Investment in S’pore equities may not yield favourable returns: DBS
- POSTED: 03 Jan 2014 18:47
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Investing in Singapore equities this year may not yield returns as favourable as investing in US, Europe and Japan stock markets. This is according to DBS Bank, which is neutral on Singapore equities in 2014.
SINGAPORE: Investing in Singapore equities this year may not yield returns as favourable as investing in US, Europe and Japan stock markets.
This is according to DBS Bank, which is neutral on Singapore equities in 2014.
But other market experts still see buying opportunities in the Singapore markets.
Most Southeast Asian economies are likely to face pressure from weaker commodity prices and slower growth in consumption from developed markets.
With the US Fed tapering its quantitative easing measures this month, DBS also sees business in emerging markets having to take on higher cost of funding.
And this could affect several Singapore-listed stocks with exposure to the region.
Lim Say Boon, chief investment officer for Group Wealth Management at DBS Bank, said: “Singapore companies that are listed on the Singapore Stock Exchange, their earnings are driven largely by domestic earnings or regional's earnings, meaning Southeast Asia earnings are dependent on China's growth, economic activities. They are likely to mirror the prospects of the Asia region, rather than the developed markets.”
DBS said worries over China's growth outlook have also cast uncertainties in the market even as the Singapore economy is expecting to benefit from a recovery in Europe, US and Japan.
While the economy in 2013 performed better than initially forecast, the performance of Singapore equities has paled in comparison to the other three Asian tigers -- Hong Kong, Taiwan and Korea -- ending 2013 at less than half a per cent higher than in 2012.
But some market watchers still see investment opportunities in Singapore stocks in 2014, including global cyclicals and growth-oriented stocks.
Eddy Loh, director at Barclays, said: “Industrial sectors, for example, would be a segment that would benefit from improving global growth. Singapore banks are also better positioned versus the regional peers in terms of potential liquidity outflows from the region. I think the focus, moving forward, would be moving more towards growth rather than defensive dividend payouts.”
While shares prices have generally not appreciated last year, returns came mostly from dividends, particularly from blue chip stocks or Real Estate Investment Trusts.