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Which listed companies benefit most from the strong greenback?
Forex gains will provide a profit boost.
The weak SGD is not good news for most Singapore firms, but some listed companies stand to benefit from the increasingly strong greenback.
According to a report by RHB, exporters with SGD-based costs and companies with revenue denominated in USD or HKD would benefit from the SGD’s weakness.
RHB expects the SGD to hit a low of $1.46 to the US dollar in the first half of 2016 on broad-based USD strengthening, before pulling back to around $1.43 per USD by the end of next year.
Among the listed companies which will benefit from this trend are Venture, IPS Securex, Valuetronics, Riverstone, and Fu Yu. Other companies which will enjoy forex translation gains are ST Engineering and SIA Engineering.
On the flip side, however. regional players will face an earnings squeeze as ASEAN currencies weaken against the USD.
"Regional consumer companies may also be more at risk from the weakness in ASEAN currencies, as many of them have USD-denominated inputs and revenue recorded in local currencies. The inability to pass on the higher costs could lead to a margin squeeze," said the report.
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