Singapore, with its 10% base rate, is relatively less hurt by the US tariffs but DBS points out that many local listed companies will still be hurt by other regional exposure to supply chains.
"The harsher-than-expected US tariffs on all trading partners, coupled with China’s retaliatory 34% tariff on US imports, have escalated the tariff war and severely undermined market confidence," adds DBS, as it lowers its year-end target for the Straits Times Index to 3,855 points from 4,080 points.
Until tariff uncertainties stabilise, DBS says it is key for investors to discern which are the sectors less hurt by the tariffs.
For now, DBS prefers stocks in defensive sectors such as consumer staples, utilities, communications; those that are positioned in the more resilient segments of their industries; companies with the ability to ride on structural or secular growth trends such as sustainability, artificial intelligence and businesses with high domestic exposure.
The 11 stocks to better navigate tariff war volatility are REITs Mapletree Industrial Trust , Keppel REIT, Parkway Life REIT; consumer staples DFI Retail Group , Sheng Siong Group ; communications service providers Singapore Telecommunications and Netlink NBN Trust; utilities firm Sembcorp Industries and public transport provider ComfortDelGro .
Tech stocks with limited exposure UMS Integration and Grand Venture Technology are favoured as well.
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On the other hand, DBS has listed 11 stocks to avoid. They are cyclical in nature and are tied to global trade and therefore more likely to lag in the current environment.
They are two of the local banks United Overseas Bank , Oversea-Chinese Banking Corp; two REITs Mapletree Logistics Trust and Daiwa House Logistics Trust ; tech manufacturers Venture Corp and Aztech Global ; consumer discretionary plays Genting Singapore , Delfi and Thai Beverage .
DBS believes that investors should avoid Seatrium and Singapore Airlines too.
