Watch out for these investing red flags in 2H15

Be cautious on telcos and REITs.

While listed companies continue to churn out their second quarter and half-year results, UBS warns that investors should be wary of these red flags as the second half of the year rolls in.

In particular, UBS noted that investors should be wary of telco stocks, mainly due to the looming threat of a fourth mobile entrant.

“We believe that all the factors for a 'perfect storm' are present in Singapore's mobile market in terms of the potential entry of a fourth operator. In the past, entry into the broadband market by new operators resulted in significant revenue impact for incumbents. The potential entry of a fourth operator coupled with an expected rising interest rate environment in the US implies a perfect storm in the sector, in our view,” UBS said.

UBS is also cautious on REITs because of the impending interest rate hike by the US Federal Reserve, which is expected to happen within the next six months. 

Lacklustre loan growth remains a key threat for bank stocks, UBS added, but marging improvement should provide some help.

Meanwhile, offshore stocks are cheap but could be “value traps” due to a dearth of positive catalysts.

UBS is most bullish on the property development and transport sectors, which could get a boost from regulatory changes.

“We maintain an optimistic view of the property developer and transport sectors, where we anticipate regulatory tailwinds,” said UBS. 

UBS noted that property cooling measures are likely to be selectively eased starting the second half. When it come to public transport operators, UBS said that the government contracting model will slash costs and improve profitability of PTOs.