Compiled by Cai Haoxiang
SINGAPORE PROPERTY | OVERWEIGHT
UOB Kay Hian, Dec 1
We recommend an "overweight" stance on the sector, preferring stocks with exposure to the residential, hotel and office segments, which are expected to outperform as we head deeper into the upcycle.
We are cautious on retail and industrial factory and warehouse spaces.
City Developments, Wing Tai, CDL Hospitality Trusts, CapitaLand Commercial Trust and Ascendas Reit are our top picks.
Concerns over interest rate hikes are unwarranted. Past cycles have demonstrated that sharp rate hikes are contingent on a strong economic recovery and heightened expectations of inflation.
Real estate investment trusts (Reits) are able to transform into growth vehicles in an inflationary interest rate environment, contrary to the conventional inverse relationship between dividend yields and interest rates.
The direct impact of higher interest rates is low for developers as interest accounts for a minority of overall development costs.
The TDSR (total debt servicing ratio) framework provides safeguards against the indirect affordability impact.
Maybank Kim Eng, Nov 28
A third consecutive quarter of core profit growth will go a long way in reinforcing sustainability of the somewhat tentative turnaround seen two quarters ago. The macro data continues to deliver on our growth outlook while earnings expectations are inching up as well.
We maintain a preference for cyclicals and are positive on property and industrials. Most of our top stock ideas are from these sectors.
We are "positive" on property developers, industrial Reits and industrials. We are "neutral" on financials, office Reits and gaming and "negative" on telecoms and agricommodities.
Key downside risks to our outlook for the current rally to extend through 2018 are external growth or trade headwinds that derail industrial production and the tech capex upcycle, potential measures to cool the property market amid rebounding physical prices and en bloc activity, and material portfolio fund outflows from Asean to North Asia.
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