DBS Group Research has lowered its year-end target for the Straits Times Index to 3,855 points from an earlier estimate of 4,080 points.
The new target is 0.5 standard deviations lower than the previous target and is pegged to 11.4 times FY2026 earnings.
DBS warns investors to expect volatile swings in the near term from fluid tariff news flow.
"Harsher-than-expected tariffs imposed by the US on all its trading partners and China’s retaliatory 34% tariff on US imports have escalated the tariffs war and severely undermined market confidence," says DBS in its April 7 note.
DBS economists now figure that there is a 35% chance that the US will tip into a recession; Singapore's GDP, meanwhile, will be directly negatively impacted by 0.5-0.75 percentage points (ppts) versus the current forecast of 2.8% this year.
Within the Singapore stocks under its coverage, DBS prefers defensive counters over cyclical names, at least until tariff uncertainties stabilise.
See also: Can Europe and emerging markets take the lead amid diminishing US exceptionalism?
So-called defensive stocks include DFI Retail Group , Sheng Siong, Singapore Telecommunications , Sembcorp Industries , ComfortDelGro , Netlink NBN Trust and Parkway Life REIT.
On the other hand, investors ought to avoid cyclical stocks the likes of United Overseas Bank , Oversea-Chinese Banking Corp, Mapletree Logistics Trust , Daiwa House Logistics Trust , Venture Corp, Aztech Global , Genting Singapore , Delfi, Seatrium and Singapore Airlines .
