Singapore Monthly (Apr 2019) - DBS Research 2019-03-29: Dividends In Focus

Singapore Monthly Strategy - DBS Group Research  | SGinvestors.io VENTURE CORPORATION LIMITED (SGX:V03) STARHILL GLOBAL REIT (SGX:P40U) SINGAPORE TECH ENGINEERING LTD (SGX:S63) MAPLETREE COMMERCIAL TRUST (SGX:N2IU)

Singapore Monthly (Apr 2019) - Dividends In Focus




April Market Outlook


REITs outperformed as FED puts rate hikes on hold

  • STI was flat m-o-m as investors juggled between worries about higher US recession risks and the impending outcome of the US-China trade talks.
  • SREITs outperformed as the FED forecasted nil hikes this year and just one hike from now till end-2021.
  • Consumer goods outperformed, led by THAI BEVERAGE PUBLIC CO LTD (SGX:Y92).

Key events this month

  • MAS monetary policy statement –
    • We expect MAS to keep monetary policy unchanged given the tame inflation and uncertain global growth outlook
  • Start of 1QFY19 results season –
    • Expect another quarter of earnings cut as US-China trade talks could turn out to be inconclusive, global growth could slow down and weak business sentiment could persist
  • Possible US-China trade deal
    • Enforcement of agreements remain tricky, Trump had said existing tariffs will be in place 'for a substantial period of time' even after a deal is struck to ensure that China abides by its agreement.
    • Tariffs likely to be removed in stages depending on how much both sides abide by their part of the agreements.
    • A trade agreement between the US and China could provide relief for technology stocks (e.g. VENTURE CORPORATION LIMITED (SGX:V03)) whose business sentiment had been negatively affected by the current US-China trade war.

FED says “I’ll get back to you later”


But be careful what you wish for

  • ED’s ‘stop hike’ forecast doesn’t come free – lowers 2019 GDP growth forecast to 2.1% (prev 2.3%), inflation to 1.8% (prev 1.9%) and sees unemployment rate rising to 3.7% (prev 3.5%).
  • 'Partial inversion' of US yield curve and yield on US 10-yr treasuries dipping 2bps below that of 3-month bills have ignited recession fears 6-18 months down the road.
  • DBS rates strategist sees a close to 30% chance of the US economy dipping into recession in next 12 months.
  • Risk off → Negative for cyclicals.
  • Yield and defensive stocks are likely to outperform.

Rangebound trade, focus on trade talks and earnings season

  • At 3190, STI trades at 12.59x (-0.5SD) 12-mth fwd PE.
  • Rangebound from 3155 to 3250, pending outcome of US-China talks and 1QFY19 earnings revision.
  • April/May ex-dividend period to lend immediate support at 3155.
  • Directional break from current range determines next level
    • Fall below 3155 would point to 3080.
    • While rise above 3250 points to 3340.


Strategy


Beneficiaries of URA draft masterplan 2019


Prefer yield and defensive stocks in a ‘peak’ interest rates and uncertain growth environment


Large-cap stocks with attractive upcoming dividend payouts






Kee Yan YEO CMT DBS Group Research | Janice CHUA DBS Research | https://www.dbsvickers.com/ 2019-03-29
SGX Stock Analyst Report BUY MAINTAIN BUY 21.700 SAME 21.700
BUY MAINTAIN BUY 0.750 SAME 0.750
BUY MAINTAIN BUY 4.150 SAME 4.150
BUY MAINTAIN BUY 2.000 SAME 2.000



Advertisement



MOST TALKED ABOUT STOCKS / REITS OF THE WEEK



loading.......



ANALYSTS SAY


loading.......