He adds that Singaporean investors prefer “good, hard figures” and trade as if they are in a bear market. Rather than getting swept up in compelling stories, Singaporeans are drawn to companies with cash flows. “There is no right or wrong to it,” he says.
According to Chew, this realism also extends to the type of stocks Singaporeans favour, mainly dividend plays instead of high-growth counters. The analyst attributes this to the performance of the benchmark Straits Times Index (STI). In 2024, the Singapore market grew by 16.9%, its best showing in 17 years and just 1.6% shy of the all-time high logged in October 2007.
Even so, Chew noted, in a January report, that investors may also see the market as doing nothing after 17 years. While the STI crossed the 4,000 mark for the first time on March 28, it retreated in early April after the announcement of the US tariffs.
“I think based on the performance of the STI, one has to be realistic and use dividends as the core of the return over that with any capital gains,” says Chew in an interview with The Edge Singapore. Global trends such as passive investing have worsened the situation, as most of the liquidity is now concentrated in large-caps, namely the US stocks.
See also: Asia rises as US exceptionalism fades
While Chew hasn’t seen a bottom yet, he believes the market may be trading sideways in the next few months with “huge whipsawing” due to the uncertainties.
“For the next year-end, our base case is probably sideways, but there’ll be a huge whipsawing of the market between Trump’s tariffs, recession fears, liquidation events, hopes of a rate cut and interest rate and tax cuts,” he says.
With the 90-day tariff pause set to expire on July 8, Chew is assuming — “hopefully not naively” — that the initial reciprocal tariffs are a bargaining chip and that the US will scale back when there are bilateral agreements. Still, he concedes that there could be incrementally higher tariffs at the end of the 90-day pause.
See also: New opportunities emerging in China from global trade tensions
Though unlikely, Chew’s biggest fear and “worst case scenario” involve the US having a tariff war with China and rallying other countries to impose tariffs on the latter, as mentioned in Stephen Miran’s book.
Small- and mid-cap space the one to watch
At the moment, Singapore’s small- and mid-cap stocks are still the ones to watch this year. “We think there is a possible re-rating of the sector,” says Chew.
Since the US tariffs were announced in early April, PhillipCapital identified several reasons for the small- and mid-cap space to do well. For one, stocks within the space are valued cheaply, as evidenced by the number of privatisations recently seen on the Singapore Exchange(SGX).
These counters are also unlikely to be impacted or exposed to the tariffs. At the same time, they are expected to enjoy a liquidity boost from the $5 billion equity market development programme (EQDP) announced by the Monetary Authority of Singapore (MAS).
In February, MAS unveiled its first set of measures, which included launching the EQDP with the financial sector development fund (FSDF), among others. Under the programme, the MAS will invest with selected fund managers to implement investment mandates with a “strong focus” on Singapore stocks.
Chew calls the review group’s actions a “positive step” and commends the initiative’s holistic approach of working with investors, regulators, research entities and other stakeholders to build a stronger ecosystem.
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When asked about the recent delistings, Chew thought that the EQDP would have helped and the number of privatisations would slow. However, he surmises that the companies’ decisions might have been made before the programme’s announcement.
At the same time, he notes that the delistings are simply a reflection of the higher valuations in the private market compared to the listed market. “You only want to acquire, because you think that the private markets can impact the valuations, [such as] from a trade sale.”
Based on his interactions with the firm’s clients, including private equity companies looking to buy assets in Singapore, Chew notes that there is a lot of untapped liquidity or unused cash reserves in the private market.
With that in mind, Chew feels that lifting valuations for the public markets is really about liquidity and demand.
“You get a snowball effect. If a particular small cap has a major run or its valuations expand, it becomes relatively cheaper compared to other small caps,” he explains. “So you get this kind of virtuous cycle for the small- and mid-cap universe.”
“Apart from valuation expansion, many investors would be generating gains by looking for other small- and mid-cap investments,” he adds. “So this virtuous cycle can be kicked off with the EQDP funding. Without it, it’ll be the opposite, [a] negative spiral.”
While the $5 billion proposed won’t be enough for the entire market, which has a total market cap of around US$600 billion ($775 billion), Chew notes that this sum will be carved out for the small- and mid-cap companies and will have a material impact on the sector.
Assuming just $1 billion of this $5 billion gets divided among 100 small- and mid-cap companies, that comes to about $10 million per company. That is why Chew is confident that this $5 billion — or even a portion — will have a “material impact”.
On initial public offerings (IPOs), Chew notes that there are always “murmurings” but the scene remains “pretty poor”. The ones that have been listed tend to be relatively small, with earnings of barely $1 million or so. “They are ripe for profit warnings after they hire a few directors,” he laughs.
Given the uncertainty of the markets, Chew warns that it is even less likely that companies want to list, not just in Singapore, but around the world; even the US had some IPOs that were pulled back at the time, he adds.
Banks as dividend plays
On the opposite end of the spectrum, Chew’s suggestion is for investors to continue to stick to blue chips such as the three local banks, DBS Group Holdings, Oversea-Chinese Banking Corporation (OCBC) and United Overseas Bank(UOB) for their high dividend yields, their articulated capital management strategies that include buybacks.
Even though the banks outperformed in 2024, all three are trading lower year to date. Singapore equities fell by 3.5% in April, with banks and commodities being the weakest sectors.
Despite investors’ concerns about the provisioning cycle, weaker loan growth and low interest rates potentially hurting margins, Chew believes there may not be a sharp provisioning cycle because there was never any credit cycle. He points out that bank loans have been growing at a very restrained pace of just 2% to 3% per year, so it is unlikely their clients are overleveraged.
So while banks may be impacted by lower interest rates, Chew believes they will enjoy a “huge boost” from the volatility pushing up trading volume. The brokers are also tipped to benefit from the same trend as part of a broader pick-up in capital markets driven by hedging activities, wealth management fees, among others.
Go for gold
PhillipCapital has also recommended commodity counters of late, as they see a surge in production for some counters like CNMC Goldmine Holdings and Geo Energy Resources. The brokerage initiated coverage on both counters in early April with “buy” calls. CNMC Goldmine, with a target price of 49 cents, will likely see its earnings grow this year due to higher production volume and gold prices.
“CNMC is a leveraged way to play the gold prices. In addition to higher gold prices, you’ll be getting production growth, dividends and hopefully with a growing resource base, this [stock] stands out compared to buying a typical gold ETF [like the SPDR Gold Trust],” says Chew.
While long-term projections all seem bullish, gold is trading in uncharted territories, “another 100- to 200-point breach beyond US$3,500 could be on the table”, says Phillip Nova senior analyst, Priyanka Sachedeva, noting that consolidations averaging around US$3,300 are “quite likely”. “The US$3,200 level, which was previously considered a target, now serves as technical support since gold has rebounded from that area three times already,” she adds.
Meanwhile, Geo Energy Resources, which has been given a target price of 47 cents, is set to enjoy stronger earnings from higher production levels and a new revenue stream from a newly built road that will be leased to other miners to ship their output.
On the other hand, PhillipCapital is advising investors to avoid the manufacturing sector with the supply chain assumed to have “very lean” inventories on the back of the uncertain environment. “Most customers will be pulling back orders because they’re unclear about the whole economic environment,” says Chew.
Asean to benefit long-term
The analyst notes that if the current tariffs remain, this will only lead to more investments in Asean. Assuming the status quo remains, Asean will enjoy a “big boost” as China will be locked out of the US market.
If so, the manufacturing sector and semiconductors will be the ones to watch. “Imagine the entire trade surface that China has with the US shifting into Asean and the rest of the world. All these imports coming out from China have to be supplied by someone, so Asean, maybe Mexico, maybe Europe will be beneficiaries,” he says.
If the reciprocal tariffs were to remain as they were first announced, it would be a “calamity”. Yet, there’s no clear direction and anything can be assumed. At this point, any guesses as to Trump’s next move are “futile”, says Chew in his May 5 report.
“Our base case (or guess) is that the worst tariff rates are behind us,” he adds, noting that the sell-off in equities and bonds seemed to “temper” Trump’s “aggressive posturing of trade policies”.
Besides the abovementioned sectors, Chew expects the construction, defence, finance, property, foreign REITs, power and telcos to outperform in this “muted” economic environment.
