SINGAPORE (THE BUSINESS TIMES) - Analysts anticipate profit-taking on the Singapore bourse as Singapore reinstates pre-emptive Covid-19 safety measures from May 8 to 30.
This comes amid a rise in Covid-19 community cases here, including a cluster at Tan Tock Seng Hospital detected in the past week.
The sell-off has already started, with Singapore shares swimming in a sea of red during the early morning trading session on Wednesday (May 5). At the midday trading break, all index counters except Jardine Matheson Holdings were down.
The Straits Times Index (STI) eventually closed 0.8 per cent down at 3,153.59 on Wednesday.
When the market opened on Wednesday, decliners outnumbered gainers 98 to 30, or three down for every one up, a ratio not seen in the past five days of trading - which has been largely even, according to a tally by The Business Times.
So far, the STI has hit a one-month low, reaching 3,145.20 as at 9.04am on Wednesday. The last time the STI closed near this level was on March 25 at 3,141.71.
For CGS-CIMB, year-to-date performers such as banks and travel-related stocks like Singapore Airlines and Sats will likely see a hit on share performance in the short term.
Reduced activities will likely hit transport stocks such as ComfortDelGro and SBS Transit, as well as retail real estate investment trusts (Reits) and other reopening beneficiaries like Genting Singapore and Jumbo.
Office Reits are less likely to be affected due to existing hybrid work-from-home and office structures. Meanwhile, sentiment among developers and realtors could be slightly affected if transaction volumes take a breather from more virtual versus physical viewings, CGS-CIMB said.
Uncertainty over a potential circuit breaker could also see renewed interest in pandemic beneficiaries. These include supermarket plays such as Sheng Siong and Dairy Farm, as well as glove-sector stocks such as UG Healthcare and Riverstone.
A heightened pace of testing will also benefit healthcare proxies such as Q&M Dental and Raffles Medical, CGS-CIMB said.
Echoing the sentiment, Maybank Kim Eng said Q&M Dental will likely benefit because of its exposure to the Covid-19 tests business. The research team initiated coverage on the stock in March with "buy" and a target price of 87 cents.
Maybank KE also expects Q&M Dental to "close the valuation gap" against bigger listed peers because of a more superior earnings trajectory at CGS-CIMB's estimates of 58 per cent, 20 per cent and 13 per cent for the financial years of 2021, 2022 and 2023 respectively.
