SINGAPORE (Dec 12): DBS expects the Straits Times Index to hit 3,688 by end 2018, representing around 10% total return inclusive of dividends.

And catalysts for more STI upside could come from a peaking in banks’ non-performing loans, better-than-expected prospects for China’s growth, positive domestic sentiment as the economic recovery becomes more established, and a more sanguine outlook on geopolitical events, says DBS.

In a Tuesday report, DBS Group Research says, “We believe there is potential in the year ahead for the index to challenge its previous high. After declining for two years in 2015 and 2016, corporate earnings in Singapore rebounded in 2017, and the recovery is set to be sustainable into 2018/19 as a global synchronised recovery gains further momentum.”

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