Market Strategy - OCBC Investment 2023-10-25: Flight To Safety Favours Singapore Banks

• Key equity markets have historically generated good gains in the final quarter of the year. Will this trend play out in the fourth quarter of 2023?
• Historically, the S&P 500 Index has ended the final quarter with good gains in 24 years out of the last 30 years. The average gain of 4.7% in the fourth quarter is also the highest of the four quarters in a year. This trend is also similarly seen in Singapore.
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High oil prices could dent the performances of oil-related sectors in Singapore

• A higher oil price environment is likely to impact both consumers and corporates. Sectors and companies which are highly dependent on oil consumption such as aviation, transportation, and certain heavy industries, are likely to see higher operating costs in the coming months if oil price head higher.

Weakness in Chinese has spilled over and impacted sentiment in Singapore

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• In Singapore, the generally quieter trading months in Nov and Dec, due to year-end school holiday and festivities, saw average gains of 1-3% in the past 20 years. However, with the prevailing uncertain investment climate, it is no surprise that almost all sectors within the Singapore markets are down for the year and a quick recovery seems unlikely before the year is out.
• The worst hits are the real estate related sectors, with the FTSE ST All-Share Real Estate Investment and Services Index (FSTREH) down 20.7% year-to-date and the FTSE ST All-Share Technology Index (FSTTG) down 25.7% year-to-date. This reflects a combination of the impact from higher interest rates on business costs and slower demand, impacting profitability.

Decent yields from Singapore banks; accumulate on price weaknesses

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Carmen Lee OCBC Investment Research | https://www.iocbc.com/ 2023-10-25 SGinvestors.io

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