Singapore Market Strategy - Maybank Research 2024-06-05: Rate Expectations Have Changed; SG Should Benefit. Rotating In.

Singapore Market Strategy - Rate Expectations Have Changed; SG Should Benefit. Rotating In.

Singapore Market Strategy - Maybank Research | SGinvestors.ioDyna-Mac (SGX:NO4) MARCO POLO MARINE LTD. (SGX:5LY) SEMBCORP INDUSTRIES LTD (SGX:U96)
  • 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

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Above is the excerpt from report by Maybank Research.
Clients of Maybank Securities may be the first to access the full report in PDF @

Thilan Wickramasinghe Maybank Research | 2024-06-05

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