue from its roaming and prepaid mobile business. This has caused the interim ordinary dividend to decline from 6.8 cents per share in 2020, to 5.1 cents in 2021 and 4.5 cents in 2022.
Fortunately, the company appears to have done better in 1H2022, with its net profit more than doubling to $954 million. Net institutional inflow for Singtel in 2022 is currently at $233 million and share prices are up by about 9% thus far in 2022. The stock is currently trading at $2.55.
Read Also: 4 Blue Chip Stocks Looking To Recover From The Pandemic
4 Stocks This Week is not a recommendation from us to buy or sell any of these stocks. For investors who are keen to find out more, you should continue researching about them before making your investment decisions.
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