Market view update
Inflation winners/losers in focus as MAS tightens monetary policy
- MAS slightly raises the appreciation of the S$NEER policy band while maintaining the policy band width and the level at which it is centred, in another pre-emptive shift against inflation
- The move comes after Dec 21 core CPI rose more than expected by +2.1% y-o-y (consensus +1.8%) while CPI added +4% y-o-y (consensus +3.7%)
- MAS expects inflation to moderate in 2H, maintains 3%-5% y-o-y GDP growth
- SGD strengthens by 0.26% against USD to USDSGD=1.343 à stronger SGD underpins SGD-denominated assets, including equities
- Outperformers in a rising rates environment
- Banks UOB, OCBC
- Value stocks or stocks with value unlocking potential such as Thai Beverage, SingTel, Yangzijiang, and Wilmar
- Underperformers in a rising rates environment
- High-growth potential stocks with low/no dividend yield (e.g., Nanofilm)
- Selective on income-generating stocks such as SREITs
- Prefer SREITs exposed to reopening recovery theme or currently trading at above sector yield (e.g., Suntec REIT, CICT, hospitality REITs)
- Less preferred are SREITs with a tight yield spread such as data centre and logistics REITs (e.g., Keppel DC REIT, MLT)