SINGAPORE - Investors looking to hedge against a potential change in spending patterns could consider switching up their buys from manufacturing towards the service sector, said DBS Bank in a report on Monday.
Noting the weak Purchasing Managers' Index seen in August, DBS researchers posited that this could be a sign that manufacturers were wary about weak consumer demand come this Christmas shopping season.
They further expect these headwinds to continue due to slowing growth expectations from China amid ongoing Covid-19 lockdowns, slowing global consumer spending as well as curbs in the US' chip exports to China that could lead to more cautious business sentiment.
Some consumer product manufacturers, like Aztech and Nanofilm, could experience slower top-line growth, while semiconductor plays like AEM and UMS could well be more resilient due to long-term industry demand drivers.
Investors looking to hedge against changing consumer sentiments may then consider buying into meetings, incentives, conferences and and exhibitions (Mice) stocks, which DBS thinks would benefit from the reopening of borders.
In particular, they named Singapore Airlines (SIA), Genting Singapore and Suntec Reit as their top picks - all of which have "buy" recommendations and target prices of $6.60, $1 and $1.90 respectively.
Both SIA and Genting Singapore are poised for growth on the back of tourism recovery, while Suntec Reit - seen as the most undervalued commercial S-Reit - could ride on the return of office workers. THE BUSINESS TIMES