Institutional investors are typically large investors, such as fund management companies, pensions, insurance companies or other non-retail entities, that invest on behalf of others.
The investments that they make a sometimes referred to as “smart money” – perhaps because they have the knowledge and expertise to make well-thought investment decisions compared to retail investors.
In our 4 Stocks This Week, we look at 4 stocks which received the most “smart money” in December 2020, and analyse how they’ve subsequently performed in December 2020 to the first half of January 2021.
How The 4 Most Bought Singapore Stocks By Institutions Performed?
During the December 2020 to 15 January 2021 period, the Straits Times Index (STI) rose 7.1%.
Source: SGX
Overall, the 4 stocks that were most bought by institutions delivered a higher in the same period. This perhaps points to why “smart money” is referred to as such.
CapitaLand (SGX:C31)
CapitaLand (SGX:C31) is no stranger to investors in Singapore – being one of the largest property developers here. CapitaLand also has wide footprint globally, with a presence in 220 cities in over 30 countries, including China, US, Europe, Australia, India and Vietnam.
Of course, it is also the sponsor to well-regarded REITs, such as CapitaLand Integrated Commercial Trust (CICT), Ascendas REIT, Ascott Residence Trust, CapitaLand Retail China Trust, Ascendas India Trust and CapitaLand Malaysia Mall Trust.
In December 2020, CapitaLand was also the stock that saw the highest net inflow of institutional funds worth $72.2 million. Note that this is on a net basis, which includes both buy and sell transactions. In total, the Real Estate (excluding REIT) sector saw a net institutional inflow of $105.8 million – which means close to 70% came from CapitaLand alone.
During the December 2020 to 15 January 2021 period, CapitaLand’s share price rose 10.9% to $3.47, from $3.13. During the same period, the STI rose 7.1%.
Read Also: Why Do Many Singaporeans Perform Poorly In The Stock Market?
CapitaLand Integrated Commercial Trust (SGX:C38U)
Another constituent of the STI – like all the stocks featured in this article – CapitaLand Integrated Commercial Trust (SGX:C38U) is also a name that does not need introduction to Singapore investors.
CICT was formed after the merger of CapitaLand Mall Trust and CapitaLand Commercial Trust – which were REITs that owned malls and office properties respectively. Today, the merged entity CICT is the largest REIT in Singapore with a market capitalisation of over $14.7 billion. It owns malls such as Plaza Singapura, Funan, Bugis Junction and Tampines Mall and 6 office properties in Singapore CBD and 2 in Frankfurt, Germany.
CICT witnessed the 2nd highest net institutional investment in December 2020 of $60.7 million. This is despite the REITs sector as a whole seeing an institution net sell of $8.9 million.
In the period between December 2020 to 15 January 2021, CICT’s share price rose 17.5% to $2.28, from $1.94. This was nearly 2.5 times the 7.1% the STI delivered in the same period.
OCBC (SGX: O39)
Everyone in Singapore will know OCBC (SGX:O39) – one of the 3 local banks here. OCBC has more than 500 branches and office in 19 countries globally, and counts Malaysia, Indonesia and Greater China as its other key markets outside of Singapore.
In the month of December 2020, institutional investors had a net investment of $55.3 million in the bank. This made it the stock with the 3rd highest net institutional fund flow on SGX.
From December 2020 to 15 January 2021, OCBC’s share price increased 5.9%. This was slightly lower than the 7.1% delivered by the STI in the same period. However, if we took November 2020 into consideration, OCBC would have delivered a stellar return of 26.7%. During this period, the STI returned 24.0% – or slightly lower than OCBC. This also highlights that the STI has been on a strong surge from November 2020 – while it had been trending sideways since mid-April to October 2020.
Read Also: 10 Companies That Beat The Straits Times Index (STI) In 2020
Wilmar International (SGX:F34)
Wilmar (SGX:F34) is also a household name for Singapore investors, even though those uninitiated may not be fully aware of its business – unlike the 3 other stocks mentioned above.
Wilmar has a market capitalisation of over $33.4 billion, making it the 7th largest company on the STI. Wilmar’s businesses include oil palm cultivation, oilseed crushing, edible oil refining, sugar milling and refining, manufacturing of consumer products, specialty fats oleochemicals, biodiesel and fertilisers as well as flour and rice milling. Wilmar counts a workforce of over 100,000 at over 500 manufacturing plants in China, India, Indonesia and some other 50 countries and regions.
Wilmar saw a net institutional buy of $30.8 million. This is compared to a net institutional sell of $1.0 million in the Materials & Resources sector on SGX.
Between December 2020 and 15 January 2021, Wilmar posted a share price gain of 24.0% to $5.22, from $4.21. This was a 3.5 times outperformance of the STI return during the same period.
The one thing we can see is that all 4 stocks that were that institutional investors bought into most in December 2020 were large-cap stocks listed on the Straits Times Index (STI). In fact, according to an SGX report, 8 of the top 10 most bought stocks in Singapore were all listed on the STI as well, while 7 of the most sold stocks were listed on the STI.
The top 4 most bought stocks also performed well in the December 2020 to 15 January 2021 period – beating out the STI return in that time. For investors like us, we only get this information a little later, and it is prudent to realise that we may have already missed the boat.
Read Also: Complete Guide To Investing In The Straits Times Index (STI) In Singapore
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