Investors must construct a defensive portfolio for 4Q32 as the near-term outlook for Singapore's equities remains “cautious” on the back of the likely rise in global inflation, the timing of the pause in interest rate rise, and the outlook for China’s economic growth.
“We think that the performances of the market, sectors, and companies will diverge, as returns are influenced by the relative resilience of earnings in the face of an uncertain future,” RHB added. “Positive revisions to net profit projections for both 2023 and 2024 have been seen for firms in the transport, utility, industrial, and consumer sectors that make up the STI,” RHB added.REITs as a sector could “outperform amid expectations of the US interest rate cycle potentially peaking in 1H24,” said RHB.
Amongst subsectors, RHB pointed to logistics, hi-tech, and good-quality business parks, saying these will “benefit from the changing market dynamics brought about by COVID-19 and the government’s longer-term push to transform Singapore into a smart nation.” “Raffles Medical could benefit from a higher influx of medical tourists in Singapore, and its China hospital operations could benefit from the gradual return of expats back to China,” added RHB.Buying into small and mid-cap companies with strong growth
With Singapore’s worker dormitory bed supply remaining tight, RHB expects bed rates to remain positive, which will benefit Centurion Corp.