Analysis: The five major "Singapore Priority" sector stocks become a safe haven in the tariff war

"Low benchmark tariffs, domestic demand driven by the construction industry and budget proposals, coupled with the government's fiscal surplus that allows for stimulus measures when necessary, will provide some buffer as the market adapts to the new world order."

Real Estate Companies and REITs Favored

If the trade war cools down, sectors most directly impacted by international trade, such as the electronics industry, will see a rebound. However, Zhou Guanlong believes, "Even if the trade war cools down, the dividend yield of the Singapore stock market can still attract investors."

Using a market capitalization of over SGD 400 million and more than 50% of revenue coming from the Singapore market as primary screening criteria, along with revenue from China and Southeast Asia as secondary criteria, Thilan found that more than half, or 53%, are real estate companies and real estate investment trusts.

Among the various types of real estate investment trusts, retail and industrial trusts are relatively resilient, such as CapitaLand Integrated Commercial Trust (CICT) and Frasers Centrepoint Trust (FCT), which primarily invest in local malls.

Companies meeting the primary criteria can benefit from government stimulus programs, while the secondary criteria may allow them to benefit from supply chain shifts.

In the past two weeks, the Straits Times Index has recovered most of its losses, closing at 3805.18 points on Tuesday (April 29), rebounding about 12% from its closing low.

Thilan believes that these factors all help support the earnings of locally listed companies.

Further Reading

Sectors related to construction, building materials, real estate developers, electricity, commodities, and defense are all currently favored by Zhou Guanlong.

Zhou Guanlong, head of research at Phillip Securities, stated in an interview with Lianhe Zaobao: "The dividend yield of the Singapore stock market is close to 6%, which is quite attractive. Coupled with the appreciation of the Singapore dollar, an overall market P/E ratio of only 12 times, relatively low valuations, and a stable economy, these are all advantages of the Singapore stock market."

Real estate development, construction, and related service companies such as Bukit Sembawang, BRC Asia, and Wing Tai Holdings benefit from the booming construction activities this year.

Thilan Wickramasinghe, head of research at Malayan Banking Berhad, mentioned in an analysis report: "In the face of challenges to global economic growth, Singapore may be a relatively safe haven."

Industrial production and service stocks and utilities with long-term contracts and large orders, such as Sembcorp Industries, as well as transportation, consumer, and healthcare stocks that meet local domestic demand, such as Sheng Siong, ComfortDelGro, and Raffles Medical, all appear on Thilan's list.

Thilan pointed out that as of February this year, the number of construction contracts awarded has increased by 58% compared to the same period last year, with numerous projects in both the public and private sectors, including HDBs and large projects such as Changi Airport Terminal 5, integrated resort expansions, and the construction of Tuas Port proceeding vigorously

The Straits Times Index has recovered over 80% of its losses

After the United States announced the "Liberation Day" of reciprocal tariffs on April 2, the Singapore stock market once fell nearly 7.5% in a single day and dropped over 14% in just five trading days, falling below 3,400 points.

Amid global uncertainty surrounding the tariff war, the Singapore stock market has instead become a safe haven. Analysts believe that as global markets adapt to the new world order, focusing on Singapore's real estate investment trusts, property developers, industrial production and services, consumer, and healthcare stocks are most likely to benefit.

A dividend yield of 6% is attractive

In addition, the government's accumulated fiscal surplus has reached SGD 14.3 billion. Dilan believes that if the government wants to provide additional assistance measures for its citizens, there is no need to tap into the reserves. He cited that during the global financial crisis, our government launched a stimulus plan equivalent to 7.6% of GDP, and additionally, with the help of reserves, proposed an assistance package amounting to about 1.5% of GDP. During the COVID-19 pandemic, both figures increased to 14.4% and 8%