Singapore’s MAS surprise adoption of stronger SGD stance is likely to increase liquidity conditions in local market, further fuel rise in asset prices, says Nomura. Says markets also expecting U.S. Fed to embark on further quantitative easing early November, house economist expects Fed to buy US$600 billion ($784 million) of securities in increments of US$200 billion.

“We believe the actions of the Fed and the MAS will buoy the Singapore stock market in the fourth quarter...In this regard, we believe investors should position themselves in sectors that are more responsive to reflation, i.e., banks and commodities.” 

 

For banks, says lower interest rates will stimulate broad credit demand and bulk of SIBOR weakness already absorbed after 6 quarters of margin decline, while deposits still generate positive spread even when parked in interbank market. 

 

Nomura tweaks top picks, adds some higher beta names to ride reflation theme; adds planters Golden Agri (E5H.SG), Indofood Agri (5JS.SG); offshore play Sembcorp Marine (SS51.SG). In property adds CapitaCommercial Trust (C61U.SG).