■ External headwinds and domestic restructuring weighing on outlook
We expect Singapore GDP growth to remain lacklustre, reflecting weaker outlook for China and ASEAN, as well as lower trend growth with domestic restructuring. This is likely to present downside risks to market expectations of an acceleration in EPS growth to 5% in 2016 from a 2% decline in 2015.
■ We expect government measures in the property, land transport and telco sectors to be closely watched
We believe a further 5-10% decline in property prices would set the stage for an easing of property cooling measures in 2H16, driving an improvement in sentiment for developers. Within the land transport sector, an emphasis on improving reliability is likely to lead to an asset-light model for rail operators. We expect resilient telco sector returns to be at risk with threat of new entrant. O&M sector restructuring could be a surprise.
Credit Susise Top Pick
■ Overweight Property and Transport
Our model portfolio favours sectors which are less externally driven and could be beneficiaries of domestic policies, including the Property and Transport sectors. Our top picks are CDL, Singtel, and DBS. Other preferred stocks include SIA, Wilmar, Genting, CMT, SCI, SATS, and Raffles Medical. We are cautious on Capital Goods, Telco, and Office REITs. Our least preferred are M1, Starhub, and Suntec REIT. (Read Report)
Source : Credit Suisse Asia Pacific Equity Research