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http://www.businesstimes.com.sg/companies-markets/banks-a-bright-spot-in-dull-singapore-stock-market

BanksabrightspotindullSingaporestockmarket
Citi Private Bank strategist says Singapore's banking sector is best-positioned among emerging markets to benet from rising interest
rates

Wednesday, January 11, 2017 - 05:50

by
MELISSA TAN melissat@sph.com.sg @MelissaTanBT

Singapore

THE banking sector here is the best-positioned among emerging markets to benet from rising interest rates but apart from that and the
materials sector, the Singapore stock market oers slim pickings, a top analyst said on Tuesday morning.

Ken Peng, investment strategist for global investments Asia Pacic at Citi Private Bank, told a media brieng held at the Ritz Carlton
Millenia hotel that the Singapore stock market "really depends a lot on investors' interest in dividends and in a rising interest rate
environment that's going to be dicult".

"In terms of short-term economic data I think Singapore could probably see better ones as we move through 1Q ... but is the market
really going to embrace that? I'm a little bit doubtful."

Though he said he expects a slight pick-up in the country's economic activity and growth in the rst quarter of 2017, he added: "Beyond
that, I nd it dicult to be very bullish. It is a small economy ... 350 per cent of GDP (gross domestic product) is exports."

SEE ALSO: STI regains 3,000 level despite weak Wall St

The pharmaceutical industry here also has a substantial impact on the economy but none of the large pharmaceuticals with factories
here is listed here, he noted.

Mr Peng, who is based in Hong Kong, said there were "not a whole lot of choices" for investors here. "I think banks is OK, probably
materials."

Singapore banks are "probably best-positioned" among emerging markets to take advantage of higher interest rates because they
"probably are more able to widen margins and not suer too much in terms of asset quality issues", he said.

added that if there was any trade friction, such as the United States possibly implementing a broad-based value added tax on imports
He
- "that's what (President-elect Donald) Trump has been talking about" - Singapore may take a huge hit.

"You'd want to see which country adds the most value ... for Singapore it's more of a conduit, a transfer port, so the amount of value
added is actually not that huge. In terms of direct taxing Singapore's exports it might not be that big. However it is going to reduce the
amount of volume that goes through Singapore. That's the killer."
Mr Trump's unexpected election victory in November 2016 has lifted hopes of more stimulus for the world's largest economy in the form
of infrastructure spending. Media reports last week suggested Mr Trump will ask the US Congress to nance the construction of a wall
along America's southern border.

Steven Wieting, global chief investment strategist at Citi Private Bank, said at the brieng that the bank was "for the rst time" overweight
cash and slightly underweight on both xed income and equities worldwide.

To prepare for higher interest rates, he said he favoured US high-yield bonds and oating rate loan bonds and was less keen on
European government bonds and Japanese government bonds.

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