As investors in Southeast Asian equities deal with an onslaught of news including monetary policy decisions, the outlook for the U.S. dollar and geopolitical tensions, Morgan Stanley strategist Sean Gardiner has picked his favorite — Singapore.
And the reason behind that? Earnings growth. Companies in the city-state could see earnings per share rise by 14 percent this year, and another 10 percent in 2019, he wrote in a report dated May 14.
He expects Singapore stocks to remain ahead of Asia ex-Japan peers at least until the end of 2018 as corporations continue to report “solid” results. The nation is a beneficiary of improving global economic growth and that should drive its banks — comprising 43.4 percent of the benchmark Straits Times Index — to profit from better loan growth, he wrote.
Gardiner, who became the firm’s Southeast Asia equity strategist two years ago, is calling Singapore his top pick for the first time in his current role. Previous darlings include Thailand and the Philippines. Morgan Stanley was voted the best provider of Asia-focused research for the past three consecutive years, according to a survey conducted by Institutional Investor.
Gardiner is the latest in a growing chorus of market watchers to pick the only developed market in Southeast Asia as its favorite. UBS Wealth Management upgraded Singapore stocks to overweight in April, with a similar bullish stance on financial firms, while Nomura Holdings Inc. said it preferred the city-state amid higher equity volatility in March.
— With assistance by Ronnie Harui