SINGAPORE (April 15): Citi says it remains in favour of defensive stocks, given the underperformance of Singapore equities this year, and it prefers Singapore Telecommunications, SATS, CapitaLand , ST Engineering and Wilmar International.

In a research note, Citi says the next lead for Singapore investors “will not come from better growth”.

“Rather, it will be changes that improve cost,” the bank says, pointing to companies that are better able to leverage lower asset prices, wages, fees and foreign exchange, as well as mergers and acquisitions.

Citi says the the last year or so has seen a big push from the likes of state investment fund Temasek Holdings, as well as other firms, to consolidate through privatisation deals and regionalisation, and that companies that do better will be the ones that can do more with less and rely less on overall economic growth.