Singapore Stocks Brace for Turbulence – Domestic-Focused Picks Offer Shelter

UOB Kay Hian | April 8, 2025

Market Overview: Navigating Volatility

The Straits Times Index (STI) has faced a 7.5% selloff yesterday and a 6.1% year-to-date decline on a total returns basis, driven by the US’ unprecedented and perplexing tariff plans. However, amidst this market turbulence, opportunities exist for investors willing to look beyond the headlines.

Defensive Plays: Domestic-Focused Stocks

UOB Kay Hian recommends focusing on companies with a significant proportion of their revenue generated within Singapore, shielding them from the direct impacts of global trade tensions. These domestic-focused picks include:

• Centurion
• ComfortDelGro
• DFI Retail
• Hong Leong Asia
• Pan United
• PropNex
• Raffles Medical
• Sheng Siong
• SIA Engineering

Additionally, Singapore-focused REITs such as CDL Hospitality Trust, Far East Hospitality Trust, Frasers Centrepoint Trust, Keppel REIT, Lendlease REIT, and Parkway Life REIT offer defensive exposure.

MAS Intervention: Liquidity Boost for Non-Index Stocks

The Monetary Authority of Singapore (MAS) is set to inject S\$5 billion of liquidity into Singapore’s non-index stocks, which could benefit many of the mid-cap domestic-focused picks highlighted. Fund managers have already submitted their proposals, with the funds likely to be deployed in the second half of 2025.

Earnings Outlook: Diverging Fortunes

UOB Kay Hian forecasts a 1.5% earnings decline in 2025 for the index stocks under their coverage, contrasting with a 1.3% earnings growth for their broader Singapore stock coverage. This diverges from the Bloomberg consensus, which currently forecasts a 5.1% year-over-year EPS growth for the STI. The analysts believe there could be further downside risk to consensus earnings estimates should a full-scale trade war materialize.

Valuation and Target: Defensive Positioning

UOB Kay Hian has lowered its STI target to 3,720 by end-2025 (previously 4,115), implying about 5% upside from current levels excluding dividends. This target is based on a 1.5% earnings decline and a PE multiple of 13.4x, which the analysts do not view as stretched given the Singapore market’s defensive characteristics.

Stock Picks and Valuations

The report highlights several domestic-focused stocks and Singapore-focused REITs, along with their current prices, target prices, and key valuation metrics: