SG Strategy (UBS)

SG Strategy: For 2H15, UBS maintains an optimistic view of the property developer and transport sectors, where regulatory tailwinds are anticipated.

On the contrary, regulatory headwinds will intensify significantly in the telcos sector, over concerns of a 4th mobile operator. They maintain neutral on banks on loan growth concerns, while capital goods (offshore) could be value traps as positive catalysts are lacking. As US inches closer to its 1st hike in the Fed Funds rate, be cautious on the REITs.

Almost all sectors have suffered consensus earnings estimate downgrades, especially in the capital goods and consumption-linked name. The transport sector has the best earnings outcome YTD, on the back of: (a) lower operating costs such as fuel (SIA, NOL, SMRT, CDG) and fees (SATS), (b) improvement in regulatory environment (SMRT, CDG).

UBS preferred picks are: CapitaLand, ComfortDelGro, CapitaRetail China Trust, GLP, Jardine Matheson, SATS, SMRT, UOB, UOL Group, Wilmar and Yangzijiang.