Lowest forward PE based on UOB Kayhian universe of stocks.
UOB Kayhian issued its 'Market Outlook & Strategy' report yesterday (Dec 9). Excerpts:
The Singapore stock market now trades at a Price/Book of 0.99x (end-Oct 08: 1.08x), marginally below its SARS crisis' Price/Book of 1.09x.
The downside would be 29% if the market were to fall to the Asian financial crisis' Price/Book of 0.70x.
However, the upside would be 80% if the market were to revert to its long-term mean of 1.78x.
The Singapore stock market is unlikely to revisit its Asian Financial Crisis' trough valuation given the following:
a) Singapore corporate and household balance sheets are a lot stronger this time round, and
b) current interest rates are much lower than 1998 levels. Confidence remains fragile, but this is how markets typically emerge from major market lows.
SIA Engineering is the first to maintain the A380. Photo: Internet
Source: UOB Kayhian
We still favour deep-value high-yield stocks such as Comfort-Delgro, SIA Engineering, Singapore Press Holdings, SingTel and selected REITs (top picks: Frasers Centrepoint Trust, CapitaMall Trust & Ascott Residence Trust).
We suggest augmenting this yield portfolio with high beta deep-value large caps that are well run and have a strong brand name (top picks: Oversea-Chinese Banking Corporation, City Developments & CapitaLand) on sharp market dips.
Recent stories:
UBS Investment Research: Top 9 stock picks
S-CHIPS: 'Buys' at UOB Kayhian conference
