As the optimism on the reopening of Singapore lifts the benchmark Straits Times Index (STI) to slightly above a 13.6x 12-month forward P/E, DBS analysts Yeo Kee Yan and Woon Bing Yong note that the index may be close to a near-term cap of 3,450 points.
While April tends to be a “benign month” for the market as stocks hold their prices ahead of ex-dividend dates, the analysts note that the current global factors may cause a cap on the index’s near-term upside.
Factors identified in the analysts’ report on March 28 include the inflation outlook, supply chain disruptions because of the Russia-Ukraine war and China’s zero-Covid strategy, and a general caution ahead of the size of the rate hike at the US Federal Reserve’s May Federal Open Market Committee (FOMC) meeting.
