HSBC sees Singapore as a standout among Southeast Asia’s markets

SINGAPORE – With most of Southeast Asia continuing to struggle with Covid, Singapore stocks are regionally standout, according to James Cheo of HSBC Private Banking & Wealth Management.

“We are generally a little more cautious in the Southeast Asia region, but within that we are actually positive about Singapore,” Cheo, CNBC’s chief investment officer for Southeast Asia, told Street Signs Asia on Wednesday.

He cited Singapore’s improved management of the pandemic as a factor in this view. The country has gradually started easing social distancing measures reintroduced in early May.

In contrast, several other countries in Southeast Asia are grappling with an increase in infections.

The vaccination rates in Singapore also far exceed those of regional competitors.

According to Our World in Data, as of July 12, 40.47% of Singapore’s population was fully vaccinated against Covid-19. By comparison, Malaysia had fully vaccinated 11.38% of its population, while the numbers in Indonesia and Thailand were even lower at 5.5% and 4.74%, respectively.

Aside from the improving situation in Singapore’s pandemic management, Cheo added that the country’s economic data and revenues appear “extremely strong.”

In the second quarter, Singapore recorded the strongest economic growth in eleven years, recovering from last year’s economic slump. In absolute numbers, the gross domestic product in the period from April to June of this year was still 0.9% below the second quarter of 2019 before the pandemic.

Preference for financials, industrials

Cheo highlighted Singapore’s financial and industrials as two sectors he likes right now.

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Companies in Singapore’s financial sector “look interesting” and should do well along with global cyclicality and economic recovery, Cheo said.

Meanwhile, industry will also benefit for similar reasons, he added.

“As the economy reopens, you will get more activity in different parts of the economy,” Cheo said. “Some of the real estate games, some of the consumer games in Singapore could actually be supported in my opinion if the economy recovers in the second half of this year.”

– CNBC’s Yen Nee Lee contributed to this report.

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