Is Asia’s worst-performing stock market headed for a rebound this year?

Singapore may finally outperform regional peers.

Singapore ended 2015 as one of the worst-performing stock markets in Asia. The benchmark Straits Times Index had dropped by 14.8% on a year-on-year basis as of the end of November, and had a measly P/E ratio of 12.5x.

“Singapore seems to have lost its shine over the past year on regional P/E and ROE bases, no thanks to self-imposed domestic restructuring as well as the economic slowdown in China. Compared to the regional markets, the country’s stock market was one of the worst-performing ones last year,” RHB Research said.

However, RHB Research reckoned that the battered stock market will finally post a small comeback in the second half of 2016. 

“We expect the Singapore market to post a modest rebound in 2H16 after a dismal 2015. We think the credit cycle will be kick-started following the US Fed interest rate lift-off, setting the conditions ripe for the DM market to outperform its regional EM peers,” RHB Research said.

After a dismal end-of-year reporting season, RHB Research said that the local market’s prospects appear to have finally improved.

“Recent risk appetite appears to have improved – spurred by the optimism of further easing in China and a strengthening SGD, while developments in the crude oil market have also allowed oil prices to stabilise, helping to generate trading opportunities,” RHB Research said.