Small Mid Cap Monthly - Diamonds in the Rough
- Sticking with well-managed, cash-generative companies with clear growth catalysts as we roll forward our conviction picks for December: China Aviation Oil, Cityneon, CNMC Goldmine, Katrina Group and Singapore O&G
- Equity Explorer: Singapore Myanmar Investco.
Conviction Picks – November and December 2016
Review of our performance for November
- We saw broad-based gains across Singapore’s equity markets over the last three weeks, as the indices (represented by the FTSE STI, FTSE Small Cap and FTSE Mid Cap indices) posted gains of 2.6% on average.
- This was mainly led by the large caps as banking stocks rallied on Trump’s pro-growth policies and helped by the rebound in oil prices after oil producers finally reached an agreement to cut output after their meeting in Vienna on 30 Nov. Crude prices closed at a 2016 high of US$54.94/bbl on 1 Dec 2016, which represents a nearly 50% increase from end-2015’s US$37.28/bbl.
- Meanwhile, our conviction picks fell by 3.5% on average (from 17th Nov), mainly as CNMC’s performance (-9.5% m-o-m) was dragged by the decline in gold prices – which fell by almost 4% over the same period.
- Of our picks, CAO was the best performing, gaining nearly 5% during the month. We think this was likely due to the contango in oil markets, which should bode well for trading opportunities and possible optimisation of margins for the group.
Rolling forward our picks to December…
- This month, we keep all of our picks from November as we continue to focus on well-managed, cash-generative companies with clear growth catalysts, which could allow them to fare better vs their respective sector peers ahead.
Equity explorer - Singapore Myanmar Investco
- A proxy to Myanmar plays, Singapore Myanmar Investco, aims to achieve at least one of the three aims – leadership position, early-mover advantage and/or monopoly position for each of its five key business segments.