Singapore Stocks To Buy Now As Trade Wars Escalate

Trade wars pose the biggest threat to one of the biggest bull runs in the stock market. As the U.S continues to squabble with China and the European Union, over trade tariffs, so have, investors resorted to cautionary tactics when it comes to investments.

Double-digit drops in some of the world’s largest stock indexes in the world all but provides a hint on what investors should expect should the trade war standoff get out of hand. While Singapore is not one of the countries that is likely to be adversely affected by such deadlocks, investors still need a game plan given that the effects would undoubtedly spill over into the stock market.

Trade conflict is expected to benefit stocks of companies with limited exposure to the U.S, China or Europe. In the event of a full-blown trade war, Singapore investors may have to pay more attention to stocks of companies that generate most of their revenues domestically.

That said, it is also essential to focus on companies with news and developments that are so compelling to withstand any full-blown trade war.

Some of the stocks to look on to, on escalating trade wars are those of companies in the property sector, consumer market as well as the electronics sector. Stocks of restaurant companies with operation in the country should also remain an affected as well as financial institutions that derive most of their operations and earnings domestically.

Property Sector

Property Sector remains one of the top performers in Singapore, presenting unique investment opportunities. The fact that the sector has limited exposure to the outside world should make it a safe bet as trade wars escalate. After three years of stagnation, the sector has bottomed out nicely thanks to a rise in private home prices.

CapitaLand Limited is without a doubt a top pick in Singapore’s property sector. After years of underperformance, the company is finally showing signs of resurgence depicted bay 30% increase in net earnings gain last year. The fact that the Singapore property developer is highly diversified means investors stand to gain exposure to some high-quality properties across the region.

City Development Limited is another blue-chip property developer stock worth considering, in times of trade wars. The company boasts of multiple residential projects expected to propel its earnings in the near future. Last year, the company reported an 18% increase in revenues and rewarded shareholders with a dividend of 4 cents a share.

Consumer Sector

Household income has been increasing steadily, in recent years, as the economy continues to grow at an impressive rate. A booming economy means there is more disposable income for people to spend with the biggest beneficiaries being companies addressing people’s day to day needs.

Genting Consumer is one of the stocks expected to stand out in 2018, on increasing consumer purchasing power. The company has diversified its operation into Japan gaming industry. Its universals Studios and hotel occupancies continue to attract huge traffic, which points to further increase in revenues.

Last year, the company reported a 100% increase in net profit. The solid performance is expected to continue in 2018, which should see investors walk away with higher dividend payout in addition to share price increases.

Leading provider of gateway services and food solutions, SATS, is another stock worth paying close attention to in the consumer spending sector. The company has been expanding its catering business into new markets having recently signed a deal with the Turkish Airlines. After topping earnings estimates last year at 5.9 cents a share, the company is expected to continue outperforming in line with improving consumer spending power.

Consumer Electronics Segment

Consumer Electronic Segment is another sector worth pursuing opportunities in, as tensions in the global markets spill over. People will always continue to buy gadgets even with the escalation of tensions across the globe.

Venture Corporation is one such company that is expected to continue outperforming the market as it did last year. The company is expected to surpass all estimates in 2018 which should see it ramp up its dividend yield as has been the case in previous years.

The company is in the process of ramping up its production capacity as it looks to meet increasing demand for electronic gadgets. Increased production should lead to more revenues, which should see an increase in net income, consequently higher earnings per share and dividend offering.

Valuetronics is another stock that any investor can look at, in a bid to ride on Singapore’s booming electronics manufacturing sector. Last year the company reported a 16% increase in revenue that saw earnings increase by 28%.

One of the reasons to bet on Valuetronics has to do with the fact that it is a reputable company when it comes to returning shareholder value. Investors love the company for its uninterrupted dividend payouts

Health Care Sector

Taking into consideration Singapore’s aging population, demand for healthcare service is on the rise. Companies with operations in the sector are experiencing booming business and in the process passing down returns to shareholders.

Raffles Medical Group is one such company with hospital and clinic operations in Singapore. The company is not expected to be affected in any way by escalating trade war tension abroad.

Last year, the company raised its dividend payout on growing optimism over earnings prospects. In addition, the company is expanding its operations into China as it looks to strengthen its hospital assets in the race for new revenue avenues.

Q&M Dental Group is another stock that investors can use to gain exposure into Singapore’s booming healthcare sector. The dental clinic operator boasts of a vast network of clinics in a majority of neighborhoods in the island nation from where it generates a good chunk of its revenues

The dental clinic operator reported a 23% increase in net profit last year and consequently paid a special dividend to shareholders.

Bottom Line

The best way to navigate the stock market amidst spiraling trade wars in some of the biggest economies in the world is focusing on stocks of companies with limited exposure abroad. It is also essential to invest in stocks of companies that are positioned to grow over the long run, regardless of what happens.

(By Ruchi Gupta)

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