2014 outlook: A safer path to growth
■ Singapore: Positioned for 'growth' and 'taper'. There are two major global themes likely in 2014: (1) an acceleration of global GDP growth (positive) and (2) a US 'taper' (potential currency and yield volatility; negative). With a stable (to strengthening) currency, inexpensive valuations, and yet with strong global linkages, we believe the Singapore equity market offers a unique, low-volatility exposure to potential growth improvement. The MSCI Singapore trades at 13.7x P/E, in line with its long-term average, and the one-month forward EPS for the market has been flat for almost 46 months. Growth can improve both.
■ But few sector-wise themes seen. The Singapore government is likely to maintain its tightening approach to property and labour markets. Consumption in the region remains under a cloud, and with an upward bias to rates (no more yield compression), there are few broad sector-wise themes evident for 2014. Any global economic strength then is likely to be largely captured by small- and mid-cap companies, and potentially by the commodity names.
■ Bottom-up stock picking. Among the large caps, the banks should benefit from SME/trade improvement. Our 2014 top picks are: (1) DBS, for valuations and earnings growth; (2) KEP, which could benefit from potential order inflow surprise; and (3) CAPL, which looks positioned for a strong earnings turnaround (through CMA). M1 (domestic data, broadband) and OSIM (strong sales momentum) are our top mid-cap picks. We also add FR and WIL to our model portfolio for commodity exposure to global growth.
Source/Extract/Excerpts/来源/转贴/摘录: Credit Suisse
Publish date: 09/12/13