As of 04 May 2021

Betting on inflationary beneficiariesAdd Angang SteelDrop Ping An InsuranceGroup Research – Equities4 May 2021

  • Add Angang Steel
  • Drop Ping An Insurance

Photo credit: AFP Photo

Equity Picks Performance Since Inception

As of 04 May 2021

Key facts

Inception Date  22 Jun 2018TWRR (%) 10.60
Start Value HK$  1,000,000TWRR Ann (%) 3.57
Current Value 1,105,997Total Dividends 65,169

DBS Equity Picks vs Hang Seng Index: Time weighted rate of return and annualised return

Current DBS Equity Picks

As of 04 May 2021

BLUE CHIP: Provides steady growth over a longer time period
DIVIDEND: Provides steady income stream
GROWTH: Provides capital growth over 12 month  

   StockEntry DateEntry Price
Number of Shares
   ALIBABA GROUP HO04/02/2021262.20500
   BOC HONG KONG HO08/03/202128.103,500
   CM BANK-H08/04/202160.002,000
   ANGANG STEEL-H04/05/20215.91200
   CHINA EAST AIR-H08/04/20213.7430,000
   CHINA INTERNAT-H08/03/202116.206,400

Although the Fed continues its dovish tone, further inflationary data points may cause the market to start second guessing this stance. Economic optimism, expectations of higher inflation, and stimulus spending have brought forward expectations for the Fed to hike rates in Dec 2022, rather than 2023. The record-high US equity market may be vulnerable amidst this relative complacency. Should any sell-off occur, the underperforming HK market will not be spared. Whilst we continue to be bullish on the HK market in the long term, near term risk regarding inflation should not be ignored

The energy sector historically offers the best returns during inflationary times. Old economy stocks also benefit from the cyclical recovery and interest rate upcycle. We continue to prefer cyclical recovery stocks in the financials, property, materials, and energy sectors, as these are both beneficiaries of earnings recovery in 2021, and being relatively shielded from inflationary pressures. We also advocate domestic recovery, particularly in post-COVID domestic spending in China for discretionary retail, airlines, and gaming.

We remove Ping An Insurance after its earnings miss in 1Q2021, while we add Angang Steel, one of our inflationary beneficiaries into our top pick mix.