Time to shift cautiously from defensive picks, says Maybank.
In its 2013 Singapore Strategy advisory, Maybank Kim Eng said that "while we would shift some of our allocation from the defensive sectors toward the growth sectors however, we are mindful that there still exists significant uncertainties on the ground. As such, we believe investors should stay focused on what we call realistic investing."
Here's more from Maybank report:
Slipping off the defensive fence a bit. For 2013, we are Overweight on Property, Offshore & Marine, Commodity Traders and Aviation Services, Neutral on Banking, S-REITS, Plantations, Gaming and Transport, and Underweight on Telcos. We set our year-end 2013 FSSTI target at 3,358, based on a bottoms-up approach. While we would shift some of our allocation from the defensive sectors toward the growth sectors however, we are mindful that there still exists significant uncertainties on the ground. As such, we believe investors should stay focused on what we call realistic investing.
But still focus on realistic investing. We have identified stocks that will do well regardless of the economy such as NAV and privatisation plays, as well as stocks with exposure to resilient businesses such as high-end property in Singapore. Investors with higher risk appetite should be drawn to cyclical sectors such as offshore & marine, shipping, aviation and commodities that are already so downtrodden that downside will be limited but could turn into multi-bagger recovery plays. Selected dividend yield plays should still do well, namely retail/industrial REITs.
Take some profit from 2012 outperformers. One sector that we would use to fund a higher risk strategy this year would be the S-REITS, which returned 36% in price gains in 2012. We have downgraded this sector from Overweight to Neutral. To be frank, we think funds got a windfall from S-REITs in 2012, and they will not be able to repeat this stellar performance in 2013, as (1) it will be challenging to complete yield-accretive acquisitions in 2013 and (2) opportunities are limited for positive rental reversions. We also see heightened risk of equity fund raising for asset enhancements, redevelopment projects or/and sponsor injections.
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