Story of the day
We expect rate hike worries to peak in June, while our rates strategist keeps his view for inflation fears to peak in 2Q22 and improve thereafter. How will this impact Singapore's stock market?
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What does this mean for your portfolio?
DBS Group Research believes now is a good time to seek bargain hunting opportunities post the market sell-off in May. Technology and REITs, which have underperformed year-to-date, should stabilise and attempt a recovery as rate hike fears peak. We also stay positive on the reopening theme thanks to pent-up travel demand among locals and inbound tourists.
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We like these:
Rate hike casualties to recover
The sell-off on rate hike casualties like technology stocks and REITs might be ending soon as rate hike fears peak and subside. Our technology picks are AEM and Venture Corp. Both stocks reported 1Q earnings that were above expectations.
For S-REITs, we like Mapletree Industrial Trust for its resilience and steady growth profile amid the current market volatility, and Keppel REIT for its best-in-class office portfolio that is well positioned to ride the rising office market.
Reopening theme
Pent-up travel demand among locals and inbound tourists will make up for some of the slack from China’s zero-COVID policy that is likely to remain through 3Q22 at least.
Our picks are SATS, Singapore Airlines, Ascott Residence Trust and CDL Hospitality Trusts for air borders reopening. We also like Frasers Centrepoint Trust for domestic restrictions easing.
Stagflation hedge
While stagflation risk is low here in Singapore, worries about a global economic slowdown or even recession has risen. For investors who seek a hedge against such a scenario, consumer staples such as grocers like Sheng Siong and telcos such as Singtel are likely outperformers.
For Sheng Siong, demand normalisation from the easing of domestic COVID restrictions is offset by organic growth from higher store count. Singtel is a value unlocking play throught asset divestments.
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