singapore equity market on morgan stanleys radar 1313762015

Singapore stocks offer deep value, Morgan Stanley says

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By :  ,  Financial Analyst

In its latest equity strategy report for the Association of South East Asian Nations (ASEAN) region, Morgan Stanley has upgraded Singapore as its most preferred market and recommends Singapore equities for the deep value they offer.

The analysts say the recent elections and the strong mandate for the ruling party could be a trigger for restructuring of government companies and a market rebound. The government would likely seek to restructure the companies in its control as it moves to consolidate and “internationalise” their operations with an eventual goal of divestment of their shares.

The electorate’s strong vote in favour of the ruling party is a sign of confidence in its abilities to steer the island-republic through the global growth slowdown.

According to Reuters, the Morgan Stanley analysts observe that most negatives are already accounted for in equity prices and that “the equity market is trading close to its cyclical troughs,” with the price-book ratio of the MSCI Singapore index ruling within 2 standard deviations of its 10-year average.

Meanwhile, the latest quarterly Economic Insight review from the Institute of Chartered Accountants in England and Wales (ICAEW), released Tuesday, said Singapore is the top ASEAN investment pick for China, India, Japan, and the US – four of the world’s biggest economies.

ICAEW produces the report in collaboration with the Center for Economics and Business Research (CEBR). It focuses on Singapore, Indonesia, Malaysia, Thailand, the Philippines and Vietnam.

The ICAEW report said more than 50 per cent of foreign business investments from the above ‘big four’ are targeted at Singapore. The report cites very good infrastructure; an educated workforce; low taxes; and integration in global capital markets. “These apply to many other investments in the city-state, which the open investment regime encourages,” observes the report.

Singapore’s benchmark Straits Times Index closed Tuesday at 2,841.94, down 29.53 points (-1.03 per cent) for the day. The index has lost 15.55 per cent this year. 

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