Home » , , , , » Singapore Monthly Strategy - A temporary slumber

Singapore Monthly Strategy - A temporary slumber

Shared By Stock Fanatic on Wednesday, June 6, 2018 | 6.6.18

June key events – FED rate hike, OPEC debate on production revival

■ Quiet June, STI 3400 limits downside, activity to pick up in early July

■ Five STI component stocks to accumulate in June – Wilmar, Genting, SIA, Yangzijiang and HPH Trust (tactical buy call)

■ Flight to safety underpins yield play in near term

Key events FED and OPEC meetings. The FED is likely to hike rates by 25bps to 2% this month. Consensus expects a total of three rate hikes this year (previously 3-4) on latest Eurozone uncertainty, trade war concerns and a FED that is more tolerant of inflation overshoot. Meanwhile, OPEC members will debate on exiting a supply cut agreement at the 22 June meeting after Saudi Arabia and Russia proposed a revival in oil production.

Quiet June, 3400 limits downside. STI’s May decline is in line with our view that the 2-mth period from May-June should be net negative in a World Cup year. Expect trading activity to quieten further this month with the June school holidays and mid-month World Cup tournament, picking up again in early July. However, we do not see much downside for the STI following May’s tumble. Support at 3415 or slightly below, pegged to 12.76x (-0.5SD) 12-mth fwd PE.

Five STI component stocks to accumulate in June. We like outperforming stocks that are up when the rest are mostly down. These are Wilmar International, SIA and Genting Singapore. All three outperformers are also in our Singapore Model Portfolio. Next, we look at the other end of the performance and with a reasonable assumption that the selling pressure has eased, and value has emerged. These are Yangzijiang and HPH Trust.

Flight to safety underpins yield play in near term. The US 10-yr Treasury yield is off the mid-May high of 3.11%. Technically, the yield trend has turned rangebound from 2.7% to 2.95% in the short-term and this should lend some support to yield stocks. With interest rates still looking to trend higher till end-2019, yield stocks with net cash or zero debt are UMS, APAC Reality, HL Finance, Yangzijiang and SIA Engineering.

Source : DBS Group Research
(Read Report)

Posted on Wednesday, June 6, 2018 | 6.6.18
With No comments

Join Me On: Facebook | Twitter | Google Plus ::: Thank you for visiting ! :::
Share this article :

Post a Comment

Modified by : Stockfanatic
Copyright © 2008 - 2018. Singapore Stock Market News - All Rights Reserved
Template Created by Creating Website Published by Mas Template
Proudly powered by Blogger
Related Posts with Thumbnails