Since the start of November, Singapore’s Straits Times Index (STI) has put up a stellar show, surpassing the rest of the region with gains of 17.5% (as of 23 Nov 2020). This was largely driven by optimism about Covid-19 vaccines as cyclical and value stocks came back into focus.

Our call in September to rotate into value stocks is panning out well as under-valued, cyclical and defensive stocks showed strong gains in November. Value stocks tend to be in play during early stages of economic recovery. The STI is currently trading at 14.0x FY21 earnings and at a price-to-book of 0.96x, below the 10-year historical PB of 1.25x.

With lingering uncertainties in the market, we prefer to adopt a stock pick strategy. Some of our preferred picks include Ascendas REIT, Ascott Residence Trust, CapitaLand Integrated Commercial Trust, CapitaLand Ltd, Frasers Centrepoint Trust, Frasers Logistics & Comm, Manulife US REIT (USD), Mapletree Industrial Trust, Mapletree North Asia Com Trust, NetLink NBN Trust, Sheng Siong Group, Singapore Telecommunications, UOL Group, Venture Corp and Wilmar International.

Source: OCBC Research - 25 Nov 2020