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Cyclical Singapore stocks still a good bet

Cyclical Singapore stocks still a good bet

Singapore equities market remain attractive for investors, particularly in cyclical sectors that ride on the recovery of global economy such as the banking, property, as well as offshore and marine sectors.  

Chan Hock Fai, head of equities for Singapore at Manulife Asset Management (Manulife AM), said the global economy is experiencing synchronised growth and he expects this growth to continue.

This will bode well for exports-driven economy like Singapore.

“We think we have to position ourselves for recovery, still. So, our thematic is more on investing for recovery. That would be more on cyclical sectors - banks, properties, offshore and marine sector,” Chan said during a press brief.

Meanwhile, valuations for Singapore equities remain fairly below mean, according to Chan.  

He said corporate earnings from Singapore equities remain supportive with forecast earnings growth of between 8% and 10% for this year, as well as the next two years.

“From the fundamentals perspective, I think we should stay invested [in equities] although there would be a bit of volatility here and there,” he said.

In addition, there are also pockets of investment opportunities within the technology sector, but investors would have to be very selective in terms of which technology stocks to invest in Singapore, Chan said.

He noted that Singapore has some very good [electronics] manufacturing companies, particularly those that are involved in outsourcing – that are doing very well.

In Singapore, the majority of technology stocks listed on the Singapore Exchange (SGX) are associated with technology hardware manufacturing.

In its latest market updates on SGX My Gateway, SGX said that information technology (IT) was the strongest of the sectors in February with a 15.8% market capitalisation total return.

On a market capitalization weighted basis, the IT sector has returned 26.4%, SGX added.

As of end-December, equity funds ended their seventh consecutive quarter of net outflows and turned to net inflows of S$226.86 million, according to the Singapore Fund Flows insight report on Investment Management Association of Singapore (IMAS)’s website.

Among all equity types, Equity Asia Pacific Ex Japan, Equity Japan, and Equity Europe posted the largest net inflows: S$147.06 million, S$142.38 million, and S$128.06 million, respectively, according to the report.

Meanwhile, Equity Global Income, Equity Global, and Equity China posted the biggest net outflows of S$39.82 million, S$159.39 million, and S$208.41million, respectively, the report added.

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