SINGAPORE: In a recent report dated Nov 29, Maybank analysts identify key sectors poised to benefit from GenAI adoption. Maybank Securities analysts, including Thilan Wickramasinghe, Eric Ong, Li Jialin, Jarick Seet, Kelvin Tan, and Krishna Guha, highlight the unprecedented surge in the adoption of Generative Artificial Intelligence (GenAI) as a transformative force across various sectors in 2023. This widespread adoption, coupled with the increasing demand for 5G and Internet of Things (IoT), is anticipated to shape medium-term earnings and valuations, The Edge Singapore reports.
According to the analysts, GenAI holds the potential to enhance productivity and open new revenue streams across diverse industries. Banking institutions are expected to be among the early beneficiaries due to their substantial investments in AI and systems integration. Maybank suggests that this could significantly improve middle-and-back office functions, alongside exploring new income sources through hyperpersonalization and cross-selling initiatives.
Telcos, focused on 5G and ICT services are also predicted to gain from the accelerated growth of cloud computing, analytics, and robotics ecosystems. Meanwhile, technology manufacturing is poised for an upswing as new production capacities are introduced regionally and innovative products hit the market, promising increased margins and volumes.
The analysts emphasise that companies with robust balance sheets, strategies emphasising regional growth, and a commitment to alternative energy will likely engage in more overseas acquisitions. Sectors such as healthcare, transport, technology manufacturing, and industrials are specifically identified as ripe for such expansions.
In an unexpected turn of events, the much-anticipated economic reopening of China in 2023 fell short of expectations. However, Maybank Securities notes that this disappointment for China had positive implications for Singapore.
According to the Maybank Securities team, “Although China’s weakness was a disappointment, Singapore was a relative winner with private banking assets under management (AUM) and supply chain reorganization investments flowing in. This also catalysed local corporates to seek growth in regional markets through mergers and acquisitions (M&A) given their ability to leverage strong balance sheets and take advantage of low Southeast Asian valuations.”
Maybank Securities has identified several key stocks as their top picks based on their alignment with emerging trends. ComfortDelGro (CDG), DBS Group Holdings, Frencken, Raffles Medical, Sembcorp Industries, Singapore Telecommunications (Singtel), Singapore Technologies Engineering (ST Engineering), and Venture Corporation are highlighted for their strong medium-term alignment with the unfolding developments. The analysts believe these stocks can potentially deliver upside surprises to return on equities (ROEs). /TISG