UBS upgrades Singapore market to Overweight on strong earnings

Singapore 50 dollar bill

UBS upgraded Singapore’s market to Overweight in its regional asset allocation, pointing to strengthening corporate fundamentals.

“Singapore’s equity market is riding on the tailwinds of strong corporate earnings, higher dividends and robust economic data,” Wen Ching Lee, an analyst at UBS, said in a note this week.

She added that UBS was long the Singapore dollar against the U.S. dollar in its Asia tactical asset allocation, noting the Monetary Authority of Singapore tightened policy in April and UBS expected further tightening in October.

Singapore property prices have also rebounded “strongly,” indicating the four-year downcycle may be over, she said.

“Banks remain our most preferred sector in Singapore,” she said. “We anticipate further upside as banks’ earnings benefit from lower credit costs, robust loan growth and firmer net interest margins as interest rates rise. Furthermore, we believe there is room for dividends to grow.”

She tipped DBS as the top pick on a “superior earnings profile.”

In a separate note, UBS’ chief investment office said its list of “most preferred” Singapore stocks was: Ascendas REIT, CapitaCommercial Trust, CDL Hospitality Trusts, City Developments, DBS, Frasers Centrepoint Trust, Genting Singapore, Mapletree Logistics Trust, ST Engineering, Singtel and UOL Group.

Its “least preferred” shares were Hutchison Port Holdings Trust, Singapore Press and Starhub.

This article was originally published on May 11, 2018, at 4:58 A.M. SGT.