Maybank Kim Eng is advising Singapore investors to concentrate on defensive yields instead of growth stocks for now, following the UK’s 52-48 vote to leave the EU last Friday.
(See BRITAIN IS OUT)
“Few stocks have significant direct exposure, but the indirect exposure will reverberate,” says its team of analysts in a Sunday report.
Calling the EU referendum results an “exogenous shock to the global economy which is already late in the cycle” Maybank foresees GDP downgrades and lower-for-longer Fed interest rates that break the previous rate-raising cycle.
It also expects bond yields to “stay compressed” along with a return to “strong safe haven currencies”, i.e. USD/JPY/SGD, versus regional ones.
REITs and telcos remain the research house’s preference over growth-oriented plays, as REITs lock their tenants in for at least three years, and telco earnings are more resilient to a growth shock. Additionally, these two sectors are likely to benefit from low rates due to the significant leverage they employ, says the team.
S-REITs to buy: Ascendas REIT, Mapletree Industrial Trust
Maybank’s top S-REIT “buy” picks are Ascendas REIT and Mapletree Industrial Trust with a target price of $2.57 and $1.78 respectively. This is because of a tighter supply outlook for business parks and high-spec versus all other sub-asset classes, as well as an SME-supportive 2016 budget.
Telcos with ‘no currency risk’: Starhub, M1
The research house says it favours domestically oriented and higher-yielding telcos Starhub and M1, which are rated “buy” at a target price of $3.54 and “hold” at a target price of $2.55 respectively, over Singtel. This is because the lower-yielding Singtel has significant regional currency exposure. The telco is currently rated at “buy” with a target price of $3.82.
“(Singtel) will have its own issues with weakening regional currencies, in particular the Indian rupee,” cautions the team, given its exposure to AUD, THB, PHP, IDR and INR.
Companies most exposed to Brexit: Ho Bee, CDG, CDL
Maybank has identified Ho Bee Land, rated “buy” at a target price of $2.47, as a stock with the biggest direct exposure to the UK – as 35% of its non-current assets form the group’s London office portfolio. This is followed by ComfortDelgro (CDG) and City Developments (CDL), which are rated at “hold” with a $2.80 target price and “buy” at a target price of $9.82 respectively.
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(See BRITAIN IS OUT)
“Few stocks have significant direct exposure, but the indirect exposure will reverberate,” says its team of analysts in a Sunday report.
Calling the EU referendum results an “exogenous shock to the global economy which is already late in the cycle” Maybank foresees GDP downgrades and lower-for-longer Fed interest rates that break the previous rate-raising cycle.
It also expects bond yields to “stay compressed” along with a return to “strong safe haven currencies”, i.e. USD/JPY/SGD, versus regional ones.
REITs and telcos remain the research house’s preference over growth-oriented plays, as REITs lock their tenants in for at least three years, and telco earnings are more resilient to a growth shock. Additionally, these two sectors are likely to benefit from low rates due to the significant leverage they employ, says the team.
S-REITs to buy: Ascendas REIT, Mapletree Industrial Trust
Maybank’s top S-REIT “buy” picks are Ascendas REIT and Mapletree Industrial Trust with a target price of $2.57 and $1.78 respectively. This is because of a tighter supply outlook for business parks and high-spec versus all other sub-asset classes, as well as an SME-supportive 2016 budget.
Telcos with ‘no currency risk’: Starhub, M1
The research house says it favours domestically oriented and higher-yielding telcos Starhub and M1, which are rated “buy” at a target price of $3.54 and “hold” at a target price of $2.55 respectively, over Singtel. This is because the lower-yielding Singtel has significant regional currency exposure. The telco is currently rated at “buy” with a target price of $3.82.
“(Singtel) will have its own issues with weakening regional currencies, in particular the Indian rupee,” cautions the team, given its exposure to AUD, THB, PHP, IDR and INR.
Companies most exposed to Brexit: Ho Bee, CDG, CDL
Maybank has identified Ho Bee Land, rated “buy” at a target price of $2.47, as a stock with the biggest direct exposure to the UK – as 35% of its non-current assets form the group’s London office portfolio. This is followed by ComfortDelgro (CDG) and City Developments (CDL), which are rated at “hold” with a $2.80 target price and “buy” at a target price of $9.82 respectively.
Click Here To Register For Free Trial Services OR Give A Missed Call : +6531581402 Follow Us On Twitter : www.twitter.com/epicresearchsg Like Us On Facebook : www.facebook.com/EpicResearchSingapore Need Any Assistance Feel Free To Mail Us at : info@epicresearch.sg
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