RHB Group Research analyst Shekhar Jaiswal says the cabinet reshuffle, which will see Lawrence Wong becoming the new Minister for Finance, as well as other shifts within six other ministries, will not impact his view on Singapore’s economic or market outlook.

“We expect Singapore to remain politically stable and continue to have a strong control on the pandemic,” writes Jaiswal in an April 26 report.

“This, we believe, will enable it to deliver a better-than-expected economic growth rebound, relative to its Asean peers, and also offer the most comfort to investors,” he adds.

On this, Jaiswal has maintained his positive stance on Singapore equities.


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“Singapore’s advance estimate of 1Q2021 GDP growth printed 0.2% y-o-y vs our -0.8% y-o-y estimate,” he says.

“We believe the balance of risks to our 5.8% y-o-y 2021 GDP growth forecast is tilted to the upside. The Monetary Authority of Singapore (MAS) is also more upbeat about official 2021 growth projections, stating that growth could ‘exceed the upper end of the official 4-6% forecast range’”, he adds.

“Positive surprises for GDP growth will be an upside for the STI, as historically, forward EPS growth and returns have correlated with GDP growth expectations.”

 “At 13.2 times FY2022F price-to-earnings (P/E), the Straits Times Index (STI) is still amongst the cheapest Asean markets. Its 3.8% forward yield is the second highest in Asia,” writes Jaiswal.

“While we remain constructive on the STI’s outlook, the index could consolidate around current levels before moving higher. Our end-2021 STI target of 3,280 pts is based on 14.5 times forward P/E,” he adds.

On this, Jaiswal sees stocks to deliver higher returns than indices, as he continues to recommend a “balanced investment strategy” with higher exposure to cyclical stocks.

“Amid greater confidence in GDP growth, we prefer exposure to cyclical over domestic consumption stocks, when playing the economic recovery theme,” he writes.

“Despite higher bond yields, REIT outperformance should come from the office and retail sectors on cyclical rotation, and from small & mid-cap REITs trading at a discount. To cover for downside risks from an uneven and uncertain economic recovery, investors should stay invested in high-yielding stocks that offer visibility on earnings and dividend growth,” he adds.

Jaiswal’s stock picks for the economic recovery are: China Aviation Oil (CAO), CapitaLand, ComfortDelGro (CDG), DBS Group Holdings, OCBC, Singapore Exchange (SGX), Singapore Telecommunications (Singtel), ST Engineering, Wilmar International and Golden Agri Resources (GAR).

He prefers ARA Logos Logistics (ALOG), Prime US REIT, Starhill Global REIT and Suntec REIT as his preferred exposure to REITs, and Fu Yu Corp, Kimly, Riverstone, Ascendas REIT and Keppel REIT as his defensive stock picks.

In a separate market strategy report, Jaiswal and his colleagues at RHB view that other countries in Asean – except Singapore – will struggle with containing Covid-19 and “effectively managing the immunisation process to achieve herd immunity in the shortest time frame, while juggling these against a global shortage of vaccines”.


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“Waves of recurring CovidD-19 infections will dampen investor sentiment, delay the recovery, and further damage the financial health of corporates,” writes the team of research analysts.

Within the region, Singapore is the near-term defensive choice while Indonesia offers long-term growth potential.

“The y-t-d outperformance of the STI should not come as a surprise, given the success in containing Covid-19 transmissions and its heavy weighting of the cyclical banking and property sectors.”

“Singapore remains our preferred market in the near term, as others are more susceptible to a resurgence of infections. With the recovery scenario getting closer to reality with every inoculation, we favour Indonesia – for its growing middle-income segment, the elimination of structural FDI impediments, and boundless investment opportunities that stem from acute infrastructure needs,” it writes