Morgan Stanley names its favorite Singapore stocks — some with over 30% upside

Published Wed, May 19 202111:47 PM EDT

Morgan Stanley has revised its list of favorite Singapore stocks — and three on that list have an upside of more than 30%. The MSCI Singapore Index — in local currency terms — has gained around 8.2% this year as of Wednesday's close, after losing 12.8% in 2020. Morgan Stanley said the Singapore market has further room to run, thanks to a recovering economy , restructuring activity among listed firms, and the inclusion of new economy stocks into the MSCI Singapore Index. Here are the five stocks that made it to the investment bank's latest "focus list" for Singapore, and the ones that dropped out. Stocks that were added One of the new additions is Sea Limited , which is listed on the New York Stock Exchange. The Singapore-headquartered company has e-commerce, mobile gaming and digital banking businesses across Southeast Asia. Sea's shares will be added to the MSCI Singapore Index in phases starting in May. That could direct more money into the stock, which will support its share price, Morgan Stanley said in a report this week. The other two newcomers to the focus list are CapitaLand , one of Asia's largest real estate firm, and SembCorp Industries , an energy and urban development company. Both firms are listed on the Singapore Exchange. Morgan Stanley said CapitaLand's restructuring will boost its return on equity — a measure of profitability, while SembCorp's renewable energy portfolio appears to be underappreciated by investors. CapitaLand has announced plans to split the company into two . A revamped real estate investment management company will become a new listed entity on the Singapore Exchange, while the property development business will be taken private. Rounding up the list are two stocks that were already on the list : Singapore's third-largest lender United Overseas Bank and conglomerate Keppel Corp , which has businesses in property, infrastructure, data centers and renewable energy. Here are Morgan Stanley's price targets for the five stocks and the implied upside: Stocks that dropped out The Wall Street bank removed three stocks from its focus list for Singapore: Property developer City Developments . Morgan Stanley said the stock's performance would be hampered by fresh property curbs, which could come by end-2021 given that home prices in Singapore are rising. Industrial real estate investment trust Ascendas REIT, which continues to offer an attractive dividend yield of more than 5%, said Morgan Stanley. But rising government bond yields could dim the stock's attractiveness, the bank added. Thai Beverage , a leading drinks producer in Asia. Morgan Stanley said a deterioration in the Covid-19 situation in the company's key markets of Thailand and Vietnam would hit stock performance.

Aerial view of Singapore's central business district and bayfront area.

BNBB Studio | Moment | Getty Images

Morgan Stanley has revised its list of favorite Singapore stocks — and three on that list have an upside of more than 30%.

The MSCI Singapore Index — in local currency terms — has gained around 8.2% this year as of Wednesday's close, after losing 12.8% in 2020.

Morgan Stanley said the Singapore market has further room to run, thanks to a recovering economy, restructuring activity among listed firms, and the inclusion of new economy stocks into the MSCI Singapore Index.

Here are the five stocks that made it to the investment bank's latest "focus list" for Singapore, and the ones that dropped out.