The Zacks Investment Bank industry is set to benefit from clarity on trade and monetary policy, a resilient economy and lower financing costs, which will boost M&As and underwriting prospects in 2026. Trading revenues are likely to remain strong as geopolitical risks and tariff concerns help sustain market volatility and client activity. Meanwhile, rising investments in AI, technology and platforms may weigh on costs in the near term but are expected to enhance long-term operating efficiency. Hence, industr ...

Core Viewpoint - Employees are increasingly expected to manage their own retirement planning, with the Central Provident Fund (CPF) in Singapore being a primary source of retirement savings, but it should be supplemented with income-generating equities [1] Group 1: CapitaLand Integrated Commercial Trust (CICT) - CICT is the first and largest real estate industrial trust (REIT) listed on the Singapore Exchange, owning a diverse portfolio of malls, offices, and integrated developments primarily in Singapore, with additional assets in Australia and Germany [3][4] - The REIT currently offers a yield of 4.7%, with an average lease term exceeding three years, ensuring a stable income stream [4] - CICT benefits from a strong sponsor, Capitaland Investment, which provides a pipeline of assets for future growth, although it is sensitive to interest rate changes that can affect borrowing costs and property values [5][6][7] Group 2: DBS Group Holdings - DBS is Singapore's largest bank and company by market capitalization, significantly influencing the Straits Times Index [8] - The bank has shown impressive growth, with net profit increasing by 142% from S$4.7 billion in 2020 to S$11.4 billion in 2024, and dividends per share rising by 181% from S$0.79 to S$2.22 [9] - Currently, DBS offers a yield of around 5% and has a strong track record of increasing dividends, alongside a S$3 billion share buyback program [9][10] Group 3: Singapore Exchange (SGX) - SGX has performed well financially over the past five years, with net profit increasing by nearly 46% from S$445 million in FY2021 to S$648 million in FY2025, despite previous perceptions of being primarily a dividend stock [13] - The exchange operates as a "toll gate" business, generating revenue from transaction fees, with only 2% of FY2025 revenue coming from listing fees [14] - SGX maintains a strong dividend yield of around 2.2% and has consistently increased dividends since FY2009, benefiting from its monopoly status in a major financial hub [14][16][17]

Industry Overview - The Zacks Investment Bank industry is expected to benefit from increased trading income due to heightened market volatility and client activity amid geopolitical and macroeconomic uncertainty [1][4] - Investments in artificial intelligence (AI) and technology are anticipated to enhance long-term efficiency despite short-term cost pressures [1][7] - The industry consists of firms providing financial products and services, including advisory-based financial transactions to corporations, governments, and financial institutions [3] Current Trends - The trading business is projected to remain solid, with client activity influenced by macroeconomic and geopolitical conditions, leading to increased trading income [4][6] - Underwriting and advisory businesses are showing signs of recovery after a slump, with expectations of a rebound in investment banking activity [5][6] - Technology investments are expected to improve operational efficiency, despite rising technology-related expenses in the near term [7] Performance Metrics - The Zacks Investment Bank industry ranks 97, placing it in the top 39% of over 250 Zacks industries, indicating solid near-term prospects [8][9] - The industry has outperformed the S&P 500 and the broader finance sector, with a collective stock surge of 34.1% over the past year compared to 11.7% for the S&P 500 [11] - The trailing 12-month price-to-tangible book ratio (P/TBV) for the industry is 2.81X, significantly lower than the S&P 500's 13.14X, indicating a discount compared to the broader market [14][16] Key Players - **Morgan Stanley**: With a market cap of $225.7 billion, the company is focusing on diversifying its revenue sources and has seen a 42% increase in shares over the past year [22][19] - **Goldman Sachs**: This company has a market cap of $212 billion and has experienced a 52.6% share price increase over the past six months, supported by robust client engagement and digital transformation [27][24] - **Robinhood**: With a market cap of $73.5 billion, Robinhood's shares have soared 310.8% in the past year, driven by its commission-free trading model and efforts to expand its product base [32][29]