With the FTSE Straits Times index gaining 12% this year, sending Singapore’s stocks to their highest level in two years, there are optimism things might move in the right direction for the local bourse.
Or at least, this is Barrons, the US financial and global market developments analytical publication, is saying STI’s glass is half full and half empty, suggesting good things ahead.
And needless to say with the IPO of NetLink Trust – the most anticipated deal for Singaporean bankers, and perhaps for the stock exchange too, due to the sheer size of the offering which is the biggest in Singapore for years – things might get rolling!
Is it time to plunge into the stock market and make some quick bucks?
Not so fast though, unless you want to dip into the NetLink Trust’s IPO, says analysts who also suggested that the banking stocks are set to gain too.
Barrons said Singapore is benefiting from stronger exports and a weak Singapore dollar that have helped to fuel the stock market rally.
It quoted Jefferies strategist Sean Darby who said – in general – Singapore’s ‘old school’ export recovery is coupled with an easing in US dollar liquidity conditions.
It has also seen a climb in money supply boosting asset prices and the credit cycle has turned upwards helped by a rise in deposits.
He noted a rise in small caps that has replicated the sweeping change in exports and underlying earnings revisions.
With its export cycle on the rise – boosted by the weaker Singapore dollar getting and a pick-up in global trade, unsurprisingly tech exports have expanded.
Darby has upgraded his view on Singapore from moderately bullish to bullish.
His main pick: Banks are poised to be among the biggest beneficiaries of a stronger economy. Jefferies recently upgraded Singapore’s biggest lender DBS Group (D05.SG) from neutral to buy.
Jefferies like the dividend upside for DBS and upgraded it to Buy.
DBS shares have rallied 18% this year and trade at 11 times forward earnings and 1.2 times book value. For more commentary on DBS, please see DBS: The Best Singapore Bank Stock to Buy, it said.
With Singapore Telecommunications ready to divest its stake in NetLink NBN Trust, owner of the infrastructure that underpins the national fibre broadband network, things are moving at a rapid pace for this development that could allow a trading debut at the end ofJuly if everything goes well, said Finance Asia.
It is no exaggeration to say that the IPO of NetLink Trust is the most anticipated deal for Singaporean bankers, and perhaps for the exchange too. That is mostly due to the sheer size of the offering, the biggest in Singapore for many years, said the online portal.
“Syndicate analysts have suggested a fair value range of S$3.3 billion to S$3.9 billion ($2.4 billion to $2.8 billion) for NetLink Trust.,” said Finance Asia.
The IPO could also raise at least $1.8 billion at the bottom end of the fair value range before factoring in an IPO discount, meaning NetLink Trust would rank as the sixth largest flotation in Singapore history and the largest since IHH Healthcare’s $2 billion listing in July 2012.
Most important of all, Finance Asia said a successful NetLink Trust IPO will not only increase liquidity in the local stock market but also boost confidence for companies looking to list in the city, including Garena and the HNA-AEP Reit.