More economic downgrades loom for Singapore

Guess where the brighter spot is.

According to DBS, slower GDP a drag on 3Q earnings outlook. We expect more downgrades in 3Q’s report card, following consecutive cuts in Singapore’s GDP growth to 1.8% and 3.2% for 2012 and 2013 respectively.

Here's more from DBS:

Despite slower growth, the economy is also grappling with rising cost pressures especially higher wages due to constraints imposed on foreign labour.

This could affect the healthcare, offshore and marine, and transport companies. Potential earnings downgrades could come from banks – slower loan growth and NIM pressure - and real estate which are the key domestic proxies while technology and China shipyards will be affected by weaker demand and slow ramp up in orders.

The brighter spot is in oil and gas where we expect a stronger 2H as recognition of higher priced projects kick in. Premium 4G pricing and lower data caps could lead to upward revision in earnings for the telecoms sector in Singapore.