Singapore equities could be on the rebound: Analysts

SINGAPORE: Analysts have said that Singapore equities could be on the rebound. This comes after a decent showing in the first quarter of 2015 – with the Straits Times Index (STI) managing to climb 2.4 per cent year-to-date. In the same period last year, the STI saw gains of 0.67 per cent.

Analysts said the interest in equities could be due to other asset classes being less attractive. And they remain optimistic that barring any major global downside risks, Singapore equities will continue to perform.

Singtel was one of the top performers for the quarter, with its share price jumping 12.3 per cent. It was followed closely behind by property developer Hongkong Land, with returns of 11.7 per cent.

Sector-wise, telecommunications and real estate investment trusts (REITs) continued to do well -even as commodity-related sectors, such as commodity suppliers and offshore and marine, underperformed.

Analysts said the first-quarter performance was better than expected, and one possible reason could be investors shifting their focus to equities from other asset classes.

Mr Liu Jinshu, lead analyst at Voyage Research, elaborated: “Investors right now are seeing the Singapore property sector as less attractive, so we may for instance see money flowing from the real-estate sector over to equities. If you were to look at real estate prices, I think right now, the interest in real estate would not be as strong as say a few years ago.”

UPWARD TREND EXPECTED TO CONTINUE IN Q2 

Going into the second quarter, analysts are optimistic that the upward trend will continue. Major events at home, such as the SEA Games, are expected to have positive spill-over effects – particularly in the transport, tourism and hospitality sectors. 

However, a major downside risk could be the impending US interest rate hike. Analysts said that if the roll-out is properly managed, the effect on equities could be minimised.

Said Mr Nicholas Teo, market analyst at CMC Markets: “The other driver is that global liquidity will still be fairly good, despite the potential US rate hike; I think that process will be managed, and with that management.

“I think equities will still be the asset class that will dominate this year. Singapore sits nicely in Asia and we will see a benefit of that fund flow coming through. So with that, Singapore would probably ride that wave.”

Across Southeast Asia, all key benchmarks closed in the black for the first quarter as a whole. Manila’s PSE was the top performer – with a gain of 9.8 per cent. Thailand was at the other end of the spectrum, with the SET pulling ahead by 0.55 per cent. 

SGX Singapore Update

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