by winston » Fri Jun 26, 2020 11:41 am
Singapore Equities: Heading to the polls on 10 July
Singapore’s Prime Minister Lee Hsien Loong announced that the general election (GE) would be held on 10 July. The focal points surrounding this election will likely be on jobs protection, the government’s handling of the Covid-19 pandemic and economic recovery plans.
Historical trends have shown that there is no clear correlation between Singapore’s general elections and performance of the stock market. Based on the historical Straits Times Index (STI) performance from one month before the GE to one month after over the last six elections, the STI registered losses four times and gains two times.
As of 24 June 2020, the STI rebounded 18% from its March lows at 2,233.48, driven by record stimulus packages, stabilisation of Covid-19 infections, and re-opening of the economy in Phase 2. The STI is trading at 13.2x PE, near its 10 year mean of 13.3x. Consensus EPS growth this year is estimated to be -20.9%, and we believe that the negative impact from Covid-19 has largely priced in.
While 2Q earnings are likely to remain weak given the 2 months of Circuit Breaker impact, stimulus packages such as the Job Support Scheme (JSS) and wage support scheme would provide some buffer to cashflows. With the early re-opening of Phase 2 and barring any spike in new infection cases ahead, we expect to see a recovery in 2H and any additional support measures from government could be a bonus.
Our preferred Singapore equity Buy picks are Singapore Telecommunications (ST SP) (FV: S$3.24), CapitaLand Ltd (CAPL SP) (FV:S$3.99), City Developments Ltd (CIT SP) (FV: S$12.01), Ascendas REIT (AREIT SP) (FV: S$3.52), Mapletree North Asia Commercial Trust (MAGIC SP) (FV: S$1.13), ST Engineering (STE SP) (FV: S$3.90) and NetLink NBN Trust (NETLINK SP) (FV: S$1.10).
Source: OCBC
It's all about "how much you made when you were right" & "how little you lost when you were wrong"