Credit Suisse tipped Singapore stocks as their top pick in Southeast Asia for 2019, and No.2 in Asia, after China, despite expectations economic growth in the city-state would slow next year.
“In Asia’s market, apart from China, Singapore is definitely the place to be for investors,” Suresh Tantia, an investment strategist and member of the Asia Pacific Investment Committee at Credit Suisse, said on Tuesday. “I think investors underestimate the potential for Singapore equities.”
Credit Suisse is forecasting Singapore’s economic growth would slow to 2.7 percent in 2019, compared with government estimates for 3.0 percent to 3.5 percent in 2018.
But Tantia said he didn’t expect that to impact the outlook for the city-state’s equities.
“The beauty about Singapore is that on the upside, you can participate on the cyclical growth story globally because we have an open economy,” he said at a press briefing in Singapore on Tuesday. “But on the downside, its much more resilient because we don’t have any kind structural issues that the markets like India or Indonesia might have. Singapore runs a very strong fiscal balance and current account balance. So it’s a much more resilient story.”
After being the second-worst-performing market in Southeast Asia this year, Singapore’s equities are only trading at around 11.7 times price-to-earnings, one of the lowest valuations in Asia, he said.
Tantia was forecasting the Singapore equity market’s earnings growth at 7-8 percent for 2019 and 2020, even with the slower GDP growth.
He also pointed to the Singapore dollar’s resiliency and the market’s 4.7 percent dividend yield.
Globally, I don’t think there’s any other market which gives you this kind of dividend yield in such a strong currency,” Tantia said.