Singapore stocks to see 'sustained rebound' as economy recovers: Morgan Stanley

SINGAPORE (THE BUSINESS TIMES) - Singapore's equity valuations have bottomed, and a "sustained rebound" is now underway as the market shifts its focus to an "imminent V-shaped recovery in the global economy", Morgan Stanley Research said in a report on Monday.

Analysts Wilson Ng and Derek Chang said economies that earlier reopened from lockdowns have seen a swift resumption in production and consumer activity, boding well for Singapore, which on Friday entered phase two of its reopening.

"We could see inflows supported by a growing perception of Singapore as a safe haven amid geopolitical and economic uncertainties in the region," they wrote.

They forecast a total potential return of 14 per cent for the Republic's MSCI Singapore Index for June 2021, including a 5 per cent return from "high and defensible" dividends.

Mr Ng and Mr Chang said Singapore stocks offer investors the highest dividend yields in the Asia-Pacific region, as well as among developed economies such as the UK, US, and Australia.

The current 4.5 per cent yield levels are "attractive relative to history", and represent a "substantial" four percentage point spread over the 10-year government bond yield, they added.

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