- We expect the sideways volatility in July and August to continue over the next one to two months, with
- the market upside capped by concerns over China’s slowdown and sustainability of the current US economy’s resilience,
- the downside limited by the STI’s low valuation, and
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- At 3,155, the valuation is well below 10.8x (-2 standard deviation) 12-month forward P/E.
- If the correction extends towards 3,115, the valuation will reach an extreme low of 10.2x (-2.5 standard deviation) 12-month forward P/E.
- Rebound resistance is at 3,230 and 3,265-3,277.
Events: FOMC meeting and F1.
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- With strong visitor arrivals and RevPAR figures for July that should extend into August as well, the F1 Singapore Grand Prix (17 Sept) should seal a strong 3Q performance for the beneficiaries of Singapore tourism (e.g. CDL Hospitality Trusts, Far East Hospitality Trust, Genting Singapore).
- Furthermore, with the counts for August at the Sumatra hotspots being just a small fraction of what was seen in the haze years of 2019 and 2015, inbound tourism stocks can continue business as usual if 2023 turns out to be a low/no-haze year, which would help cushion the seasonal lull period post F1 till November.
7 stocks to ride out the next 2 months
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