Macquarie on Local Market
SINGAPORE (XFN-ASIA) - Macquarie said it is rating the loca stockmarket as "slightly overweight" with the benchmark Straits Times index (STI) seen rising to around
the 2,600 points mark by end-2006, a 9 pct gain from
last year. Macquarie expects five major themes to dominate the market in 2006.
"The first is expectation of GDP upgrades for Singapore on the back of accelerating
global growth. Better-than-expected GDP growth has historically led to the STI
beating expectations. We advise investors to overweight
technology and offshore marine stocks in the first quarter of 2006," it
said. "Our second theme is dividend surprises and capital
restructuring. Whilst this is more of an ongoing theme, we
would look to position in Singapore REITs with high yields in the second quarter
ahead of the anticipated peaking of Fed tightening in May 2006," it said.
Besides Singapore REITs, companies with high free cashflow generation are likely
to consider special dividends or capital reductions. Within the telecom sector,
MobileOne has already announced a special dividend, and Macquarie expects that
StarHub will do the same. "We also anticipate more merger and acquisition activities.
Here, companies will use their balance sheets for expansion to fuel longer-term
growth. ST Engineering is the most likely candidate along with Parkway given its
regional healthcare ambitions," Macquarie said. "Reflation is our fourth theme.
This was our main theme in 2005 and it will spill over into 2006 given that residential
prices and office rents will continue their upward spiral," it said. "The expected
general election this year is our final theme. Usually elections are non events
but this is Prime Minister Lee Hsien Loong's first election campaign and we
expect (upbeat) market sentiment on the back of friendly policy announcements,"
it said. The first such policy announcement may be made
on Feb 17 when the government unveils its budget for the fiscal year
to March 2007, it added. The STI ended the morning session up 15.09 points or
0.64 pct at 2,383.41.
the 2,600 points mark by end-2006, a 9 pct gain from
last year. Macquarie expects five major themes to dominate the market in 2006.
"The first is expectation of GDP upgrades for Singapore on the back of accelerating
global growth. Better-than-expected GDP growth has historically led to the STI
beating expectations. We advise investors to overweight
technology and offshore marine stocks in the first quarter of 2006," it
said. "Our second theme is dividend surprises and capital
restructuring. Whilst this is more of an ongoing theme, we
would look to position in Singapore REITs with high yields in the second quarter
ahead of the anticipated peaking of Fed tightening in May 2006," it said.
Besides Singapore REITs, companies with high free cashflow generation are likely
to consider special dividends or capital reductions. Within the telecom sector,
MobileOne has already announced a special dividend, and Macquarie expects that
StarHub will do the same. "We also anticipate more merger and acquisition activities.
Here, companies will use their balance sheets for expansion to fuel longer-term
growth. ST Engineering is the most likely candidate along with Parkway given its
regional healthcare ambitions," Macquarie said. "Reflation is our fourth theme.
This was our main theme in 2005 and it will spill over into 2006 given that residential
prices and office rents will continue their upward spiral," it said. "The expected
general election this year is our final theme. Usually elections are non events
but this is Prime Minister Lee Hsien Loong's first election campaign and we
expect (upbeat) market sentiment on the back of friendly policy announcements,"
it said. The first such policy announcement may be made
on Feb 17 when the government unveils its budget for the fiscal year
to March 2007, it added. The STI ended the morning session up 15.09 points or
0.64 pct at 2,383.41.
posted by SmartYInvestor at 3:35 PM
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