Strategy: Nomura has a strategy note for the asean region today. While the house remains cautious on the region, it is recommending an overweight rating for Singapore and Philippines, neutral Indonesia and underweight in Malaysia and Thailand.
For Singapore, despite lacklustre earnings performance overall, the house believes that valuation is extremely favourable. The STI is currently trading at 11.5x forward P/E, 1.4x standard deviations below its long-term average. While negative earnings revisions are a drag, the house does not expect much further downside.
Also, short selling is close to extreme highs, particularly in banks (27%-38% on a 15-day avg. basis), which is unwarranted and has in the past led to short-covering rallies. With continued upside in interbank rates, sentiment on banks should improve even as concerns about credit quality in overseas exposure persist.
The top five stock picks are DBS, OCBC, Singtel, ComfortDelgro and Raffles Medical.
No comments:
Post a Comment