These twin headwinds have depressed demand and created headaches for heavily-indebted businesses.
Hence, it is not surprising for investors to turn to blue-chip stocks as these large, reputable names provide reliability and assurance.
Blue-chip names not only boast a strong performance track record but most, if not all, also pay out regular dividends that can act as a source of passive income.
If you are sourcing for a reliable business, here are three Singapore blue-chip stocks that might just fit the bill.
Singapore Exchange Limited (SGX: S68)
Singapore Exchange Limited, or SGX, is Singapore’s sole stock exchange operator.
The group runs a platform that allows users to buy and sell a variety of securities including stocks, bonds, derivatives, and currencies.
SGX enjoys a natural monopoly as it is Singapore’s sole bourse operator.
The group is morphing into a multi-asset exchange as it builds up its capabilities in foreign exchange (forex) and introduces a wider variety of securities and financial products to cater to investors.
Last month, SGX launched a new technology ETF, the CSOP iEdge Southeast Asia+ TECH Index ETF (SGX: SQU) to grow the number of listed ETFs to 40 as of June 2023.
The bourse operator has also introduced Singapore Depository Receipts, or SDRs, to allow investors access to three blue-chip names on the Stock Exchange of Thailand.
SGX reported a commendable set of earnings for its fiscal 2023’s first half ending 31 December 2022.
Revenue rose 10% year on year to S$334 million while net profit jumped 30% year on year to S$285 million.
Stripping out exceptional and one-off items, net profit would still have been 7% higher year on year.
An interim dividend of S$0.08 was paid out, taking the annualised dividend to S$0.32.
SGX has reported healthy market statistics for June 2023, with forex daily volume achieving a record high above US$100 billion.
For the first six months of 2023, forex futures also grew 13% year on year to 18 million contracts.
SGX also reported that full operations have begun for the NSE International Exchange for the NSE IX-SGX GIFT Connect scheme, potentially driving higher liquidity and trading volumes for the bourse operator.
Venture Corporation Limited (SGX: V03)
Venture is an electronic services provider employing more than 12,000 staff with capabilities spanning innovation, design and development, and process engineering, among others.
The group serves a wide clientele in domains such as life sciences, genomics, medical devices, and luxury lifestyle, to name a few.
For 2022, the technology group reported a 24.3% year on year jump in revenue to S$3.9 billion along with an 18.4% year-on-year increase in net profit to S$369.6 million.
The board declared a final dividend of S$0.50, taking the total 2022 dividend to S$0.75, unchanged from a year ago.
For the first quarter of 2023 (1Q 2023), Venture saw revenue dip by 7.6% year on year and net profit slide by 12.4% year on year as the semiconductor industry was caught in a cyclical downturn.
Despite this, the group had S$920.2 million of cash on its balance sheet as of 31 March 2023 with zero borrowings.
Management expects new product introductions to drive growth in the months ahead, and Venture should also benefit once the upturn comes when supply and demand reach equilibrium.
Venture also announced a restructuring in May to form two distinct business groups, each led by a CEO, to better distinguish and deepen the focus for each division.
United Overseas Bank (SGX: U11)
United Overseas Bank, or UOB, is the smallest of the three local banks.
However, the lender recently reported a sparkling set of earnings for 1Q 2023 despite negative loan growth.
The bank is benefitting from higher net interest margins arising from the surge in interest rates.
UOB is also enjoying a 14% year-on-year rise in assets under management to S$160 billion along with higher trading and investment income.
For 2022, the bank paid out a total dividend of S$1.35 per share, up from S$1.20 a year ago and exceeding the pre-pandemic level of S$1.30 per share in 2019.
The group looks well-positioned for continued good results as interest rates look to continue rising after pausing in July.
UOB has also completed the acquisition of Citigroup’s (NYSE: C) consumer banking businesses in Malaysia and Thailand in November last year and Vietnam in March this year.
These completions should help to boost the bank’s customer base and improve its financial numbers in these regions.
The acquisition in Indonesia is expected to be completed by the end of 2023.
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Disclosure: Royston Yang owns shares of Singapore Exchange Limited.