Wednesday, 10 April 2013

HSBC upgrades Singapore's market to Overweight

HSBC upgrades to Singapore's stock market to Overweight from Neutral for the second quarter. "With markets across the region stuck in a holding pattern, we believe Singapore provides a relatively safe haven," it says.

"Singapore is one of the more stable, low beta Asian markets with very low earnings volatility. The expected 2013 dividend yield of 3.5% -- with an appreciating Singapore dollar -- is in the upper end of the region's range, and one of the main attractions of the market."
HSBC notes mutual-fund investors have rotated to underweight Singapore equities in relative terms, with their exposure at a five-year low and sell-side analysts are increasingly bearish on Singapore equities.

It notes the market trades at 14.3x 12-month forward P/E, a 1% discount to the 10-year average; with the consensus EPS growth estimates at just 2.1% for MSCI Singapore, high risks to earnings appear priced in, it says. It has an end-2013 STI target of 3,800.

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