Better safe than sorry: Bet on defensive plays in 2015, analysts warn

Expect a muted year for the local bourse.

Investors should stick with tried-and-tested stocks that have good fundamentals in 2015. Analysts warn that the stock market is not headed for stellar year amid softening global economic growth and a muted domestic outlook.

According to OCBC Investment Research, there is a greater need for stock picking in 2015 as there are increased risks to corporate earnings and overall growth outlook. OCBC warns that while risks cannot be completely eliminated, some calculated ones are acceptable and is the new norm going forward.

“Global economic growth in 2015 is decent, although not exciting. Against this, we expect equity investors to have a renewed focus on fundamentals and the quality and sustainability of earnings. The latter will continue to be a key driver for stock price outperformance. For 2015, our stock picks comprise mainly well-positioned quality stocks with good track records,” stated OCBC.

These include CapitaMall Trust, ComfortDelgro, DBS, Frasers Centrepoint Trust (FCT), Hotel Properties, Keppel Corp, Keppel Land, Sheng Siong, Singapore Post, SingTel, Starhill Global REIT and Wheelock.

Meanwhile, Macquarie Research notes that the STI is headed for a second consecutive year of quiet compounding amid a noisy backdrop of sloshing global liquidity.

“Our Top Picks generally share two characteristics which we think will be key in a disinflationary low rate environment: pricing power and attractive yields. The common theme underpinning our Underperforms is structural headwinds that trump any perceived near term fillips like lower oil prices such as NOL and SIA andthe visitor arrival and retail sales rebounds we forecast such as GENS and OSIM,” Macquarie stated.