DBS says Trump win could boost SGX, SATS but negatively impact REITs

SINGAPORE: As the United States approaches its pivotal elections, experts from DBS Bank are closely monitoring the potential ramifications for Singapore’s equity markets.

According to their analysis, the results of the elections will likely play a significant role in shaping market performance in the coming months, extending possibly into 2025.

DBS warns that a substantial victory for the Republican Party could lead to negative consequences for specific sectors.

Real Estate Investment Trusts (REITs) and companies with significant exposure to the Chinese market may face increased pressure if a red sweep occurs.

Conversely, some companies might stand to benefit from such an outcome.

SATS and ST Engineering are expected to gain from US reshoring initiatives, while the Singapore Exchange (SGX) and iFAST could see advantages from increased market volatility.

Additionally, ComfortDelGro and Singapore Airlines are likely to thrive due to stable oil prices, and Sheng Siong is anticipated to perform well, given its strong domestic market presence.

In contrast, a scenario where Kamala Harris assumes the presidency may foster a more favourable environment for regional markets.

DBS analysts suggest that her leadership could lead to a more stable global trade environment and greater policy continuity, which would be advantageous for the region’s economic landscape.

DBS also identifies several Singaporean firms that could benefit from anticipated rate cuts and a more favourable inflation outlook, including Frasers Centrepoint Trust (FCT), CapitaLand Ascendas REIT (CLAR), and Mapletree Industrial Trust (MINT).

These companies are well-positioned to leverage improved economic conditions if rates decrease.

Regardless of the election outcome, DBS points to potential opportunities for companies such as Venture Corporation and Frencken, which could benefit from technology supply chain diversification into the ASEAN region.

Seatrium may also find support as the next administration focuses on clean energy and oil and gas sectors.

DBS predicts that a calm election outcome, coupled with lower interest rates, could propel the Straits Times Index (STI) towards its year-end target of 3750.

However, they caution that a significant Republican victory and rising interest rates could lead to increased market volatility, with support levels potentially dropping to 3480 or even 3340.