Following the launch of the EQDP and its subsequent updates, the team has noted rallies in selected small- and mid-cap stocks such as Boustead Singapore and Centurion Corporation, which it attributes to “pre-emptive positioning” by investors ahead of the implementation in 2H2025.
Shares in Boustead and Centurion rallied by 62.1% and 82.3% respectively, based on their last-closed prices on July 23. The FTSE ST small cap index also outperformed the Straits Times Index (STI) and the MSCI Singapore Index year-to-date (ytd), the team notes.
In addition, the team has seen some diversification out of the banks this year and into sectors such as utilities and communications services, which have outperformed within the MSCI Singapore universe. At the same time, consumer staples and consumer discretionary counters have lagged.
“The EQDP could drive a broadening out in performance, alongside lower Sora (Singapore overnight rate average) rates, which may fuel a rotation from banks into real estate and selected industrial names,” the team adds.
Unlike its peers, who have mainly identified small- and mid-cap beneficiaries, the OCBC team believes Singapore-listed REITs (S-REITs) could also benefit from the EQDP.
This comes under Option C of the Global Investor Programme (GIP), where an applicant has to establish a Singapore family office (SFO) with assets under management (AUM) of at least $200 million. Of the sum, $50 million has to be deployed into certain investments to encourage capital inflows into Singapore’s equities market. The changes, as part of the long list of proposals put forward by the equities market review group, were announced on Feb 21.
“Prior to the changes, SFOs could choose to invest in listed equities, REITs and business trusts, qualifying debt securities, Singapore-distributed funds or non-listed Singapore-based operating companies. The new criteria, however, require an SFO’s funds to be deployed in a more targeted manner; specifically, into equities listed on Singapore-approved exchanges,” the team notes.
“This means that REITs and business trusts have been excluded from the new criteria. As such, we believe the EQDP could provide a new avenue for fund managers to invest in S-REITs and thus potentially inject liquidity into the sector,” it adds.
As such, the team has put forth 13 names that could benefit from the EQDP. They are: Mapletree Logistics Trust (MLT), Keppel DC REIT, Parkway Life REIT (Plife REIT), Frasers Centrepoint Trust (FCT), CapitaLand India Trust (CLINT), OUE REIT, UOL Group, Netlink NBN Trust, Sats, Seatrium, Boustead Singapore, ComfortDelGro and China Aviation Oil.
All of them have “buy” calls with potential share price upsides ranging from 1% to 27% as at the team’s July 24 report.
The team is maintaining its “overweight” call on Singapore equities despite the strong performance due to the market’s status as a safe haven for investors.
The benchmark STI has returned 11.7% year-to-date and is pushing new highs despite heightened global volatility.
“Singapore offers several defensive and attractive features. This includes pro-business policies, political stability, well-established and inter-connected infrastructures, an active approach towards building up a smart nation, relatively low inflation, strong credit rating, and good governance,” says the OCBC team.
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“While the forward dividend yield for the STI has compressed, it remains attractive at 5.2%, which is close to one standard deviation above its 10-year historical average,” it adds. “As the equity markets review group continues to explore other initiatives to enhance Singapore’s equity market, this may also present further re-rating catalysts in the near future.”
The team also notes that income-focused investors will like the market’s attractive dividend yields while discerning investors could discover growth opportunities.
Beyond geographic diversification, Singapore stocks provide exposure to the Singapore dollar (SGD), which adds a currency diversification benefit, says the team.
The STI closed 19.92 points lower or 0.47% down at 4,241.14 points.
