• After a months-long upturn, Singapore’s small-mid-caps took a breather. But DBS Research says, "An eventful 4Q awaits small-mid-cap stocks." There's a year-end rally coming, it says. "Several factors are converging to deepen liquidity and improve visibility for this market segment."  • So if you are looking for ideas, check out the DBS report. Read excerpts below first .... |
Excerpts from DBS report
Analysts: Kee Yan YEO, CMT and Fang Boon FOO
• Small-mid-cap stocks poised for an eventful 4Q • Focus shifts to value plays ahead of “Value Unlock” package • Revisiting technology and industrial stocks |
The pullback before the year-end rally.
We maintain our STI year-end target of 4,430, underpinned by MAS equity market support measures, attractive forward dividend yield of c.4.6% and 1.4x P/B, sustained net global liquidity inflow, and favourable seasonal behaviour ahead.
Key support levels are at 4,250 and 4,175.
An oversold market breadth sets the market for a potential year-end rally, with small-mid-caps (SMCs) to benefit from further MAS support measures.
Any positive progess in US-China trade talks before the 10-Nov deadline could catalyse regional market rallies.
An eventful 4Q awaits small-mid-cap stocks.
The recent pullback in SMCs presents an opportunity to add ahead of anticipated 4Q momentum, supported by
| 1) the deployment of the first tranche of EQDP managers; 2) enhanced GEMS scheme; 3) forthcoming “Value Unlock” package; and 4) details on the second tranche of EQDP managers. |
Potential EQDP beneficiaries within the iEdge SG Next 50 indices should screen favourably, including SIA Eng, IFAST, UMS, Frencken, ComfortDelGro and NetLink.
Meanwhile, initiatives designed to improve the visibility of small caps could spotlight ‘gems’ like Nam Cheong, Valuetronics, Haw Par, and F&N.
Turning focus to value stocks ahead of a “Value Unlock” package.
Value plays should stay supported by the forthcoming MAS “Value Unlock” package.
We see value plays beyond stocks merely trading at low valuations, with three ‘expressions’:
| 1) stocks with value-unlocking potential (SingLand, UOL, CityDev, F&N), 2) quality stocks with low visibility and/or valuations (ComfortDelGro, Nam Cheong, Haw Par), and 3) stocks with scope to improve returns through active capital management (SIA Eng, Raffles Med, Valuetronics).  |
| Revisiting technology and industrial stocks. Industrial and tech names outperformed following the September FOMC meeting. Our industrial picks, anticipated to deliver growth rates above the sector average, include SIA Eng, SATS, Yangzijiang, and Seatrium. Our top tech pick is UMS, followed by Frencken. While the uncertain US inflation outlook has paused the SREIT rally and placed investors in a data-watching mode, we remain as buyers on pullback on SREITs. Picks are MPACT, MLT, LREIT. |
 → Full DBS report here.→ See also: The 4 Undervalued Stocks AGT Partners Recently Scooped Up -- From Property To Vessel Operator |
