Consider undervalued firms as trading picks up here: Panellists

Sats, Beng Kuang Marine, Centurion Corp seen as having strong growth potential

- Sue-Ann Tan

Singapore stocks saw their best rally in years over the week of July 8, with the Straits Times Index rising 2.6 per cent through the week to close on July 12 at 3,497.78.

The benchmark index was supported by the three Singapore banks – DBS, UOB and OCBC – which all hit record highs during the week, as well as interest rate-sensitive real estate investment trusts and property stocks.

But besides the blue chips, there could be some firms with smaller market capitalisation which are undervalued that are worth looking into, said panellists at a July 11 seminar organised by Maybank Securities to highlight stock opportunities for retail investors.

At the event, guest speaker Ven Sreenivasan, who is a senior columnist at The Straits Times, noted there has been a resurgence of trading activity in the Singapore stock market in recent weeks.

“There is some interest returning to the market. It is, after all, a market which gives dividends of 3.5 per cent to 4 per cent, and there are lots of undervalued players. Companies are generally well regulated and well managed.”

Mr Thilan Wickramasinghe, Maybank’s head of research for Singapore, who moderated a panel discussion at the seminar, noted separately that the current rally has been driven by financials and a few industrial stocks.

“However, if sentiment strengthens, the rally could broaden and investor attention will increasingly shift towards good-quality laggards,” he said.

He added that by stock picking, investors can find companies whose valuations are cheap compared with their peers, and check if the management team has a plan.

“Are there clear targets with timelines to achieve these (plans), especially when it comes to shareholder returns?” he asked.