Singapore’s Straits Times Index may rise at least 14% to 3,180 by the end of next year, reflecting continued upgrades in earnings estimates, said Credit Suisse Group AG and UBS AG.
The gauge rose 0.5% to 2,786.03 as of 3:41 p.m. in Singapore. The index has climbed 91% from a six-year low on March 9 on signs stimulus measures were reviving economies around the world.
“Consensus earnings upgrades have helped trigger share price performance in 2009,” Credit Suisse analyst Sean Quek wrote in a note dated yesterday. “We expect this trend to continue into 2010 on a more positive top-line and margins outlook.”
The brokerage said it is “overweight” on transport, banking, media and property stocks. Among its top picks are Singapore Airlines, DBS Group Holdings, Neptune Orient Lines, Hyflux and Parkway Holdings.
Credit Suisse and UBS join Citigroup Inc. in forecasting further gains for Singapore stocks next year. UBS expects the index to reach 3,200 by the end of next year. Citigroup expects the gauge to climb to 3,250 by the middle of next year before it stalls. It previously forecast the index to rise to 3,000 next year.
“The Straits Times Index will likely rise in early 2010, driven by a synchronized global recovery, inventory restocking and continued stimulus,” Citigroup analyst Chua Hak Bin wrote in a note dated Nov. 30. Chua said the benchmark index may stall after June because the government will likely start unwinding stimulus measures in the second half.
UBS also expressed concern over a potential monetary policy tightening next year. “The government is likely to remain vigilant on a potential asset bubble in residential property.”
