Investors hoping to take advantage of the economic growth should consider stocks that represent the ‘new’ Singapore, such as those in the resource, leisure and wealth management industries, said Christopher Gee, head of Singapore equity research at JP Morgan.
As new growth engines emerge, a group of firms representing the ‘new’ Singapore has also come up, said Mr. Gee.
These companies, usually in the resource, leisure and wealth management sectors, may not be based in Singapore, with a significant part of their business coming from outside the country.
They “will show a lot more growth over the course of the next three to five years”, he said, predicting that their earnings growth in 2011 could be in the “high teens to over 20 percent”.
Mr. Gee, however, added that these ‘new’ Singapore counters carry valuations beyond the market average and will unlikely pay large dividends since they will be reinvesting profits for growth.
JP Morgan is optimistic on stocks including commodities supply chain manager Olam International and Keppel Corp. While Keppel comes from the ‘old’ sector, it has successfully evolved into a globally competitive company and is set to benefit from a recovery in rig order flow, said Mr. Gee.
In the commodities and consumer staples sector, the equity research team favours China Minzhong and First Resources for their growth potential and cheap valuations.
JP Morgan is not so positive on the real estate and banking sectors, both from the ‘old’ Singapore model. The threat of further cooling measures from the government still looms over the property sector, he said.