Singapore Market Focus - DBS Research 2020-06-01: Mending The Broken Circuit

Singapore Market Focus - DBS Research | SGinvestors.io COMFORTDELGRO CORPORATION LTD (SGX:C52) KOUFU GROUP LIMITED (SGX:VL6) FAR EAST HOSPITALITY TRUST (SGX:Q5T) ASCOTT RESIDENCE TRUST (SGX:HMN) CAPITALAND MALL TRUST (SGX:C38U)

Singapore Market Focus - Mending The Broken Circuit




Two risks

  • Simmering US-China tensions - Further degeneration risks pulling down the RMB to multi-year lows could have a detrimental effect on regional currencies and funds outflow.
  • Possible resurgence in US COVID infections – restrictions were eased when daily new infections were above 20,000, the highest for any country. Any resurgence could show as early as end-June.


One potential catalyst

  • Rotational shift out of COVID beneficiaries into selective cyclical stocks as countries unlock restrictions. For Singapore, we expect retail REITs, F&B and public transportation stocks to benefit from Circuit Breaker easing. In US, banks were among the top S&P500 performers since mid-May while COVID beneficiaries underperformed.
  • Being weighted towards cyclicals, STI will benefit if the US sector rotation from COVID beneficiaries into cyclical laggards catches on here.


Steep cuts in earnings



Reasonably Priced

  • STI currently trades at 12x (-1SD) 12-mth fwd PE. Valuation is reasonably priced considering the already aggressive earnings cut in recent months and the gradual easing of circuit breaker measures ahead. We expect support at 2,400 and maintains our 2,850 year-end target.


Circuit Breaker easing beneficiaries



One small step forward for travel/aviation



Top slice COVID beneficiaries






Kee Yan YEO CMT DBS Group Research | Janice CHUA DBS Research | https://www.dbsvickers.com/ 2020-06-01
SGX Stock Analyst Report BUY MAINTAIN BUY 1.68 SAME 1.68
HOLD MAINTAIN HOLD 0.680 SAME 0.680
BUY MAINTAIN BUY 0.600 SAME 0.600
BUY MAINTAIN BUY 1.100 SAME 1.100
BUY MAINTAIN BUY 2.150 SAME 2.150



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