- Expectations of five-to-six Fed rate cuts in early-2024 is being replaced by two-to-no-cuts. This should bring Singapore’s defensive and low-gearing characteristics back in favour.
- 1Q24 shows downgrades are bottoming, while earnings have upside surprise potential.
- Medium term themes of corporate restructuring, JB-SG SEZ, decarbonisation and AI are additional catalysts.
1Q24 shows bottoming downgrades
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- Forecast earnings downgrades fell to 17% in contrast to the REIT-led 43% in 4Q23. Rating remains largely unchanged. We think these all point to expectations bottoming out, giving greater confidence in the 2024E STI earnings growth forecast of 5.6% y-o-y – an upgrade from 4% at the start of the year.
Rate expectations have changed
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- The Financials have been leading the charge from expectations of defensible net interest income from a higher-for-longer interest rate scenario. Also improving returns expectations from Telco restructuring is also starting to take hold.
- We believe that Singapore’s defensive capabilities and the demonstration of its ability to pass on higher operating costs and preserve margins should catalyse a rotation of investor flows back to the country from more growth oriented markets.
Material institutional inflows so far in 2024
- Read more at SGinvestors.io.
Above is the excerpt from report by Maybank Research.
Clients of Maybank Securities may be the first to access the full report in PDF @ https://www.maybanktrade.com.sg/.
Thilan Wickramasinghe Maybank Research | https://www.maybank-ke.com.sg/ 2024-06-05
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