Only 14% of Singapore firms exceeded performance expectations: UOB

August's financials are the exact opposite of July’s stellar performance.

Geopolitical risks in Iraq and Ukraine continued to be a drag, says UOB, offsetting the strong set of 2Q14 results by US corporates.

Closer to home, Singapore’s 2Q14 corporate reports ended with limited upside surprise as 55% of the companies under UOB’s coverage reported in-line results (1Q14: 51%).

Only 14% of the results exceeded expectations (1Q14: 16%) one of the lowest since 2Q12. Sectors that outperformed the broader market included defensive sectors such as healthcare (+6.0% mom) and REITs (+0.5% mom). Underperforming the market were plantations (-4.9% mom) and property developers (-3.8% mom).

Here’s more from UOB:

We stick to our year-end target of 3,400 for FSSTI and with an expected upside of
only 2%, we remain selective and focus on stock-picking to outperform. Valuation-wise, the market’s FY14F PE of 15.6x is at a 4% discount to its long-term mean of 16.2x.

Therefore, even if valuations mean-revert, upside could be moderate, re-affirming our selective stance. Investment themes we favour include: a) asset monetisation/M&A; b) energy proxies; c) regional growth plays; and d) easing regulatory environment. Our top picks in the big cap space include DBS, OCBC, CapitaLand, Keppel Land, CCT, M1 and Ezion. In the mid cap space, we like Pacific Radiance, Riverstone, Silverlake, Kris Energy and Halcyon. SELL Tiger Airways, SIA Engineering and Mewah.