Could the worst be behind the Singapore market? Despite the worst of regional lockdowns in 2Q2020, only 28% of combined STI and MKE (Maybank Kim Eng) coverage stocks missed Street expectations, with an equal number beating expectations, note Maybank analysts Thilan Wickramasinghe, Gene Lih Lai and Kareen Chan in an August 26 note. 

The analysts posit that the ultra-bearish pre-lockdown EPS cuts in 1Q2020 may not be fully materialising. Indeed, 23% of stocks saw EPS upgrades vs. just 12% in 1Q2020. “Core-PAT fell 58% y-o-y. More than a third of that contraction was driven by industrials, followed by financials. Q-o-q contraction was slower (-31% vs. -46% 1Q2020) & this deceleration may become more pronounced as movement controls are further eased.”

“Fears of a worst-case scenario seem to have overshot lockdown reality, with less earnings misses and higher earnings per share (EPS) upgrades in 2Q2020. Progressive ramp up of regional economic activity in 2H2020 has the potential to strengthen these trends further.”

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