New investment ideas to play the Singapore market

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SINGAPORE (Sept 20): CIMB Equity Research has found two new investment themes that local investors can look into, namely the Asean domestic consumption and new technology.

These are on top of the Real Estate Investment Trusts and property segments which CIMB has an “overweight” rating on.

In a flash note on Tuesday, analyst Lim Siew Kee wrote that companies with Asean exposure like Thai Beverage PLC, Courts Asia, Dairy Farm, Delfi and Singtel look interesting, given that they “benefit from rising domestic consumption in Thailand, Malaysia and Indonesia, spurred by pump priming and infrastructure spending by the government”.

On top of that, Lim added that the growing demand for “niche technologies such as life sciences, smart nation spending and big data cloud, could shape Singapore’s future economy”. As such, she recommends Venture Corporation, ST Engineering, and Keppel DC REIT.

This is because Lim expects to see more initiatives and the increased focus on information, communication and technology (ICT) in the year end report put together by the Committee of Future Economy, which comprises the Ministry of Finance and 30 members from different industries.

“The CFE will build upon and update its 2010 report, in which one of the stark recommendations implemented was lower reliance of foreign labour over the years,” says Lim.

To be sure, regional fund managers continue to remain “underweight” on Singapore, according to feedback received by CIMB in Singapore and Malaysia.

According to Lim, investors were more willing to pay for a premium valuation for stocks with earnings growth such as SATS, Sheng Siong and Raffles Medical, in a weak economic growth environment. But they were “unanimously negative” on offshore, marine and banking sectors.

CIMB also does not foresee the Monetary Authority of Singapore changing its policy of keeping the rate of Singapore dollar appreciation at 0% any time soon, given the projected core inflation of around 1% and GDP growth of 1-2% for 2016.