Listed firms face steep earnings cuts as growth prospects dim

Investors are scouting for safe haven investments.

Now is not the time to take risks when it comes to investing in Singapore, according to a report by RHB Research.

RHB warns that listed firms are headed for more earnings downgrades as more companies report dismal results in the ongoing reporting season. The sharp correction in Chinese equities and the dire performance of Singapore’s manufacturing sector also does not bode well for the local stock market, the report said.

“We advocate a safe and defensive stance during this turbulent period and single out companies with high-dividend yields and at least near three years of listing history to ride out the bumpy journey ahead,” said the report.

Singapore’s growth prospects are increasingly looking uncertain, particularly as the labour crunch and rising costs brought about by Singapore’s restructuring efforts have added to the woes of many Singapore-based companies.

“We do not rule out chances of further earnings downgrades in the coming quarters. With catalysts lacking in the domestic markets, we expect the share prices of Singapore companies to continue to be swayed by external events, spanning from the volatility in the Chinese equity markets, oil price fluctuations and timing of further US rate hikes,” RHB said.