Investment Policy

Investment Policy

Any government rule or law that promotes or prevents investment from abroad in the national economy, such as currency restrictions, is known as a financial policy. 

What is an investment policy? 

An investment policy outlines the guidelines for spending public funds, defines the investment goals, inclinations or capacity for risk and limits the number of investments. It also includes details on how that investing programme is going to be managed and reviewed.  

The paper itself acts as a communication tool between the employees, elected authorities, consumers, rating firms, and holders of bonds. It may also be from any other parties involved in investment norms and objectives. The most crucial component of an official funds investments programme is a financial policy because it improves making choices and shows a dedication to the ethical management of public money.  

Contrarily, Investment Policy Statements constitute verbal agreements between a customer or owner and a portfolio manager. The overall guidelines and criteria for the folio are outlined in this paper. 

Understanding investment policy 

When managing their portfolios, investors can refer to an investment policy statement or the IPS for direction. Issues covered in an IPS include choices about how to allocate assets, customer willingness to take risks, influence, stability needs, and restrictions on investing in foreign securities. 

In addition to helping the client establish an investment plan for the future, a well-written investment policy statement offers an outline of the asset manager’s choices regarding investments. An IPS helps remind customers about the main aims and tactics of the assets, helping to prevent personal choices taken by the customer with reference to the investment. 

Working of an investment policy 

Investment declarations are occasionally, yet not always, used by accountants and investment advisors to document their financial plans with an investor in mind. It provides guidance for making informed judgements, serves as an orientation strategy for successful investing, and provides protection from potential errors or infractions. 

The investor’s duration and investment objectives are described in an IPS. For instance, an individual might state in their IPS declaration that they want to be able to retire when they are 60 years old and that under certain price hike assumptions, their portfolio of investments will provide US$65,000 per year in the present-day currency. 

Allocating assets goals are also specified in a well-designed IPS. The desired allocation among bond and stock markets. For example, is specified, and the desired allocation is further broken into smaller sub-asset lessons, including global equities by area. The goals ought to have an appropriate minimum and maximum variance that, if reached, will cause rebalancing of the investment. 

Importance of investment policy 

The following are some reasons why an investment portfolio is important:  

  • It offers insightful advice on asset creation and continuing maintenance. 
  • The following material aids investment consultants or managers of portfolios in maintaining their attention on the monetary objectives of the client. 
  • It aids portfolio management in avoiding aberrations brought on by the unstable financial situation. 
  • Consumers and managers of portfolios can prevent psychological prejudice by creating an IPS. 
  • Investors are always informed of the actions taken on behalf of them by their portfolio management. 
  • It aids in placing an investor’s expenditure forecast in perspective. 

Example of an investment policy 

Let’s assume that a person and his investment portfolio manager created an IPS. The agreement was very clear because the latter couldn’t engage in dangerous, speculated investments. After a while, a lot of rumours started to circulate about the potential legalisation of marijuana at the federal level. He requested that the portfolio advisor invest a sizeable amount of his capital in cannabis-related companies because he believes that the medical marijuana sector will soon surpass other industries. 

Nevertheless, the latter helped him realise that the IPS prevents him from adopting such risky investing judgements. The manager of the portfolio also added that while the customer’s action might increase short-term gains, its eventual effect on the worth of the portfolio may not be significant. The person would thus be unable to accomplish his objectives for the future as a result. 

Frequently Asked Questions

A client’s contracted chief expenditure office, or OCIO, executives, investment group, investment professionals, and custodians, among others, are listed along with their specific positions and duties in an investment policy that also details the customer’s financial targets and goals for investing. 

 

The purpose of all bank transactions is to generate revenue. Both the main and supplementary reserves are used to meet the bank’s solvency requirements. This helps alleviate society’s need for credit as well. These considerations include the need for the bank to provide quick funding.  

The financial institution uses the remaining funds for a long period of time to increase and optimise earning potential once the loan has been repaid. Every bank has a distinct investment plan that complies with business bank requirements. These investing tactics incorporate substantial earnings on unsold assets. 

  • A customer’s fund goals as well as data important to accomplishing those objectives are outlined in an investment strategy declaration, a piece of paper that is created in collaboration with the client by a manager of the portfolio. 
  • Purpose and objective, administration, investing, return and danger targets, and handling risks are the elements of a financial policy declaration. 
  • An IPS assists investors with portfolio decision-making and prevents customers from making emotional portfolio-related choices. 

The three basic and main components of the investment policies are: 

  • Stocks 
  • Cash equivalent 
  • Bonds

There are actually four basic types of assets, or investing categories, from which one may select. Each has unique qualities, dangers, and advantages. 

  • Investments in growth companies: These are better suited for individuals who can weather economic fluctuations. 
  • Shares: Shares are seen as a growth investment because, over the course of time, they can aid in increasing the worth of the initial investment. 
  • Property: Since the cost of homes and other real estate can increase significantly over the course of a short- to long-time timeframe, properties are also seen as an expanding investment. 
  • Defensive investments: They are thought to be more secure than growth assets since they are more concerned with reliably delivering income than with growth. 

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    Alphabet Inc: Record Cloud Surge Offset by Search Slowdown — Target Price US$375

    Published on Nov 12, 2026 3 

    Brief Overview Alphabet Inc delivered third-quarter 2026 earnings below Phillip Securities Research's expectations. Revenue increased 25 per cent year on year to US$127.6 billion, driven by strong growth in the core advertising and Cloud segments, while adjusted profit after tax and minority (PATMI) interests grew 10 per cent year-on-year to US$33 billion. Nine-month revenue and PATMI reached 72 per cent and 63 per cent respectively of full-year 2026 forecasts, subject to the seasonality of the advertising business. Google Cloud Platform growth was robust, while Search revenue slowed. Free cash flow remained negative at US$9.1 billion due to heavy artificial intelligence investment. Investment Positives Record Cloud Growth The standout development in the quarter was the record performance of the Cloud segment. Revenue surged 103 per cent year –on year to US$30.7 billion, the fastest growth recorded by the segment, compared with 34 per cent growth in the third quarter of 2025. This exceptional acceleration was driven by strong growth in Google Cloud Platform, particularly across infrastructure, platform services, and TPU system sales. Enterprise adoption of Gemini Enterprise remained robust, with model API usage rising to more than four times last year’s level and enterprise spending quadrupling year on year. Cloud operating income tripled year-on-year to US$11.1 billion, with the operating margin expanding by 1,250 basis points to 36.2 per cent, demonstrating significant operating leverage as the segment scales. Enterprise adoption of Gemini Enterprise remained robust, with model API usage rising to more than four times last year’s level and enterprise spending quadrupling year on year. Cloud operating income tripled year-on-year to US$11.1 billion, with the operating margin expanding by 1,250 basis points to 36.2 per cent, demonstrating significant operating leverage as the segment scales. We increased the financial year 2026 Cloud revenue forecast by 9 per cent to reflect accelerating growth in the fourth quarter, driven by initial revenue contributions from TPU systems and the gradual conversion of the sizeable backlog. Wider enterprise adoption of AI solutions is also expected to support incremental demand for compute, database storage and cybersecurity services. Investment Challenges Negative Free Cash Flow Continued Free cash flow was negative for the second consecutive quarter at negative US$9.1 billion, as third-quarter capital expenditure grew at its fastest pace since 2018 to support TPU system build-up. The US$51.4 billion capital expenditure was mostly directed towards servers and networking equipment, at 65 per cent of the total, with data centres accounting for the remaining 35 per cent. Free cash flow was further weighed down by a one-off US$5.2 billion cash payment relating to the European Commission fine issued in 2018, following the conclusion of the appeal process. We forecast negative free cash flow of US$18 billion and US$32 billion in financial years 2026 and 2027 respectively. The elevated cash outflows reflect upfront investment in expanding compute capacity to fulfil secured customer commitments, creating a timing mismatch between cash outflows and revenue realisation rather than signalling weakening demand. With industry-wide compute capacity remaining constrained, sustained AI infrastructure demand is expected to support Google Cloud's growth as additional capacity comes online and is monetised. Slowing Advertising Growth Advertising revenue growth moderated to 11 per cent year on year in the third quarter, reaching US$82 billion, compared with 13 per cent growth in the third quarter of 2025. Search revenue grew 12 per cent year on year to US$63.4 billion, down from 15 per cent in the prior year period, with management attributing the slower growth to lower monetisation of AI Mode despite search query growth reaching its highest level in five years. Strong user engagement was largely driven by AI-powered search, with queries being three times longer than traditional searches. YouTube advertising revenue growth also moderated to 9 per cent year on year to US$11 billion, down from 15 per cent, as foreign exchange headwinds offset continued momentum in brands and living room viewing. Beyond lower monetisation of AI searches, advertising revenue also declined on a quarter-on-quarter basis, partly reflecting weaker spending from APAC advertisers following the removal of the EU de minimis exemption and the normalisation of advertising spend following the FIFA World Cup. To capture monetisation opportunities from AI Mode, the company announced the expansion of advertisements into international markets and launched multi-turn advertisements in the United States. We reduced financial year 2026 and 2027 Search revenue forecasts by 1 per cent, now expecting the segment to grow 14 per cent and 11 per cent respectively. While the plan to expand advertisements on AI Mode is viewed positively as it could unlock additional monetisation by improving revenue per query, near-term margin headwinds are expected from higher compute costs associated with AI-powered Search compared to traditional Search. However, margins are expected to gradually recover as inference efficiency improves, with AI Mode response costs reaching the lowest level since launch in the second quarter of 2026. We also remain cautious about user retention, as users could increasingly shift towards competing AI search platforms and chatbots. Outlook The outlook is shaped by the tension between exceptional Cloud momentum and moderating advertising growth. Cloud revenue growth is expected to accelerate further in the fourth quarter, supported by TPU system contributions and backlog conversion, while wider enterprise AI adoption should drive incremental demand. However, Search and advertising face near-term headwinds from lower AI Mode monetisation and higher compute costs, though margins should gradually recover as inference efficiency improves. Free cash flow is expected to remain negative through financial year 2027 as the company continues to invest heavily in AI infrastructure, but we view this as a timing mismatch rather than a sign of weakening demand. Recommendation and Target Price Phillip Securities Research maintains its BUY recommendation on Alphabet Inc but has lowered the DCF-based target price to US$375, from the previous US$425. Financial year 2026 and 2027 PATMI estimates have been reduced by 10 per cent and 11 per cent respectively to reflect higher costs. The lower target price reflects the earnings revision, while the maintained BUY rating reflects confidence in the long-term AI growth trajectory and the substantial Cloud backlog providing revenue visibility. Frequently Asked Questions [market_journal_faq]   This article has been auto-generated using PhillipGPT. It is based on a report by a Phillip Securities Research analyst.   Disclaimer These commentaries are intended for general circulation and do not have regard to the specific investment objectives, financial situation and particular needs of any person. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of any person acting based on this information. You should seek advice from a financial adviser regarding the suitability of any investment product(s) mentioned herein, taking into account your specific investment objectives, financial situation or particular needs, before making a commitment to invest in such products. Opinions expressed in these commentaries are subject to change without notice. Investments are subject to investment risks including the possible loss of the principal amount invested. The value of units in any fund and the income from them may fall as well as rise. Past performance figures as well as any projection or forecast used in these commentaries are not necessarily indicative of future or likely performance. Phillip Securities Pte Ltd (PSPL), its directors, connected persons or employees may from time to time have an interest in the financial instruments mentioned in these commentaries. The information contained in these commentaries has been obtained from public sources which PSPL has no reason to believe are unreliable and any analysis, forecasts, projections, expectations and opinions (collectively the “Research”) contained in these commentaries are based on such information and are expressions of belief only. PSPL has not verified this information and no representation or warranty, express or implied, is made that such information or Research is accurate, complete or verified or should be relied upon as such. Any such information or Research contained in these commentaries are subject to change, and PSPL shall not have any responsibility to maintain the information or Research made available or to supply any corrections, updates or releases in connection therewith. In no event will PSPL be liable for any special, indirect, incidental or consequential damages which may be incurred from the use of the information or Research made available, even if it has been advised of the possibility of such damages. The companies and their employees mentioned in these commentaries cannot be held liable for any errors, inaccuracies and/or omissions howsoever caused. Any opinion or advice herein is made on a general basis and is subject to change without notice. The information provided in these commentaries may contain optimistic statements regarding future events or future financial performance of countries, markets or companies. You must make your own financial assessment of the relevance, accuracy and adequacy of the information provided in these commentaries. Views and any strategies described in these commentaries may not be suitable for all investors. 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    Keppel Ltd: Asset Management Franchise Gains Momentum — Target Price S$13.80

    Published on Nov 12, 2026 2 

    Brief Overview Keppel Ltd's key financial disclosures for the third quarter of 2026 showed nine-month net profit growing more than 20 per cent year on year, building on the 25 per cent growth recorded in the first half. Nine-month recurring income rose at a slower pace of more than 10 per cent year on year, compared with 13 per cent in the first half. The integrated power business saw nine-month EBITDA grow a disappointingly weaker 7 per cent year-on-year, as maintenance work on a turbine at Keppel Merlimau offset maiden earnings from the Keppel Sakra Cogen power plant. Investment Positives Accelerating Asset Management Growth The standout development in the quarter was the sharp acceleration in asset management fees, which spiked 48 per cent year-on-year to S$154 million in the third quarter. These fees were underpinned by robust new funds under management (FUM), which jumped to S$19.5 billion year-to-date in 2026, compared with just S$6.7 billion in the corresponding period of 2025. Approximately S$6 billion of new FUM was raised in the third quarter alone. The outlook for fees remains strong, with S$23 billion worth of deals in the pipeline. The asset management franchise is gaining meaningful traction by broadening its investor base to include sovereign wealth funds with much larger fund commitments. Investor breadth and the size of individual commitments have been rising, reinforcing the sustainability of the fundraising momentum. The group's target to double FUM to S$200 billion by 2030 remains unchanged, implying a compound annual growth rate of approximately 15 per cent. Monetisation Pipeline on Track Keppel is on course to realise at least S$1.5 billion of assets this year. Assets monetised and realised rose by S$380 million in the third quarter to S$940 million, driven by the S$343 million sale of a 40 per cent stake in Empire City in Vietnam. Beyond the current year, the monetisation pipeline remains substantial. A further S$611 million will be recognised in the second quarter of 2027 from the 51 per cent sale of Keppel South Central to Keppel REIT. Additional assets in the pipeline include the remaining 49 per cent of Keppel South Central, valued at approximately S$1 billion; a 50 per cent stake in Rigco's six operational rigs, valued at approximately S$600 million; and M1, valued at approximately S$1.2 billion. Together, these pipeline assets are equivalent to 16 to 24 cents of special dividend, representing a meaningful potential catalyst for shareholder returns. Investment Challenges Weaker Than Expected Power EBITDA Despite the commercialisation of the 600-megawatt Keppel Sakra Cogen power plant in May 2026, EBITDA from the integrated power business has slowed in the third quarter. Planned major maintenance on one of the four F-Class turbine units at Keppel Merlimau was a key contributor to the shortfall. This resulted in nine-month EBITDA growth of just 7 per cent year on year, down from 9 per cent in the first half. Infrastructure earnings face further downside risk from planned maintenance activities. Non-Core Portfolio Drag The non-core portfolio remains a drag on overall profitability. Overall net profit for the nine months fell 40 per cent year on year, driven by a 4 per cent reduction in the gross asset value of non-core assets remaining on the books. This decline stemmed from impairments, depreciation, operating costs and holding costs associated with these legacy assets. Outlook The asset management business is maintaining its fundraising momentum and building a stronger foundation of recurrent income. The franchise is broadening its investor base and securing larger commitments, which bodes well for the medium-term trajectory of management fees. On the infrastructure side, the near-term outlook is mixed. Planned maintenance work on turbine units will dampen earnings in the short term. However, improving electricity spreads — driven by liquefied natural gas shortages and strong mobility and industrial demand — are expected to provide upside to earnings in the fourth quarter of 2026. The monetisation pipeline remains a key feature of the investment case, with approximately S$2.8 billion of assets still to be realised, offering the potential for further special dividends. Recommendation & Target Price Phillip Securities Research maintains its BUY recommendation on Keppel Ltd with an unchanged target price of S$13.80. The financial year 2026 estimated adjusted profit after tax and minority interests is also unchanged. The analyst highlights the continued strengthening of the asset management franchise and the substantial monetisation pipeline as key supports for the investment case, while acknowledging near-term headwinds from power segment maintenance and the non-core portfolio drag. Frequently Asked Questions [market_journal_faq] This article has been auto-generated using PhillipGPT. It is based on a report by a Phillip Securities Research analyst.   Disclaimer These commentaries are intended for general circulation and do not have regard to the specific investment objectives, financial situation and particular needs of any person. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of any person acting based on this information. You should seek advice from a financial adviser regarding the suitability of any investment product(s) mentioned herein, taking into account your specific investment objectives, financial situation or particular needs, before making a commitment to invest in such products. Opinions expressed in these commentaries are subject to change without notice. Investments are subject to investment risks including the possible loss of the principal amount invested. The value of units in any fund and the income from them may fall as well as rise. Past performance figures as well as any projection or forecast used in these commentaries are not necessarily indicative of future or likely performance. Phillip Securities Pte Ltd (PSPL), its directors, connected persons or employees may from time to time have an interest in the financial instruments mentioned in these commentaries. The information contained in these commentaries has been obtained from public sources which PSPL has no reason to believe are unreliable and any analysis, forecasts, projections, expectations and opinions (collectively the “Research”) contained in these commentaries are based on such information and are expressions of belief only. PSPL has not verified this information and no representation or warranty, express or implied, is made that such information or Research is accurate, complete or verified or should be relied upon as such. Any such information or Research contained in these commentaries are subject to change, and PSPL shall not have any responsibility to maintain the information or Research made available or to supply any corrections, updates or releases in connection therewith. In no event will PSPL be liable for any special, indirect, incidental or consequential damages which may be incurred from the use of the information or Research made available, even if it has been advised of the possibility of such damages. The companies and their employees mentioned in these commentaries cannot be held liable for any errors, inaccuracies and/or omissions howsoever caused. Any opinion or advice herein is made on a general basis and is subject to change without notice. The information provided in these commentaries may contain optimistic statements regarding future events or future financial performance of countries, markets or companies. You must make your own financial assessment of the relevance, accuracy and adequacy of the information provided in these commentaries. Views and any strategies described in these commentaries may not be suitable for all investors. Opinions expressed herein may differ from the opinions expressed by other units of PSPL or its connected persons and associates. Any reference to or discussion of investment products or commodities in these commentaries is purely for illustrative purposes only and must not be construed as a recommendation, an offer or solicitation for the subscription, purchase or sale of the investment products or commodities mentioned. This advertisement has not been reviewed by the Monetary Authority of Singapore.

    Lendlease REIT: Retail Resilience Drives Performance as Target Price Lowered to S$0.73

    Published on Nov 12, 2026 2 

    Brief Overview Phillip Securities Research has issued an update on Lendlease REIT (LREIT), maintaining a BUY recommendation while lowering the target price to S$0.73, down from S$0.77. Limited financials were provided this quarter. Retail rental reversion was strong at 10%, driven mainly by PLQ Mall and 313 Somerset, while Jem's retail reversion was slightly weaker. Tenant sales rose 8.1% year on year (excluding PLQ Mall), with gold and jewellery, beauty and wellness, and sports and athletics performing particularly well. PLQ Mall's asset enhancement initiative (AEI) is progressing across two floors, on track for completion by end-2026. Uniqlo and Footlocker's space at Level 2 has been split into five units, of which two are signed — one by a new-to-market tenant — while three remain in leasing. The cost of equity has been increased by 25 basis points to reflect a higher interest-rate environment. LREIT is trading at a FY27e price to net asset value ratio (P/NAV) of 0.81x with a dividend yield of approximately 7.14%. Investment Positives Strong Operational Performance LREIT's portfolio demonstrated robust operational metrics during the quarter. Portfolio retail rental reversion stood at 10%, compared with 11.7% in FY26, indicating sustained pricing power across its Singapore malls. Retail portfolio occupancy remained strong at 98.2%, with a marginal dip of 0.3 percentage points quarter on quarter attributed to PLQ Mall reconfiguration works rather than any fundamental weakening in demand. Tenant sales and visitation increased 8.1% and 6.7% year on year respectively, excluding PLQ Mall. When PLQ Mall is included, the increases were even more pronounced at 45.5% and 27.4% year-on-year. Footfall was bolstered by several catalysts: the reopening of Jem's cinema, a heavy events and promotions calendar at 313@somerset, and National Day-related events near PLQ Mall. Tenant retention was healthy at 87%, and notably, the tenants that replaced outgoing ones over the past year are outperforming their predecessors. Strong Capital Management The REIT's capital management continued to improve. The cost of debt fell to 2.5%, down from 2.75% during FY26, driven mainly by PLQ Mall loans that were refinanced at a lower borrowing cost. Gearing declined from 38.9% to 38.7% as gross borrowings fell 1.5% quarter on quarter to S$1,679 million. Liquidity remains ample, with S$383 million of undrawn committed facilities available. S$300 million of facilities, of which S$200 million is drawn, mature in April 2027 and will be refinanced at that time. Investment Challenges Slow Leasing Progress with Milan Building 3 The key negative identified in the report relates to the Milan Sky Complex Building 3, which is only 51% occupied. The building did not see any leasing progress during the quarter, despite floors being subdivided into smaller units. While agents have received the reconfigured space well, this interest has yet to convert into signed leases. Management described the past six to nine months as among the softest periods on record for Milan leasing. Improved occupancy is needed before a divestment of the asset can be pursued at attractive valuations. Additionally, management flagged aggressive low-cost Chinese e-commerce platforms as a new threat to multi-product stores, including those selling blind boxes and generic accessories, across its malls. Some established food and beverage brands have also been outcompeted by new entrants and mainland Chinese operators. Outlook The reconfiguration of 16,000 square feet of space at PLQ Mall is on track to be completed by the end of 2026. Grange House, adjacent to 313@somerset, is expected to be operationally ready by mid-2027, with rent commencing towards end of 2026 or early 2027. While Grange House represents less than 1% of portfolio income, the primary benefit will be the halo effect of a 3,000-person capacity Live Nation venue on 313@somerset footfall, enlarging the combined net lettable area to approximately 330,000 square feet in the Somerset precinct. Rent-free periods on the 51% leased portion of Building 3 should roll off, contributing income over FY27. Management is not pursuing acquisitions in the near term, with the Jem divestment gain held in reserve and larger Jem AEIs now feasible. Future performance depends on three key factors: the PLQ AEI completing on schedule across Levels 1 and 2, the successful divestment and capital recycling of Sky Complex Building 3, and Singapore retail reversions continuing at a strong pace. Recommendation & Target Price Phillip Securities Research maintains a BUY recommendation on Lendlease REIT. The DDM-based target price has been lowered to S$0.73, from the previous S$0.77, reflecting a 25-basis-point increase in the cost of equity to account for a higher interest-rate environment. Frequently Asked Questions [market_journal_faq] This article has been auto-generated using PhillipGPT. It is based on a report by a Phillip Securities Research analyst.   Disclaimer These commentaries are intended for general circulation and do not have regard to the specific investment objectives, financial situation and particular needs of any person. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of any person acting based on this information. You should seek advice from a financial adviser regarding the suitability of any investment product(s) mentioned herein, taking into account your specific investment objectives, financial situation or particular needs, before making a commitment to invest in such products. Opinions expressed in these commentaries are subject to change without notice. Investments are subject to investment risks including the possible loss of the principal amount invested. The value of units in any fund and the income from them may fall as well as rise. Past performance figures as well as any projection or forecast used in these commentaries are not necessarily indicative of future or likely performance. Phillip Securities Pte Ltd (PSPL), its directors, connected persons or employees may from time to time have an interest in the financial instruments mentioned in these commentaries. The information contained in these commentaries has been obtained from public sources which PSPL has no reason to believe are unreliable and any analysis, forecasts, projections, expectations and opinions (collectively the “Research”) contained in these commentaries are based on such information and are expressions of belief only. PSPL has not verified this information and no representation or warranty, express or implied, is made that such information or Research is accurate, complete or verified or should be relied upon as such. Any such information or Research contained in these commentaries are subject to change, and PSPL shall not have any responsibility to maintain the information or Research made available or to supply any corrections, updates or releases in connection therewith. In no event will PSPL be liable for any special, indirect, incidental or consequential damages which may be incurred from the use of the information or Research made available, even if it has been advised of the possibility of such damages. The companies and their employees mentioned in these commentaries cannot be held liable for any errors, inaccuracies and/or omissions howsoever caused. Any opinion or advice herein is made on a general basis and is subject to change without notice. The information provided in these commentaries may contain optimistic statements regarding future events or future financial performance of countries, markets or companies. You must make your own financial assessment of the relevance, accuracy and adequacy of the information provided in these commentaries. Views and any strategies described in these commentaries may not be suitable for all investors. Opinions expressed herein may differ from the opinions expressed by other units of PSPL or its connected persons and associates. Any reference to or discussion of investment products or commodities in these commentaries is purely for illustrative purposes only and must not be construed as a recommendation, an offer or solicitation for the subscription, purchase or sale of the investment products or commodities mentioned. This advertisement has not been reviewed by the Monetary Authority of Singapore.

    Microsoft Corp: Cloud Momentum Builds but Capital Intensity Weighs — Target Price US$515

    Published on Nov 12, 2026 2 

    Brief Overview Microsoft Corp delivered first-quarter results for financial year 2027 in line with expectations, with revenue and profit after tax and minority interests both meeting 24 per cent of Phillip Securities Research's full-year 2027 forecasts. Revenue grew 19 per cent year on year, led by Cloud Azure growth of 48 per cent year on year. The analyst maintains a financial year 2027 revenue growth forecast of 17 per cent, with Azure expected to accelerate further to 49 to 50 per cent constant-currency growth in the second quarter. Capital expenditure is expected to accelerate in the second half of financial year 2027, driven by CPUs, higher memory and storage costs, and delayed third-party GPU capacity. Investment Positives Strongest Cloud Azure Growth in Five Years Microsoft Cloud Azure grew 48 per cent year on year in the first quarter of financial year 2027, its strongest growth rate in five years, with further acceleration to 49 to 50 per cent expected in the second quarter. The company added 24 new data centres during the quarter, bringing the total to 488 as of the fourth quarter of financial year 2026. Importantly, higher growth was not solely driven by new capacity but also came from existing infrastructure. Three key drivers underpinned this performance. First, GPU efficiency gains allowed existing GPUs to process more artificial intelligence workloads through better software and lower GPU idle time, without proportionally increasing hardware spending. Second, Microsoft allocated additional capacity to highest-value demand — specifically Foundry, the platform that developers use to build, deploy and manage AI applications and models — making more AI model capacity available to customers and driving higher token consumption. Third, higher-than-expected token pricing acted as an average revenue per user lever, as customers consumed higher-quality models for more complex reasoning tasks. This combination of efficiency improvements, capacity prioritisation and pricing power paints a picture of a cloud business that is generating incremental revenue from both new and existing infrastructure. Returns Improving Despite Enormous Capital Expenditure Microsoft Cloud revenue grew strongly by 30 per cent year on year to US$63.9 billion in the first quarter, comprising Azure and cloud-delivered services including M365 Commercial, Copilot, GitHub Cloud and others. Cloud revenue covered 1.4 times quarterly capital expenditure of US$45.2 billion, broadly flat year-on-year. Margins held up well despite continued AI infrastructure investment. Operating margin reached 50 per cent, up from 49 per cent in the first quarter of financial year 2026. Adjusted net margin, excluding the OpenAI investment impact, remained resilient at 39.4 per cent, up from 38.0 per cent in the second quarter of financial year 2026 and broadly comparable with 39.7 per cent a year ago. This suggests the infrastructure ramp has yet to materially dilute underlying profitability. Adjusted earnings per share grew strongly at 18 per cent year-on-year to US$4.89. Investment Challenges Weakening Windows OEM and Devices Segment The Devices and Consumer revenue segment declined 3 per cent year on year, with Windows OEM and Devices revenue underperforming significantly, falling 22 per cent year on year. This segment covers the licensing of Windows to PC manufacturers that pre-install it on their devices. Three factors contributed to the decline. First, OEMs and channel partners drew down elevated inventory levels following the previous quarter's inventory build-up. Second, weaker PC demand persisted amid rising memory costs and device prices, discouraging purchases. Third, the comparison base was tougher owing to the prior year's boost from the Windows 10 end-of-support cycle. The outlook has worsened, with Windows OEM and Devices expected to decline in the mid-30s percentage range in the second quarter of financial year 2027 as these factors persist. Rising Capital Intensity and Financing Cost Risks While liquidity remains sufficient with US$64.5 billion in cash and equivalents and positive free cash flow, capital intensity is rising. Capital expenditure reached 78 per cent of operating cash flow of US$58 billion in the first quarter. Depreciation and amortisation intensity rose to 12.7 per cent, up from 11.6 per cent in financial year 2026 and 12.1 per cent in financial year 2025. Notably, 75 per cent of the US$45.2 billion capital expenditure was directed to shorter-lived CPUs and GPUs, raising both depreciation charges and future replacement needs. Microsoft also added US$7.4 billion of finance leases and is reportedly seeking at least US$25 billion in bonds. Higher fixed costs from leases and debt make returns on AI infrastructure more dependent on sustained utilisation and monetisation. Outlook The analyst maintains a financial year 2027 group revenue growth forecast of 17 per cent. Azure is expected to grow 49 to 50 per cent in constant-currency terms in the second quarter, supported by OpenAI backlog conversion, strong enterprise AI adoption and global capacity expansion. Demand continues to outpace supply. M365 Commercial Cloud growth should remain supported by stronger monetisation of premium SKUs including Copilot, E5 and E7, alongside increased usage-based offerings. The PC hardware business is expected to remain weak owing to elevated inventory levels and weaker PC demand. Capital expenditure is expected to accelerate in the second half of financial year 2027, driven primarily by CPUs, including higher memory and storage costs, and delayed delivery of leased third-party GPU-as-a-service. Recommendation and Target Price Phillip Securities Research maintains its NEUTRAL recommendation on Microsoft Corp with an unchanged DCF-based target price of US$515. Financial year 2027 forecasts are also unchanged. The analyst notes that returns are improving despite elevated capital expenditure, with Cloud revenue growing 30 per cent year on year and operating margin at 50 per cent. However, capital intensity remains high, with 75 per cent of capital expenditure directed to shorter-lived CPUs and GPUs and depreciation intensity rising. Higher lease and debt funding may also raise fixed costs, tempering returns on AI infrastructure despite strong growth. Frequently Asked Questions [market_journal_faq]   This article has been auto-generated using PhillipGPT. It is based on a report by a Phillip Securities Research analyst.    Disclaimer These commentaries are intended for general circulation and do not have regard to the specific investment objectives, financial situation and particular needs of any person. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of any person acting based on this information. You should seek advice from a financial adviser regarding the suitability of any investment product(s) mentioned herein, taking into account your specific investment objectives, financial situation or particular needs, before making a commitment to invest in such products. Opinions expressed in these commentaries are subject to change without notice. Investments are subject to investment risks including the possible loss of the principal amount invested. The value of units in any fund and the income from them may fall as well as rise. Past performance figures as well as any projection or forecast used in these commentaries are not necessarily indicative of future or likely performance. Phillip Securities Pte Ltd (PSPL), its directors, connected persons or employees may from time to time have an interest in the financial instruments mentioned in these commentaries. The information contained in these commentaries has been obtained from public sources which PSPL has no reason to believe are unreliable and any analysis, forecasts, projections, expectations and opinions (collectively the “Research”) contained in these commentaries are based on such information and are expressions of belief only. PSPL has not verified this information and no representation or warranty, express or implied, is made that such information or Research is accurate, complete or verified or should be relied upon as such. Any such information or Research contained in these commentaries are subject to change, and PSPL shall not have any responsibility to maintain the information or Research made available or to supply any corrections, updates or releases in connection therewith. In no event will PSPL be liable for any special, indirect, incidental or consequential damages which may be incurred from the use of the information or Research made available, even if it has been advised of the possibility of such damages. The companies and their employees mentioned in these commentaries cannot be held liable for any errors, inaccuracies and/or omissions howsoever caused. Any opinion or advice herein is made on a general basis and is subject to change without notice. The information provided in these commentaries may contain optimistic statements regarding future events or future financial performance of countries, markets or companies. You must make your own financial assessment of the relevance, accuracy and adequacy of the information provided in these commentaries. Views and any strategies described in these commentaries may not be suitable for all investors. Opinions expressed herein may differ from the opinions expressed by other units of PSPL or its connected persons and associates. Any reference to or discussion of investment products or commodities in these commentaries is purely for illustrative purposes only and must not be construed as a recommendation, an offer or solicitation for the subscription, purchase or sale of the investment products or commodities mentioned. This advertisement has not been reviewed by the Monetary Authority of Singapore.

    NetLink NBN Trust Maintains Steady Cash Flow Despite Rising Costs, Target Price Raised to S$0.96

    Published on Nov 12, 2026 4 

    Company Overview NetLink NBN Trust delivered a steady but unspectacular set of first-half results for the financial year ending 2027. Revenue and earnings before interest, taxes, depreciation and amortisation (EBITDA) came in within expectations, reaching 49 per cent and 50 per cent, respectively, of Phillip Securities Research's full-year forecasts. First-half EBITDA edged up 0.8 per cent to S$144.6 million, while distribution per unit (DPU) rose 1.1 per cent year on year to 2.74 cents. Revenue for the period was S$200.3 million, marginally higher than the S$199.9 million recorded in the prior corresponding half. Net profit, however, slipped 2.3 per cent to S$41.2 million. The improvement in other operating costs was attributable to the absence of a S$1.3 million write-off seen in the prior year and the reversal of an over-accrual of maintenance costs, the amount of which was not disclosed. Residential fibre connections are recovering following operators' exercise of removing inactive connections. Investment Positives Fully hedged interest rate exposure The standout positive in the our assessment is NetLink's proactive management of its debt costs. The trust has fixed or hedged all S$991 million borrowings at an interest rate of approximately 2.4 per cent, with an average debt maturity of 4.4 years. This is a significant improvement from the position as recently as March, when only 48 per cent of borrowings were at a fixed rate. In a rising interest rate environment, this hedging strategy provides considerable certainty over finance costs for the medium term and underpins the stability of cash flows available for distribution to unitholders. NetLink's distribution yield of 5.8 per cent is supported by these stable cash flows and the fully hedged financing structure. For income-focused investors, the predictability of finance costs at 2.4 per cent offers a degree of comfort, particularly given the volatility in interest rate markets. Investment Challenges Slow recovery in residential connections The key concern highlighted by the us is the pace of recovery in residential fibre connections. Following a contraction of approximately 6,000 connections in FY26 — driven by operators removing inactive connections — the net additions have turned positive. However, the annualised pace of recovery at roughly 10,000 connections is materially below Phillip Securities Research's forecast of 20,000 connections. This shortfall suggests that the structural demand recovery may take longer than initially anticipated, potentially constraining revenue growth from the residential segment. Rising cost pressures on EBITDA margins We expect EBITDA margins to remain under pressure from multiple fronts. The completion of the Seletar central office has led to higher staff and maintenance costs. Additionally, NetLink's new IT system incurs more in operating expenditure than in capital expenditure, adding a recurring cost burden. Together, these factors — IT costs, staff costs, and maintenance expenses — are expected to weigh on margins and limit EBITDA growth going forward. Lack of DPU growth diminishes yield appeal Perhaps the most significant challenge for NetLink is the absence of meaningful DPU growth. While the 5.8 per cent distribution yield is reasonable in absolute terms, the lack of growth in distributions makes it less compelling in an environment of rising inflation and interest rates. Income investors who can access alternative yield instruments with better growth prospects may find NetLink's static yield profile less attractive.lack of growth in distributions makes it less compelling in an environment of rising inflation and interest rates. Income investors who can access alternative yield instruments with better growth prospects may find NetLink's static yield profile less attractive. Outlook Our outlook for NetLink is cautious. EBITDA margins are expected to remain under pressure as the cost increases from the Seletar central office, the new IT system, and general staffing expenses continue to flow through. The absence of EBITDA and DPU growth means that distribution yield is likely to remain static, which reduces the trust's attractiveness in an inflationary and rising-interest-rate environment. While the fully hedged borrowing structure provides stability on the finance cost front, this alone may not be sufficient to drive re-rating or deliver the kind of total returns that investors are seeking in the current climate. Recommendation and Target Price Phillip Securities Research maintains a NEUTRAL recommendation on NetLink NBN Trust with an unchanged target price of S$0.96. The current unit price stands at S$0.94, implying modest upside to the target. The recommendation reflects the trust's stable but unexciting fundamentals — supported by fully hedged borrowings and a stable distribution yield of 5.8 per cent, but tempered by cost pressures, slow residential connection recovery, and the absence of meaningful DPU growth. There is no change to the FY27 forecast, recommendation, or target price. Frequently Asked Questions [market_journal_faq]   This article has been auto-generated using PhillipGPT. It is based on a report by a Phillip Securities Research analyst. Disclaimer These commentaries are intended for general circulation and do not have regard to the specific investment objectives, financial situation and particular needs of any person. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of any person acting based on this information. You should seek advice from a financial adviser regarding the suitability of any investment product(s) mentioned herein, taking into account your specific investment objectives, financial situation or particular needs, before making a commitment to invest in such products. Opinions expressed in these commentaries are subject to change without notice. Investments are subject to investment risks including the possible loss of the principal amount invested. The value of units in any fund and the income from them may fall as well as rise. Past performance figures as well as any projection or forecast used in these commentaries are not necessarily indicative of future or likely performance. Phillip Securities Pte Ltd (PSPL), its directors, connected persons or employees may from time to time have an interest in the financial instruments mentioned in these commentaries. The information contained in these commentaries has been obtained from public sources which PSPL has no reason to believe are unreliable and any analysis, forecasts, projections, expectations and opinions (collectively the “Research”) contained in these commentaries are based on such information and are expressions of belief only. PSPL has not verified this information and no representation or warranty, express or implied, is made that such information or Research is accurate, complete or verified or should be relied upon as such. Any such information or Research contained in these commentaries are subject to change, and PSPL shall not have any responsibility to maintain the information or Research made available or to supply any corrections, updates or releases in connection therewith. In no event will PSPL be liable for any special, indirect, incidental or consequential damages which may be incurred from the use of the information or Research made available, even if it has been advised of the possibility of such damages. The companies and their employees mentioned in these commentaries cannot be held liable for any errors, inaccuracies and/or omissions howsoever caused. Any opinion or advice herein is made on a general basis and is subject to change without notice. The information provided in these commentaries may contain optimistic statements regarding future events or future financial performance of countries, markets or companies. You must make your own financial assessment of the relevance, accuracy and adequacy of the information provided in these commentaries. Views and any strategies described in these commentaries may not be suitable for all investors. Opinions expressed herein may differ from the opinions expressed by other units of PSPL or its connected persons and associates. Any reference to or discussion of investment products or commodities in these commentaries is purely for illustrative purposes only and must not be construed as a recommendation, an offer or solicitation for the subscription, purchase or sale of the investment products or commodities mentioned. This advertisement has not been reviewed by the Monetary Authority of Singapore.

    Sheng Siong Group: Headwinds Loom as Target Price Lowered to S$2.75

    Published on Nov 12, 2026 2 

    Company Overview Sheng Siong Group delivered third-quarter 2026 results broadly in line with expectations. Nine-month revenue and net profit after tax and minority interests (PATMI) came in at 76 per cent and 74 per cent, respectively, of Phillip Securities Research's full-year 2026 forecast. Third-quarter PATMI rose 2 per cent year on year to S$44.6 million, while revenue grew at a slower pace of 6 per cent year on year, with store closures shaving off 2 percentage points of revenue. Staff costs continued to outpace revenue growth owing to progressive wage requirements and competitive pressures. Investment Positives Improving Gross Margins The standout positive in the our assessment is the continued improvement in gross margins. Gross margins extended their upward trajectory with a 0.7 percentage-point year on year improvement to 32.3 per cent in the third quarter. We attribute this gain to scale advantages in the fresh produce segment and more benign competition, which have enabled the group to extract better margins from its operations. Long-Term Market Share Trajectory Looking beyond the near-term headwinds, we note that the longer-term trajectory remains positive. The group has been consistently gaining market share in the grocery market, a trend that supports its competitive positioning over time. This structural advantage should serve the company well as it continues to scale and benefit from operational efficiencies. Active Store Pipeline On the expansion front, three Housing and Development Board (HDB) tenders and one Singapore Land Authority (SLA) tender are still awaiting results, providing potential catalysts for store network growth. Beyond these public tenders, additional new stores are under discussion through several private leases. These opportunities, if realised, could provide an avenue for revenue growth. Indirect Impact from Middle East Conflict Well Managed The impact from the Middle East conflict has been indirect, largely manifesting through diesel costs, supplier prices, and longer lead times. We note that the company has managed this disruption effectively, suggesting resilience in its supply chain operations. Investment Challenges Slower Sales Momentum The principal challenge identified is a deceleration in sales momentum. Same-store sales growth slowed from 2.7 per cent in the first half of 2026 to negative 0.5 per cent in the third quarter. We point to a base effect from SG60 voucher spending in the prior year as a contributing factor. Revenue was further dragged down by two store closures — Elias Mall in March 2026 and Thomson Imperial Court in September 2026 — which reduced revenue by 2.1 percentage points. Rising Electricity Costs A significant headwind is the anticipated doubling of electricity costs from contract renewals in the financial year 2027. We estimate that this increase will shave 1 to 2 percentage points off margins next year, representing a material drag on profitability. Operating Cost Pressures Operating leverage remains a challenge as staff costs and energy costs are climbing faster than revenue. Progressive wage requirements and competitive labour market pressures continue to push personnel expenses higher, while the expected surge in electricity prices compounds the cost burden. These dynamics constrain the group's ability to translate revenue growth into commensurate earnings growth. Sungei Kadut Distribution Centre The S$520 million Sungei Kadut distribution centre is another consideration. Between 70 to 80 per cent of the capital expenditure will be incurred in financial years 2027 and 2028. While depreciation will only commence in the financial year 2030, pre-operating costs and lower finance income will weigh on near-term earnings. The project, once commenced, will also reduce the interest income currently earned on the group's cash holdings Limited Visibility on New Stores Visibility on new HDB stores in 2027 is weaker, and the pipeline of new stores has not been disclosed. This uncertainty makes it difficult to assess the pace of network expansion and its contribution to revenue growth going forward. Outlook Several headwinds are converging for Sheng Siong. Operating costs are set to rise faster owing to higher electricity prices and competitive wage pressures. Revenue growth will be partially offset by the lagged impact of store closures. The Sungei Kadut distribution centre will begin to absorb capital and reduce finance income before it generates operational benefits. Visibility on new store openings is limited. However, the longer-term outlook remains supported by the group's consistent market share gains and improving gross margins. Recommendation and Target Price Phillip Securities Research maintains its NEUTRAL recommendation on Sheng Siong Group. The target price has been lowered to S$2.75, from the previous S$3.31. This reduction reflects a cut in the price-to-earnings valuation multiple from 28 times to 25 times financial year 2027 estimated earnings. We believe the valuation de-rating is warranted by the softer earnings expected in the financial year 2027. Full-year 2026 earnings estimates are maintained, but financial year 2027 earnings estimates have been lowered by 7 per cent. Frequently Asked Questions [market_journal_faq] This article has been auto-generated using PhillipGPT. It is based on a report by a Phillip Securities Research analyst.   Disclaimer These commentaries are intended for general circulation and do not have regard to the specific investment objectives, financial situation and particular needs of any person. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of any person acting based on this information. You should seek advice from a financial adviser regarding the suitability of any investment product(s) mentioned herein, taking into account your specific investment objectives, financial situation or particular needs, before making a commitment to invest in such products. Opinions expressed in these commentaries are subject to change without notice. Investments are subject to investment risks including the possible loss of the principal amount invested. The value of units in any fund and the income from them may fall as well as rise. Past performance figures as well as any projection or forecast used in these commentaries are not necessarily indicative of future or likely performance. Phillip Securities Pte Ltd (PSPL), its directors, connected persons or employees may from time to time have an interest in the financial instruments mentioned in these commentaries. The information contained in these commentaries has been obtained from public sources which PSPL has no reason to believe are unreliable and any analysis, forecasts, projections, expectations and opinions (collectively the “Research”) contained in these commentaries are based on such information and are expressions of belief only. PSPL has not verified this information and no representation or warranty, express or implied, is made that such information or Research is accurate, complete or verified or should be relied upon as such. Any such information or Research contained in these commentaries are subject to change, and PSPL shall not have any responsibility to maintain the information or Research made available or to supply any corrections, updates or releases in connection therewith. In no event will PSPL be liable for any special, indirect, incidental or consequential damages which may be incurred from the use of the information or Research made available, even if it has been advised of the possibility of such damages. The companies and their employees mentioned in these commentaries cannot be held liable for any errors, inaccuracies and/or omissions howsoever caused. Any opinion or advice herein is made on a general basis and is subject to change without notice. The information provided in these commentaries may contain optimistic statements regarding future events or future financial performance of countries, markets or companies. You must make your own financial assessment of the relevance, accuracy and adequacy of the information provided in these commentaries. Views and any strategies described in these commentaries may not be suitable for all investors. Opinions expressed herein may differ from the opinions expressed by other units of PSPL or its connected persons and associates. Any reference to or discussion of investment products or commodities in these commentaries is purely for illustrative purposes only and must not be construed as a recommendation, an offer or solicitation for the subscription, purchase or sale of the investment products or commodities mentioned. This advertisement has not been reviewed by the Monetary Authority of Singapore.

    Amazon.com Inc: AWS Dominance and AI Momentum Drive Upgrade — Target Price US$330

    Published on Nov 12, 2026 4 

    Brief Overview Amazon.com Inc delivered third-quarter 2026 results broadly in line with expectations. Revenue grew 12 per cent year on year. Growth was softer because Prime Day shifted from its usual third-quarter timing to the second quarter this year, which pulled forward retail sales. Nine-month revenue and adjusted profit after tax and minority interests (PATMI) reached 70 per cent and 71 per cent, respectively, of Phillip Securities Research's full-year 2026 forecasts. Amazon Web Services (AWS) accelerated for the sixth consecutive quarter, growing 39 per cent year on year — the fastest growth in 19 quarters — with backlog surging 189 per cent year on year. Amazon maintained its full-year 2026 capital expenditure guidance at US$220 billion but expects spending to increase meaningfully in financial year 2027. Investment Positives AI Adoption and Custom Silicon Accelerate AWS Growth AWS revenue grew 39 per cent year on year to US$46 billion, its fastest growth in nearly five years, supported by both core cloud and artificial intelligence workloads. The backlog reached US$578 billion, up 189 per cent year on year. Amazon Bedrock continues to gain traction, with Fortune 500 customer spending increasing nearly seven times year on year and token volume surging nearly 17 times. Graviton and Trainium revenue commitments each increased more than 20 times year on year, while custom silicon helped customers save over US$2 billion in the third quarter alone. The analyst views custom silicon as a key competitive differentiator, enabling AWS to reduce reliance on third-party chip suppliers such as Nvidia and capture a greater share of the AI infrastructure value chain. Margins Exceeded Expectations Operating income surged 61 per cent year on year to US$28.1 billion, exceeding guidance of US$22.5 billion to US$26.5 billion. Operating margin reached a record 13.9 per cent, 160 basis points above expectations. AWS operating income grew approximately 56 per cent year on year to US$17.8 billion, with a 38.7 per cent margin. AI margins are improving rapidly, supported by cost efficiencies from proprietary silicon, higher infrastructure utilisation, and growing inference demand. Retail profitability also improved, supported by fulfilment efficiencies and lower cost-to-serve, despite higher fuel and transportation costs. Strong Demand Visibility Justifies Aggressive Capital Expenditure AWS backlog surged 189 per cent year on year to US$578 billion, with an average contract life of six years, providing strong long-term revenue visibility. Management expects AWS revenue growth to exceed 40 per cent in both the financial years 2027 and 2028, supported by customer commitments extending well into the financial year 2029. Full-year 2026 capital expenditure guidance remains at US$220 billion, but spending is expected to increase meaningfully in the financial year 2027. Elevated spending has weighed on trailing 2-month free cash flow, which deteriorated from US$14.8 billion to negative US$42.4 billion. Nevertheless, the ratio of backlog to annual capital expenditure improved from 1.9 times in the financial year 2025 to 2.6 times in the third quarter of 2026, suggesting contracted demand is growing faster than infrastructure investment. With newly deployed AI capacity being absorbed almost immediately, the analyst believes robust demand visibility supports elevated capital expenditure despite near-term free cash flow pressure. Outlook Amazon guided fourth-quarter 2026 revenue to be between US$240.0 billion and US$247.0 billion, representing 12.5 to 15.7 per cent year-on-year growth, along with an approximately 60 basis-point foreign exchange headwinds. Fourth-quarter 2026 operating income is expected to be between US$28.5 billion and US$33.5 billion, compared with US$25.0 billion in the fourth quarter of 2025. Capital expenditure in the financial year 2026 is expected to remain at US$220 billion, representing a 67 per cent year-on-year increase. We view management's projection of over 40 per cent AWS revenue growth in both the financial years 2027 and 2028 positively, particularly given its unusually long guidance horizon and visibility into customer commitments extending into the financial year 2029. While near-term free cash flow remains under pressure, strong demand visibility and improving infrastructure utilisation support the long-term investment case, with monetisation expected to accelerate as capacity comes online. Recommendation and Target Price We upgrade our recommendation from ACCUMULATE to BUY, with an increased target price of US$330, up from the previous US$320. The financial year 2027 revenue and adjusted PATMI estimates have been increased by 2 per cent and 3 per cent, respectively, to reflect strong AWS growth visibility, while the financial year 2027 capital expenditure estimate has been raised by 3 per cent. While aggressive capital expenditure creates free cash flow pressure, strong demand visibility supports sustained infrastructure investment, which we believe will strengthen Amazon's market leadership and create significant barriers to entry for potential competitors over the long term. Frequently Asked Questions [market_journal_faq] This article has been auto-generated using PhillipGPT. It is based on a report by a Phillip Securities Research analyst.   Disclaimer These commentaries are intended for general circulation and do not have regard to the specific investment objectives, financial situation and particular needs of any person. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of any person acting based on this information. You should seek advice from a financial adviser regarding the suitability of any investment product(s) mentioned herein, taking into account your specific investment objectives, financial situation or particular needs, before making a commitment to invest in such products. Opinions expressed in these commentaries are subject to change without notice. Investments are subject to investment risks including the possible loss of the principal amount invested. The value of units in any fund and the income from them may fall as well as rise. Past performance figures as well as any projection or forecast used in these commentaries are not necessarily indicative of future or likely performance. Phillip Securities Pte Ltd (PSPL), its directors, connected persons or employees may from time to time have an interest in the financial instruments mentioned in these commentaries. The information contained in these commentaries has been obtained from public sources which PSPL has no reason to believe are unreliable and any analysis, forecasts, projections, expectations and opinions (collectively the “Research”) contained in these commentaries are based on such information and are expressions of belief only. PSPL has not verified this information and no representation or warranty, express or implied, is made that such information or Research is accurate, complete or verified or should be relied upon as such. Any such information or Research contained in these commentaries are subject to change, and PSPL shall not have any responsibility to maintain the information or Research made available or to supply any corrections, updates or releases in connection therewith. In no event will PSPL be liable for any special, indirect, incidental or consequential damages which may be incurred from the use of the information or Research made available, even if it has been advised of the possibility of such damages. The companies and their employees mentioned in these commentaries cannot be held liable for any errors, inaccuracies and/or omissions howsoever caused. Any opinion or advice herein is made on a general basis and is subject to change without notice. The information provided in these commentaries may contain optimistic statements regarding future events or future financial performance of countries, markets or companies. You must make your own financial assessment of the relevance, accuracy and adequacy of the information provided in these commentaries. Views and any strategies described in these commentaries may not be suitable for all investors. Opinions expressed herein may differ from the opinions expressed by other units of PSPL or its connected persons and associates. Any reference to or discussion of investment products or commodities in these commentaries is purely for illustrative purposes only and must not be construed as a recommendation, an offer or solicitation for the subscription, purchase or sale of the investment products or commodities mentioned. This advertisement has not been reviewed by the Monetary Authority of Singapore.

    ETF Monthly October 2026: Further Weakness Expected Across Most Asset Classes in November

    Published on Nov 12, 2026 6 

    Brief Overview Phillip Securities Research's ETF Monthly technical analysis report for October 2026 finds that most major asset classes experienced weakness during the month. Heading into November, the ETFs tracking oil and Bitcoin are expected to consolidate sideways. Conversely, the ETFs tracking the S&P 500, US Treasury Bonds, gold, Singapore equities, and the Hang Seng Index are likely to pull back further.   Investment Positives Oil Stabilising After Strong October Rally The SPDR S&P Oil and Gas Exploration and Production ETF (XOP) was the standout performer in October, surging 13.6 per cent. At the beginning of the month, the price rebounded from the upward channel support and the US$179.78 breakout level before retesting the US$200.09 swing high resistance in mid-October. The price subsequently formed a higher high in the last week of the month, signalling constructive momentum. We expect the price to consolidate sideways in November, suggesting the rally may pause rather than reverse. The current price is US$203.76, with a buy zone identified at US$172.00 to US$180.00 and a sell zone at US$188.00 to US$200.00.   Bitcoin Consolidation May Provide Support The ProShares Bitcoin Strategy ETF (BITO) ended a three-month winning streak with a sharp 8.5 per cent decline in October. The price broke down through the US$11.16 level at the beginning of the month, consolidated sideways, and then broke below the US$10.64 level on the last day of October. Despite this weakness, we expect the price to consolidate sideways in November, potentially finding support on a retest of the US$10.03 swing low formed in mid-September 2026. The current price stands at US$10.23, with a buy zone at US$10.70 to US$11.15 and a sell zone at US$11.66 to US$12.50.   Investment Challenges Gold Breaks Key Support The SPDR Gold MiniShares Trust (GLDM) tumbled for the second consecutive month, falling 6.5 per cent in October. The price consolidated sideways for most of the month before breaking below US$80.65 and the key horizontal support level at US$78.43 on the final day of the month. We expect the price to extend its weakness in November and potentially retest the US$73.40 range-consolidation resistance level formed in mid-September 2026, representing a 4.4 per cent downside from the current price.   US Treasury Bonds Under Pressure The iShares 7-10 Year Treasury Bond ETF (IEF) faces a challenging technical outlook. The current price is US$91.76, with a buy zone identified at US$90.70 to US$91.40 and a sell zone at US$91.75 to US$92.30. We expect the ETF to pull back in November.   Singapore Equities Extend Decline The SPDR Singapore Equities ETF (ES3) fell for the second consecutive month, tumbling 5.5 per cent in October. At the beginning of the month, the price broke below the S$5.71 support level and subsequently consolidated sideways, retesting the uptrend support line formed since June 2025. We expect the price to extend its weakness in November if it breaks below the uptrend support line at S$5.44. Price could retest the next support level at S$5.34, a previous swing high formed at the end of June 2026, representing a 2 per cent downside from the current price of S$5.45. The buy zone is identified at S$5.23 to S$5.34, and the sell zone at S$5.51 to S$5.59.   Hang Seng Downtrend Deepens The Hang Seng China Enterprises Index ETF (2828) pulled back for the third consecutive month, declining 4 per cent in October. The price bounced to form a lower high in the first half of the month before breaking down through the HKD82.84 level in the second half to extend its downtrend. We expect the price to extend its weakness in November and potentially retest the swing low support level at HKD75.29 formed at the end of June 2026, representing a 6.8 per cent downside from the current price of HKD80.82. The buy zone is set at HKD75.25 to HKD78.80, and the sell zone at HKD81.70 to HKD82.85.   S&P 500 Expected to Retreat We expect the ETF tracking the S&P 500 to pull back in November, placing it among the majority of asset classes facing near-term downward pressure.   Outlook The November outlook across asset classes is predominantly cautious. Five of the seven ETFs covered — those tracking the S&P 500, US Treasury Bonds, gold, Singapore equities, and the Hang Seng Index — are expected to pull back. Only the oil and Bitcoin ETFs are expected to consolidate sideways, offering relative stability in an otherwise weak technical environment. The most significant potential downside is in the Hang Seng China Enterprises Index ETF, where we identify a possible 6.8 per cent decline to support, followed by gold with a potential downside of 4.4 per cent.   Summary of Technical Levels For investors monitoring entry and exit points, we have provided the following buy and sell zones: US Treasury Bonds (IEF): Buy zone US$90.70 to US$91.40; Sell zone US$91.75 to US$92.30. Oil (XOP): Buy zone US$172.00 to US$180.00; Sell zone US$188.00 to US$200.00. Bitcoin (BITO): Buy zone US$10.70 to US$11.15; Sell zone US$11.66 to US$12.50. Singapore Equities (ES3): Buy zone S$5.23 to S$5.34; Sell zone S$5.51 to S$5.59. Hang Seng (2828): Buy zone HKD75.25 to HKD78.80; Sell zone HKD81.70 to HKD82.85.   Frequently Asked Questions [market_journal_faq]   This article has been auto-generated using PhillipGPT. It is based on a report by a Phillip Securities Research analyst.   Disclaimer These commentaries are intended for general circulation and do not have regard to the specific investment objectives, financial situation and particular needs of any person. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of any person acting based on this information. You should seek advice from a financial adviser regarding the suitability of any investment product(s) mentioned herein, taking into account your specific investment objectives, financial situation or particular needs, before making a commitment to invest in such products. Opinions expressed in these commentaries are subject to change without notice. Investments are subject to investment risks including the possible loss of the principal amount invested. The value of units in any fund and the income from them may fall as well as rise. Past performance figures as well as any projection or forecast used in these commentaries are not necessarily indicative of future or likely performance. Phillip Securities Pte Ltd (PSPL), its directors, connected persons or employees may from time to time have an interest in the financial instruments mentioned in these commentaries. The information contained in these commentaries has been obtained from public sources which PSPL has no reason to believe are unreliable and any analysis, forecasts, projections, expectations and opinions (collectively the “Research”) contained in these commentaries are based on such information and are expressions of belief only. PSPL has not verified this information and no representation or warranty, express or implied, is made that such information or Research is accurate, complete or verified or should be relied upon as such. Any such information or Research contained in these commentaries are subject to change, and PSPL shall not have any responsibility to maintain the information or Research made available or to supply any corrections, updates or releases in connection therewith. In no event will PSPL be liable for any special, indirect, incidental or consequential damages which may be incurred from the use of the information or Research made available, even if it has been advised of the possibility of such damages. The companies and their employees mentioned in these commentaries cannot be held liable for any errors, inaccuracies and/or omissions howsoever caused. Any opinion or advice herein is made on a general basis and is subject to change without notice. The information provided in these commentaries may contain optimistic statements regarding future events or future financial performance of countries, markets or companies. You must make your own financial assessment of the relevance, accuracy and adequacy of the information provided in these commentaries. Views and any strategies described in these commentaries may not be suitable for all investors. Opinions expressed herein may differ from the opinions expressed by other units of PSPL or its connected persons and associates. Any reference to or discussion of investment products or commodities in these commentaries is purely for illustrative purposes only and must not be construed as a recommendation, an offer or solicitation for the subscription, purchase or sale of the investment products or commodities mentioned. This advertisement has not been reviewed by the Monetary Authority of Singapore.

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    IMPORTANT INFORMATION

    This material is provided by Phillip Capital Management (S) Ltd (“PCM”) for general information only and does not constitute a recommendation, an offer to sell, or a solicitation of any offer to invest in any of the exchange-traded fund (“ETF”) or the unit trust (“Products”) mentioned herein. It does not have any regard to your specific investment objectives, financial situation and any of your particular needs. You should read the Prospectus and the accompanying Product Highlights Sheet (“PHS”) for key features, key risks and other important information of the Products and obtain advice from a financial adviser (“FA“) pursuant to a separate engagement before making a commitment to invest in the Products. In the event that you choose not to obtain advice from a FA, you should assess whether the Products are suitable for you before proceeding to invest. A copy of the Prospectus and PHS are available from PCM, any of its Participating Dealers (“PDs“) for the ETF, or any of its authorised distributors for the unit trust managed by PCM.  

    An ETF is not like a typical unit trust as the units of the ETF (the “Units“) are to be listed and traded like any share on the Singapore Exchange Securities Trading Limited (“SGX-ST”). Listing on the SGX-ST does not guarantee a liquid market for the Units which may be traded at prices above or below its NAV or may be suspended or delisted. Investors may buy or sell the Units on SGX-ST when it is listed. Investors cannot create or redeem Units directly with PCM and have no rights to request PCM to redeem or purchase their Units. Creation and redemption of Units are through PDs if investors are clients of the PDs, who have no obligation to agree to create or redeem Units on behalf of any investor and may impose terms and conditions in connection with such creation or redemption orders. Please refer to the Prospectus of the ETF for more details.  

    Investments are subject to investment risks including the possible loss of the principal amount invested. The purchase of a unit in a fund is not the same as placing your money on deposit with a bank or deposit-taking company. There is no guarantee as to the amount of capital invested or return received. The value of the units and the income accruing to the units may fall or rise. Past performance is not necessarily indicative of the future or likely performance of the Products. There can be no assurance that investment objectives will be achieved.  

    Where applicable, fund(s) may invest in financial derivatives and/or participate in securities lending and repurchase transactions for the purpose of hedging and/or efficient portfolio management, subject to the relevant regulatory requirements. PCM reserves the discretion to determine if currency exposure should be hedged actively, passively or not at all, in the best interest of the Products.  

    The regular dividend distributions, out of either income and/or capital, are not guaranteed and subject to PCM’s discretion. Past payout yields and payments do not represent future payout yields and payments. Such dividend distributions will reduce the available capital for reinvestment and may result in an immediate decrease in the net asset value (“NAV”) of the Products. Please refer to <www.phillipfunds.com> for more information in relation to the dividend distributions.  

    The information provided herein may be obtained or compiled from public and/or third party sources that PCM has no reason to believe are unreliable. Any opinion or view herein is an expression of belief of the individual author or the indicated source (as applicable) only. PCM makes no representation or warranty that such information is accurate, complete, verified or should be relied upon as such. The information does not constitute, and should not be used as a substitute for tax, legal or investment advice.  

    The information herein are not for any person in any jurisdiction or country where such distribution or availability for use would contravene any applicable law or regulation or would subject PCM to any registration or licensing requirement in such jurisdiction or country. The Products is not offered to U.S. Persons. PhillipCapital Group of Companies, including PCM, their affiliates and/or their officers, directors and/or employees may own or have positions in the Products. Any member of the PhillipCapital Group of Companies may have acted upon or used the information, analyses and opinions herein before they have been published. 

    This advertisement has not been reviewed by the Monetary Authority of Singapore.  

     

    Phillip Capital Management (S) Ltd (Co. Reg. No. 199905233W)  
    250 North Bridge Road #06-00, Raffles City Tower ,Singapore 179101 
    Tel: (65) 6230 8133 Fax: (65) 65383066 www.phillipfunds.com