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Singapore’s markets have done “really bad” in 2020 and lately are “undervalued,” according to Kelvin Tay of UBS Global Wealth Management.
“We believe that with respect to the Straits Times index, there is a lot in some of the stocks,” Tay, who is the company’s director of regional investments, told CNBC’s Squawk Box Asia on Wednesday.
In particular, he noted that large banks that dominate the index “are trading close to book valuations. “Tay said: “We think it’s a sign that we’re starting to buy the Singapore market. “
Timothy Moe of Goldman Sachs, however, warns that bank stocks can be just a disadvantage.
“The most important story here is that of a significant replacement in the composition of the indices towards a greater focus on the generation and so-called movements of the virtual economy,” said Moe, Asia’s co-director of macroeconomic studies and a leading strata behind the company’s Asia-Pacific stocks.
This trend, he said, “much more widespread” in China and North Asia compared to Southeast Asia, where the representation of the index remains “very weighted” for banks.
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“In today’s low interest rate environment, this base is anything that favors banks,” Moe told CNBC’s Street Signs Asia on Wednesday.
Against the back of the worst economic recession in years since the coronavirus pandemic, primary central banks such as the US Federal Reserve have been able to do so. But it’s not the first time They have taken drastic steps to keep money markets afloat. Movements such as lower interest rates can accumulate profits.
“We still think the broader story of the Asian region is to favor North Asia in large part over South Asia,” the strata said. He added that this includes “over-overlaying” in countries such as China and South Korea.
Singapore’s Straits Times index is one of Asia’s worst performing rates to date in 2020 and has still dropped more than 21% since the start of the year at Singapore time on Wednesday afternoon, according to Refinitiv Eikon.
It occurs when the country’s trade-dependent economy has been affected by the coronavirus pandemic. In the current quarter of 2020, Singapore’s economy is 42. 9% on a seasonally adjusted annualized basis compared to the previous quarter, according to the country’s Ministry of Trade and Industry.
– Yen Nee Lee of CNBC contributed to this story.
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