Some catalysts include increasing sustainability investments flowing to the region favouring Singapore given its lower environmental, social and governance (ESG) risk relative to the region and shifting supply chains from North Asia to Southeast Asia. Other factors include Singapore’s regional hub status and the restructuring and value-unlocking of government-linked companies. Wickramasinghe believes that these could support his 12-month STI target of 3,629 points.
As the market sails through 2022 and leaves the year of the Tiger behind, it welcomes a new era of the Water Rabbit in 2023. Maybank Investment Banking Group’s head of research Thilan Wickramasinghe says Singapore ended 2022 in a position of strength, as it was one of the best-performing markets in Southeast Asia, with the Straits Times Index (STI) gaining some 4% during the year.
With rising interest rates and inflation bringing into question the path to profitability for growth stocks (particularly in the technology sector), the relative visibility of earnings, dividends, and strong balance sheets of Singapore offered a defensive market position. “Inflation globally is still running hot and central banks are signalling that rate hikes will continue until the job is done. We think this could pressure growth stocks, and flows would prefer defensive Singapore,” adds Wickramasinghe.
