Singapore stocks to benefit from MAS reforms next year, Morgan Stanley says

Sembcorp Industries

19/11/2024 04:00

SINGAPORE, Nov 19 (Reuters) - Southeast Asia's
top-performing stock market in 2024 is likely to continue its
momentum into next year as Singapore unveils measures to revive
its stock market, according to analysts at Morgan Stanley.
    Singapore's Straits Times Index  .STI , comprising 30
biggest companies in the city-state, hit a 17-year high on
Tuesday, bringing its year-to-date gains to 17%. It has
outperformed regional peers, with the MSCI index of ASEAN stocks
 .MISU00000PUS  up 10% over the same period.
    Analysts are bullish on the overlooked market in the near
term, citing central bank's efforts to boost stock markets and
the U.S. election uncertainty favoring defensive positioning.
    In August, the Monetary Authority of Singapore (MAS) said it
had formed a review group to recommend steps to strengthen the
development of the equities market in the island country, which
hosts more than $4 trillion of assets under management. 
    "The combination of seemingly stronger political will and
low market expectations drives our conviction that soon-to-be
announced initiatives will likely have a meaningfully positive
market impact, even if their exact details are still to be
fleshed out," Morgan Stanley analysts said in a note.  
    Singapore is one of the most preferred markets in Morgan
Stanley's Asia equity strategy, ranked second only to India in
its Asia Pacific ex-Japan market allocation.
    The brokerage said the new measures will likely lift stock
trading liquidity through capital infusion, with valuations
potentially rising as much as 20% to narrow the gap with global
peers.  
    Singapore stocks currently trade at 10.68 times its forward
earnings, a commonly used valuation metric, below Malaysia's
Bursa Index  .KLSE  at 15 times and Australia's ASX 200 at 18
times.  
    Singapore Exchange  SGXL.SI , United Overseas Bank
 UOBH.SI , Singapore Telecom  STEL.SI , Sembcorp Industries
 SCIL.SI  and CapitaLand Investment  CAPN.SI  are part of Morgan
Stanley's Singapore focus list.     
    Goldman Sachs upgraded Singapore stocks to "market weight"
earlier this week, citing its constructive view on banks,
technology and telecom sectors. 
    

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 (Reporting by Ankur Banerjee in Singapore; Editing by Sherry
Jacob-Phillips)
 ((ankur.banerjee@thomsonreuters.com;; Mobile - +65 8121 3925;
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