EWS: Not Sold Despite High Income Potential

seekingalpha05-16

iShares MSCI Singapore ETF tracks the MSCI Singapore Index, focusing on mid and large-cap stocks, with $439M in assets. It has a notable yield profile at 6.4% TTM.EWS is heavily weighted in the ...

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It has a notable yield profile at 6.4% TTM.EWS is heavily weighted in the ...</p>\n\n<a href=\"https://seekingalpha.com/article/4693757-ews-not-sold-despite-high-income-potential\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BK4207","symbol_name":"综合性银行","start_time":0,"source_url":"https://seekingalpha.com/article/4693757-ews-not-sold-despite-high-income-potential","article_id":"2435644214","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1353756955/image_1353756955.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2435644214","pubTimestamp":1715840545,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"iShares MSCI Singapore ETF tracks the MSCI Singapore Index, focusing on mid and large-cap stocks, with $439M in assets. It has a notable yield profile at 6.4% TTM.EWS is heavily weighted in the financ","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK4207":"综合性银行","EWS":"新加坡ETF-iShares MSCI","EFA":"欧澳远东指数 ETF-iShares MSCI","BK4585":"ETF&股票定投概念","EWH":"香港ETF-iShares MSCI","DBSDF":"DBS Group Holdings Ltd.","BK4550":"红杉资本持仓","BK4504":"桥水持仓","BK4588":"碎股","BK4581":"高盛持仓","MCHI":"中国ETF-iShares MSCI","FDN":"First Trust Dow Jones Internet I"},"translate_title":"EWS：尽管收入潜力很高，但没有出售","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"DBSDF":1,"EFA":1,"EWH":1,"EWS":1,"MCHI":1,"FDN":0.9,"US7Y.BOND":0.69,"US6M.BOND":0.69,"US5Y.BOND":0.69,"US3Y.BOND":0.69,"US10Y.BOND":0.69,"US12M.BOND":0.69,"US2Y.BOND":0.69,"US30Y.BOND":0.69,"US912797FS14.BOND":0.6,"US912797HE00.BOND":0.6,"US912797GB79.BOND":0.6,"US912797GK78.BOND":0.6,"US912797GL51.BOND":0.6,"US912797GW17.BOND":0.6,"US912797FH58.BOND":0.6},"content_text":"iShares MSCI Singapore ETF tracks the MSCI Singapore Index, focusing on mid and large-cap stocks, with $439M in assets. It has a notable yield profile at 6.4% TTM.EWS is heavily weighted in the financial sector (about 50%), benefiting from high interest rates. However, volatility and potential shifts in the interest rate environment could impact profitability.Despite attractive valuation multiples and a strong dividend history, recent net outflows and structural economic challenges in Singapore raise concerns about its future performance.   Matteo Colombo The iShares MSCI Singapore ETF (NYSEARCA:EWS) tracks the MSCI Singapore Index, which contains 29 stocks across the mid and large-cap universe. At the time of writing, the fund has $439M in assets and has been in existence since 1996. The ETF currently displays some value characteristics, and a particularly large yield profile. However, fundamental headwinds will continue to challenge the fund in the near-term, which is why I currently rate the fund at a hold. Singapore is a country generally known for its strong economic fundamentals, political stability, and business-friendly environment in the Asia-Pacific region. However, due to structural challenges, the city-state faces some unique headwinds. For starters, Singapore relies on imports for most of its goods, so maintaining a strong Singapore dollar is of importance. This has contributed to the monetary authority maintaining interest rates at their current level, as the country tends to take cues from the global interest rate environment. Singapore also had slower than expected GDP growth in 2023. GDP grew at 2.2% in 2023, missing advanced estimates of 2.8%. Financials heavy fund benefits from interest rate tailwinds, but there are downsides EWS is a sector concentrated ETF, with about 50% of its holdings in the financials sector. Industrials and real estate also have sizable allocations, while the remaining assets are scattered through consumer cyclicals, communications, tech, and consumer defensives. The high interest rate environment has been beneficial to Singaporean banks. However, general market volatility that has characterized markets thus far in 2024, as well as cooling inflation in the US could shift the regime in Singapore, leading to less profitability for the financials sector. The real estate sector has also been challenged in the recent period. Singapore is notorious for its expensive real estate, and new homes sales dropped 66% in April compared with March. The Singaporean Real Estate market has also made headlines due to projections around the sustained impact of climate change. While projections around climate change scenarios are just that - scenarios, they do have the capacity to spook investor sentiment.   Seeking Alpha EWS is extremely concentrated from an individual holdings perspective. The fund has $424M across 26 individual holdings. Roughly a fifth of the fund is allocated to DBS Group Holdings (OTCPK:DBSDF), a multinational financial services firm headquartered in Singapore. About 76% of the fund's total assets are concentrated in the top 10 holdings.   Seeking Alpha Middling multiples and standout yield EWS has decent valuation multiples, and is currently trading at 1.3x book value, and with 10.5x earnings. EWS offers a very attractive yield profile, offering 6.4% on a trailing twelve-month basis. It has a strong history of consecutive dividend payments, having paid a dividend for the past 18 years. I see this as the brightest spot for the fund. However, the question remains if this fund will be able to deliver this level of yield in a different interest rate environment. Outflows demonstrate sentiment around EWS has seen net outflows in the recent period, reflecting investor sentiment around headwinds for the fund. Singapore's outflows YTD have already doubled that of total net outflows in 2023. Singapore is one of many countries in the region that suffered in the COVID era, one reason being its reliance on foreign workers for its manufacturing sector. The country saw a drastic drop in its foreign workers at the onset of the pandemic that has only recently recovered.   ETF.COM Volatility and performance Looking at a peer comparison over the past year, we see a downturn in Q3 2023 for both single country Asian and regional ETFs. The iShares MSCI EAFE Index ETF (EFA) strongly rebounded, delivering 7.2% on a trailing 1-year basis, however EFA contains both Australian and European securities in addition to the far east, so it is less of direct comparison. Singapore strongly outperformed both the iShares MSCI Hong Kong ETF (EWH), as well as the iShares MSCI China ETF (MCHI) ETF, while underperforming the broader Southeast Asia region. Data by YCharts From a volatility perspective, we see that EWH is less volatile than both Hong Kong, as well as China, while retaining higher volatility characteristics than regional ETFs. Given Singapore's sensitivity to global economic pressures, this is not outside my set of expectations. Data by YCharts Conclusion  The iShares MSCI Singapore ETF offers a decent value characteristics and a compelling yield profile, making it an attractive option for income-focused investors – for now. However, the fund's heavy concentration in the financial sector, coupled with a world that is inching towards a lower-interest rate environment, calls its future yield potential into question. While EWS has historically edged out some regional peers, I'm not sold on its future potential just yet.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.2","shortVersion":"4.29.2","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2435644214"}