However, with the most recent US inflation numbers finally slowing, the US Fed looks likely to ease its rate hikes too. One of the key investment themes put forward by CGS-CIMB is to look for sectors that will thus benefit. “We think the time to accumulate S-REITs could be post- or during the upcoming first quarter 2023 results season, as consensus may still need to downgrade earnings to account for higher refinancing costs. The other indicator that we watch out for is the certainty of the Fed Fund rate pause.”
With many global stock markets in a downturn because of surging interest rates, inflation and the war in Ukraine, it is easy to overlook how the Straits Times Index (STI) is one of the best-performing markets in the region in 2022, recording a gain of 4.42% since the start of the year to Dec 15, versus the double-digit drops in many other major markets.
True, the STI’s performance this year has been skewed somewhat by the three local banks, which were riding on expanding interest margins from the US rate hikes, as they account for nearly half the index’s weight. As such, CGS-CIMB has set a 2023 target of 3,350 points, which is not far off from current STI levels.
