Maybank Kim Eng analyst Thilan Wickramasinghe believes that new measures to support the domestic economy market could potentially catalyse a “longer-term reshaping” of the Singapore Exchange’s (SGX) listing mix.
See: Singapore unveils over $1 billion in new measures to boost equity financing for high-growth enterprises
In a Sept 16 research note, Wickramasinghe says the move could see a shift away from “old world” stocks such as financials, real estate and industrials which currently make up some 77% of the Straits Times Index market capitalisation. “This has resulted in a significant gap in relevance between SGX’s listed equity offerings and other major global financial centers where new economy counters are increasing,” he says.
To that end, he believes small and mid cap companies geared towards sustainable, growth sectors with lagging valuations may benefit from the measures introduced. This may include counters such as AEM Holdings, Nanofilm Technologies International, UMS Holdings, China Everbright Water, SIIC Environment, Sembcorp Industries, Sunpower Group, and ComfortDelGro (CDG) Corp.
Wickramasinghe expects the market-friendly support measures to further bolster Singapore’s multiple expansion phase catalysed by the country’s herd immunity-led reopening. He maintains his target STI target of 3,650, implying 19% upside.
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His top picks are AEM, Ascendas REIT, CDG CDG, CapitaLand Integrated Commercial Trust, DBS Bank, ESR-REIT, Frasers Centrepoint Trust, OCBC, SingTel and UMS Holdings.
The STI closed up 0.02% at at 3,056.26 on Sept 17,
Photo: Bloomberg
