Singapore stocks to benefit from MAS reforms next year, Morgan Stanley says
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The Straits Times Index hit a 17-year high on Nov 19, bringing its year-to-date gains to 17 per cent.
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SINGAPORE - South-east Asia’s top-performing stock market in 2024 is likely to continue its momentum into 2025 as Singapore unveils measures to revive its stock market, according to analysts at Morgan Stanley.
The Straits Times Index, comprising the 30 biggest listed companies, hit a 17-year high on Nov 19, bringing its year-to-date gains to 17 per cent. It closed at 3,757.97 on Nov 19.
It has outperformed regional peers, with the MSCI index of Asean stocks up 10 per cent over the same period.
Analysts are bullish on the overlooked market in the near term, citing the Monetary Authority of Singapore’s (MAS) efforts to boost stock markets and the US election uncertainty favouring defensive positioning.
In August, MAS said it had formed a review group to recommend steps to strengthen the development of the equities market in the Republic, which hosts more than US$4 trillion (S$5.4 trillion) of assets under management.
“The combination of seemingly stronger political will and low market expectations drives our conviction that soon-to-be announced initiatives will likely have a meaningfully positive market impact, even if their exact details are still to be fleshed out,” Morgan Stanley analysts said in a note.
Singapore is one of the most preferred markets in Morgan Stanley’s Asia equity strategy, ranked second only to India in its Asia-Pacific ex-Japan market allocation.
The brokerage said the new measures will likely lift stock trading liquidity through capital infusion, with valuations potentially rising as much as 20 per cent to narrow the gap with global peers.
Singapore stocks currently trade at 10.68 times the forward earnings, a commonly used valuation metric, below Malaysia’s Bursa Index at 15 times and Australia’s ASX 200 at 18 times.
The Singapore Exchange, UOB, Singtel, Sembcorp Industries and CapitaLand Investment are part of Morgan Stanley’s Singapore focus list. Goldman Sachs upgraded Singapore stocks to “market weight” earlier this week, citing its constructive view on the banks, technology and telecommunications sectors. REUTERS
