SG Strategy: Deustche note that 1Q GDP off to a strong start at +8.5% YoY, far exceeding expectations. Re-centering of the SGD policy band suggests near term upside Improving GDP growth supportive; Stronger SGD benefits domestic plays Market valuations remain moderate and house remains positive on conglomerates, office landlords….
Remain O/W on conglomerates (SembCorp and SembMarine are preferred) where a surge in order books should more than offset the impact of a stronger SGD. Also favor domestic asset plays such as REITs/landlords (KepLand, Ascendas REIT) which are less exposed to policy tightening in housing market, and SGX on attractive valuations and a refocus on driving organic growth. House is U/W telcos, developers and container shipping.
Credit Suisse tips key Inflation winners and losers in SG. Note that Co’s with high materials or wage costs, low margins and limited pricing power to pass through the incremental costs are most impacted, which include HL Asia, Amtek, SATS, NOL, Wilmar and ST Engg…..
Beneficiaries include Midas, DBS, Straits Asia, Yongnam and Genting SP. Add that Wage is probably the cost component that affects most number of Co. in SG, given G’s high wage cost base. Those most affected by rising wages are SATS, ST Engg, CD and Raffles Medical.
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