UOB Kay Hian says that with the prospect of slowing economic growth and reasonable stock market valuations in 2011, investors should balance their portfolio with a combination of high-yielding large-cap and mid-cap counters that offer a higher margin for growth.
Despite the moderate earnings [8%} outlook for Singapore compared with its regional peers, we think Singapore’s safe haven status will continue to attract selective investor interest amid the uncertain external outlook.
Investors will be best served by having a balanced portfolio comprising firstly of counters that promise high and sustainable dividend yields.
These would be local telcos StarHub and M1, along with real-estate investment trusts K-Reit, Sabana Reit and CapitaCommercial Trust.
And’laggard’ large-cap stocks that offer good growth prospects eg. the banks. Its top pick in this segment is OCBC, followed by DBS. (I prefer Haw Par because of its stake in UOB).
Investors should also be on the lookout for the so-called Garp (growth at a reasonable price) stocks in both the mid-cap, like Ezra and Ezion, CDL Hospitality Trusts, First Resources and Super Group, and large-cap space.
Its ‘sell’ calls include Keppel Corporation, SingTel, Tiger Airways and CapitaLand. Surprised abt Keppel call because the offshore marine sector is looking gd, what with firm oil prices and offshore projects in Brazilian waters.