While optimism builds in Singapore on declining numbers of Covid-19 infection, investors should stick with defensives. This is because the global Covid-19 situation remains “fluid”, with cases of resurgence in some countries, says RHB analyst Shekhar Jaiswal in an August 24 note. 

“We note that optimism of the economic recovery is rising amidst Singapore’s declining COVID-19 infections, revision in 2020 NODX forecast to growth from a decline, and rising expectation of strong profit growth in 2021… We recommend investors to stick with REITs and defensive stocks, while selectively adding exposure to cyclical recovery names in consumer, property and transport sectors,” says Jaiswal. 

Unless the expected gradual recovery in economic activity stalls, Jaiswal believes that downgrades to 2020F EPS, which has been lowered by 39% YTD, should taper off from here. “We recommend investors to gradually build positions in CapitaLand, City Developments, ComfortDelGro, Suntec Real Estate Investment Trust and Thai Beverage – our cyclical recovery picks.”

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