Phillip 2Q24 Singapore Strategy - Phillip Securities 2024-04-01: Drifting Sideways

• We replaced OCBC with DBS in our Singapore stock model portfolio for its dividend visibility. Cromwell European REIT will replace Frasers Centrepoint Trust.

1Q24 Review:

• - Read this at SGinvestors.io -
• The consumer sector was a drag with high cost of living and weak economic growth.
• REITs suffered as expectations in the number of interest rate cuts by the Federal Reserve were lowered and delayed.

Market Outlook:

• - Read this at SGinvestors.io -
• Apart from the government, consumer spending is holding up despite weakening disposal income. We believe higher borrowings and wealth effect (housing and equity) are supporting consumption spending.
• The lagged impact of higher interest rates, diminishing pandemic savings, and repayment of student loans will persist as a drag on the economy.
• On interest rates, inflation is becoming stickier than expected. The deflation in goods prices has started to stall, and services are not turning down quickly enough. Inflation becomes a challenge in 2H24 as base effects will cap the downside. Another worry is creeping oil prices from supply cuts. Our base case of two rate cuts in 2H24 is unchanged.
• The Singapore economy is similarly drifting sideways. Exports are recovering but against a collapsein 2023. Retail sales are stable, supported by rising wages and the availability of jobs.
• The key strength of Singapore equities is the dividend yield of 5.6%, and it is a steadfast currency. The Singapore dollar is supported by its rising foreign reserves, persistent current account surplus, and only AAA-rated sovereign in Asia.

Recommendation:

• Read more at SGinvestors.io.

Paul Chew Phillip Securities Research | https://www.stocksbnb.com/ 2024-04-01 SGinvestors.io

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