Singapore Market Focus - DBS Research 2020-03-05: The Only Thing To Fear Is Fear Itself

Singapore Market Focus - DBS Research | SGinvestors.io AIMS APAC REIT (SGX:O5RU) CAPITALAND RETAIL CHINA TRUST (SGX:AU8U) THAI BEVERAGE PUBLIC CO LTD (SGX:Y92) ESR-REIT (SGX:J91U) STARHUB LTD (SGX:CC3)

Singapore Market Focus - The Only Thing To Fear Is Fear Itself



Another rate cut ahead?

  • Global monetary and fiscal support continues as COVID-19 was spreading across the globe over the past two weeks. On top of the 50bps emergency cut, consensus expects the FED to lower rates by a further 25bps at the 18 March FOMC meeting. The drop in the US 10-yr yield below 1% is positive for REITs/yield stocks while banks face NIM pressure.
  • Downgrade UOB (SGX:U11) to HOLD, Target Price cut to S$25.50. See report: Singapore Banks - DBS Research 2020-03-05: Further NIM Pressures.


Earnings slashed on viral outbreak uncertainties.



STI year-end target 3350.

  • The COVID-19 situation in China has improved tremendously over the past month even as more countries are affected. STI earnings are slashed by 6.3% and 5.6% for FY20F and FY21F respectively, leading to almost zero growth for STI this year.
  • We thus lower our STI year-end target to 3350 (from 3500) pegged to 12.89x (-0.25SD) FY21F PE.
  • Technical support at 2960.


COVID-19 playbook.

  • We identify the five phases (fear, anger, relief/acceptance and finally recovery) of COVID-19 experience and the sector outperformers/underperformers. We believe that China has started its recovery phase, where sector outperformers are manufacturing and domestic demand (F&B and retail). Singapore is at the relief/acceptance phase, and its sector outperformers are telecom and domestic demand (F&B and retail).

COVID-19 resilience list



Two-pronged strategy.


Positioning for China’s COVID-19 recovery phase and Singapore malls’ footfall recovery


Fall in US 10-yr yield to record low underpins REITs, puts pressure on banks






Kee Yan YEO CMT DBS Group Research | Janice CHUA DBS Research | https://www.dbsvickers.com/ 2020-03-05
SGX Stock Analyst Report BUY MAINTAIN BUY 1.500 SAME 1.500
BUY MAINTAIN BUY 1.750 SAME 1.750
BUY MAINTAIN BUY 1.040 SAME 1.040
BUY MAINTAIN BUY 0.590 SAME 0.590
BUY MAINTAIN BUY 1.720 SAME 1.720



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