Who says large-cap companies are not able to give great returns? Out of the 30 components of the Straits Times Index (SGX: ^STI), five were able to log more than 5% in returns for the month of July alone! Although we focus on long-term investing here at The Motley Fool, there’s no harm in putting on our fun cap and handing out a short review of the top 3 performers within the STI for the month of July. Banks feeling the love Two banks – United Overseas Bank Ltd (SGX: U11) and DBS Group Holdings Ltd (SGX: D05)…
Who says large-cap companies are not able to give great returns? Out of the 30 components of the Straits Times Index (SGX: ^STI), five were able to log more than 5% in returns for the month of July alone!
Although we focus on long-term investing here at The Motley Fool, there’s no harm in putting on our fun cap and handing out a short review of the top 3 performers within the STI for the month of July.
Banks feeling the love
UOB came in third with a return of 7.28% for the month of July (it moved up from S$22.52 per share to S$24.16 per share). DBS on the other hand snagged top spot as it gained 8.78% for the month.
The renewed interest in the banking sector had helped pushed both UOB and DBS higher. Oversea-Chinese Banking Corp. Limited (SGX: O39) was the only local bank that failed to rally as much due to an overhang stemming from its acquisition of Hong Kong-based Wing Hang Bank. OCBC had just consolidated its control over Wing Hang a few days ago but there are concerns that the Singapore bank might be overpaying for the Hong Kong-based financial institution; OCBC’s buying over shares of Wing Hang at close to 1.8 times book value.
Property’s well-liked too
It seems that the concerns regarding a slowdown in China and Singapore’s property markets have not deterred investors’ interest in CapitaLand (SGX: C31). The company, which is one of Asia’s largest property developers and counts China and Singapore as its key markets, had increased by 7.81% in the month of July.
But despite the share price gains for CapitaLand, the risk in its industry is still very real (and perhaps undiminished). Both the Chinese and Singapore government seem determined to prevent a bubble from forming in the residential real estate sector by putting in place cooling measures; these have directly affected the new sale of properties in recent months.
That said, CapitaLand does have a strong property investment portfolio in retail and commercial real estate which can help provide insulation from the residential real estate market. That part of CapitaLand’s business is represented by its interests in other publicly-listed entities like CapitaMall Trust (SGX: C38U), CapitaCommercial Trust (SGX: C61U), and CapitaRetail China Trust (SGX: AU8U).
Although it might be fun to look at shares with strong returns over a short period of time, we have to note that short-term market fluctuations can often be meaningless and that it is fruitless to look at a share’s performance over short spans of time. Five days have barely passed in August and UOB is already trading at S$22.70 per share, giving up almost all its gains in July.
All told, it is important for investors to know that markets are voting machines over the short-term but weighing machines over the long-term.
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Stanley Lim doesn't own any shares of companies mention above.