RHB Bank Singapore analyst Shekhar Jaiswal says the private banking units of DBS D05 and Oversea-Chinese Banking Corporation (OCBC) O39 may benefit from the negative news flow after the recent spate of banking crises.
In his March 29 report that came after meetings with investors in Kuala Lumpur, the analyst sees the possibility of DBS and OCBC’s private banking units gaining market share as the wealthy elite and family offices may look to move their assets and diversify their holdings amid UBS’s takeover of Credit Suisse.
He adds that the news will not pose any systemic risks or spillover effects to the banks in Singapore.
During the meetings, Jaiswal notes that investors like Singapore for its earnings growth, low valuations and potential gains from the return of Chinese tourists. That said, there are also concerns on the sustainability of the growth in earnings amid the slower economic growth and market expectations of a rate cut in 2H2023.
“While investors have stayed away from Singapore REITs (S-REITs), industrial REITs remain the preferred subsector,” the analyst writes.
Within RHB’s coverage, the analyst says ComfortDelGro (CDG) C52 , DFI (formerly Dairy Farm International) D01 , Raffles Medical Group (RMG) BSL , Singapore Telecommunications (Singtel) Z74 and Thai Beverage (ThaiBev) Y92 as some of the counters which will benefit from China’s reopening. These counters are also set to reap the rewards from the return of Chinese tourists to Asean.
Beyond the banking sector, industrial space and S-REITs, CDG and RMG were the most-discussed investment ideas, says Jaiswal.
In FY2023, the brokerage is remaining positive on Singapore equities, believing that they will close the year on a higher note. This is despite the risk of a global recession and central banks’ policies that have been keeping markets volatile in the short term.
“For now, we believe investors should focus on companies that are higher quality in nature, backed by more secular growth, and/or that can offer better relative value. Our investment themes for Singapore include: Buying banking stocks as a proxy to defensive earnings growth, buying shares of firms with resilient earnings and dividends, selective exposure to China's economic reopening, and buying industrial REITs,” says Jaiswal.
RHB is currently “overweight” on the consumer, financials, healthcare, industrials, industrial S-REIT and transport sectors. At the same time, it is “neutral” on plantations, manufacturing & tech, real estate, telecom and media, as well as the rest of the S-REIT subsectors.
