What a year 2020 was, with the coronavirus upending industries, supply chains and the livelihoods of many.

On Dec 31, 2020, the last trading day of the year, the benchmark Straits Times Index (STI) slid 25.41 points or 0.89% to 2,843.81 points at the closing bell. 

Year-on-year (y-o-y) this is down 379.02 points or 11.8% from the 3,222.83 point close on the last trading day of 2019.

Still, Maybank Kim Eng analysts Thilan Wickramasinghe and Lai Gene Lih say that 2020 has birthed several opportunities such as the expedited push towards digitalisation and innovation. 

While these moves will help strengthen Singapore’s hub status, the duo say they believe that they will also provide “opportunities to enhance long-term returns and improve earnings visibility,” particularly of listed companies.

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“An improved earnings outlook and significant liquidity has us raising our 12-month STI target to 3,282, from 2,995,” Wickgramasinghe and Lai say in a Dec 8 note.


SEE: STI up 0.26% on slowdown in economic contraction in 2020


DBS analysts Yeo Kee Yan, Janice Chua and Woon Bing Yong agree. 

“We expect a strong recovery in 2021 to be underpinned by wider vaccine availability, more stable US-China trade relations, stronger regional trade ties, continued fiscal support, lower-for-longer interest rates,” they say in a Jan 4 note.

The STI showed signs of a recovery with shares gaining 15.09 points or 0.53% to close at 2,858.90 points on the first trading day of 2021, following news of Singapore’s full-year 2020 GDP coming in at 5.8%.

Things have since turned with the benchmark index inching down 0.8% or 21.4 points to 2,837.50 at 9.01am on Jan 5, following losses on Wall Street. This follows anxiety over the Georgia Senate runoffs as polls show Democrats and Republicans coming in neck and neck in both Senate races.

All three major US indices finished decisively lower with the Dow Jones Industrial Average down 1.3% at 30,223.89 on Jan 4. The broad-based S&P shed 1.5% to 3,700.65, while the Nasdaq Composite Index tumbled by 1.5% to 12,694.45

To this end, analysts like RHB Singapore’s Shekhar Jaiswal caution that recovery may be uneven given the fluidity of the Covid-19 situation globally. 

“Inability to control Covid-19 infections in countries that are Singapore’s key trade partners, or countries that account for the highest number of tourist inflows, could derail expectations of an economic recovery that is currently in place,” he elaborates in a Jan 4 note.

He adds that other external risks stemming from the continued deterioration of US-China ties could also put a dent of the index’s performance.

Still, Jaiswal says that the STI – with a 13.8x 2021F Price-to-earnings ratio – is the cheapest market in ASEAN. Meanwhile, its 4% 2021F yield is the highest in Asia.

“The persistence of almost-zero interest rates, elevated global liquidity, and the reversal of funds flowing into Asia should bring investors to high-yield markets like Singapore,” reckons Jaiswal.

His end-2021F STI target is 3,144 points, which is based on a 13.5x forward price-to-earnings ratio.

Similarly, DBS’ Yeo, Chua and Woon are looking at the STI ending the year at 3,180 points. This is “pegged to a 14.4x (+1 standard deviation) blended FY2021/2022F price-to-earnings with strong technical support at 2,670 and 27,40,” they explain.

In this time, they are expecting “a solid 43.2% year-on-year FY2021F earnings per share growth with 2Q2021 being the strongest quarter. The earnings recovery trend should continue into 2H2021, as the path to herd immunity, gathers pace and borders reopen,” they add.

Stock picks

Interestingly, Yeo, Chua and Woon note that the “current market rally led by banks/property should eventually expand to industrials, capital goods, materials and construction as the recovery broadens”.

The analysts also believe that the laggard blue chips and small-mid cap counters will see better interest.

RHB’s Jaiswal agrees and says a recovery, particularly in the vaccine-dependent sectors is likely to come in 2H21. 

“We see opportunities for the underperformers of 2020 to play catch-up in 2021, as businesses revert back to partial normalcy towards 2H21F,” he mulls. His recommendation is for investors, to “selectively add positions in domestic consumption recovery cyclical plays, while staying invested in defensive picks, to cover downside risks.”.


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Among his top picks are counters from manufacturing and technology where the growth witnessed in 2020 is tipped to be sustained in 2021. Meanwhile, he remains cautious on stocks with direct exposure to the travel and tourism sectors, which remain battered by the restrictions imposed to curb the spread of the coronavirus.

As for specific counters, Jaiswal names China Aviation Oil (CAO) , ComfortDelGro, Dairy Farm, Suntec REIT and Thai Beverage, as counters to look at.

Aside from these, he recommends that investors stay invested in high-yield stocks such as ARA Logos Logistics Trust, Fu Yu, Prime US REIT, Riverstone, Sheng Siong and ST Engineering, which have defensive growth.

Like Jaiswal, DBS’ analysts too have a liking for cyclicals and counters with yield. 

“We see opportunities in value names trading below average historic valuations that have recovery potential post-Covid,” they say as they name OCBC, CapitaLand and AEM as their top picks. 

The analysts also have a liking for ComfortDelgro, Keppel Corp and Yangzijiang Shipbuilding, given expectations of a turn to “mid-cycle recovery outperformers as the economic recovery broadens”.

In the long-run, they say that yield remains in favour due to the “lower-for-longer interest rate stance by the US Fed,” which is expected to last at least till end-2022. 

In light of this, the analysts note that S-REIT’s attractive FY2021F yield of 6.0%, making them investment worthy instruments.

Among their S-REIT picks are, for retail: CapitaLand Retail China Trust, CapitaLand Integrated Commercial Trust, Lendlease Global and Frasers Centrepoint Trust

From the logistics sector, they have chosen Mapletree Logistics Trust and Frasers Logistics & Commercial Trust. Lastly, they have picked Mapletree Commercial Trust and Keppel REIT for their diversified office space offerings.

Other sectors that the DBS analysts recommend for long-term play, are aviation and hospitality. This is as the sectors are slated to benefit from the re-opening of international borders as global communities move towards herd immunity.

Counters that the DBS analysts like from these sectors include: Ascott Residence, CDL Hospitality Trust and Frasers Hospitality Trust (for hospitality REITs), SATS and CAO (from the aviation sector) and Koufu, Lendlease and Frasers Centrepoint (from the retail/food and beverage sector).