UOB Kay Hian’s Adrian Loh and the Singapore research team remain positive on the Straits Times Index (STI) and Singapore equities despite foreseeing a potentially bumpy recovery in the Asian region in the 2H2021.

“We believe that the STI has tailwinds from Singapore’s robust GDP growth and positive sentiment from re-opening, and thus investors should remain long equities,” write Loh and the team in a June 28 report.

The Singapore market has performed “extremely well” year-to-date (y-t-d), with its valuations remaining inexpensive compared with stocks in the US and in Europe, notes Loh.

“[This is] especially considering that its companies are fundamentally healthy with low debt and rising cash balances,” he writes.

Closer to home, the STI is the most inexpensive in the region on a P/B basis, and “relatively inexpensive” on a P/E basis. The index also has one of the highest yields in the region with potential upside from banks and REITs.

As at June 22, the STI was up 8.8% y-t-d. The figure at the time was in line with the Stock Exchange of Thailand, compared to mixed performances from the rest of the Asian markets.

In USD terms, the STI’s performance held its own compared to other asset classes and indices in the global markets.

Loh has upgraded his end-2021 target for the STI to 3,456 from 3,450 previously.

On this, Loh says he continues to ‘like’ financials, with a preference for OCBC over DBS among the banks.

This is due to OCBC’s relatively inexpensive valuation and stronger earnings per share (EPS) growth.

“We also like SGX because of its multiple earnings streams from various revenue silos over the next few years,” writes Loh.

Loh has rated “buy” on OCBC and SGX with target prices of $15.50 and $12.35 respectively.