Investment bank picks Asia stocks that offer 'calm in a sea of volatility'

Published Wed, Sep 29 202112:30 AM EDT

Stock investors are desperately searching for stable places to stash their money as markets churn around the world. OCBC Investment Bank says it knows one. "The Singapore market has been well shielded from the wide global markets fluctuations and it has done comparatively well this year," Carmen Lee, a Singapore strategist at the firm, wrote in a Thursday note. As of its Tuesday close, the benchmark Straits Times index in Singapore has risen more than 8% so far in 2021. In comparison, Hong Kong's Hang Seng index sits in bear territory as of its Tuesday close — more than 20% lower than its 52-week high. For the year so far, the index has tumbled about 11% as private education and tech stocks have been slammed by regulatory uncertainty in mainland China. Meanwhile, MSCI's broadest index of Asia-Pacific shares outside Japan has also declined more than 3% as of Tuesday. Stateside, the Dow Jones Industrial Average is on pace to end a five-quarter win streak having plunged 3% so far in September. Singapore's market has "proven to be fairly resilient in these uncertain and volatile times," Lee said. Furthermore, trading volume and activity in the country have also picked up sharply, notching their best year in the last four, she added. Markets globally have seen wild swings in September as a range of factors — including the ongoing fallout from indebted Chinese developer Evergrande — weigh on sentiment. OCBC's stock picks in Singapore include lenders such as DBS Group and United Overseas Bank . Real estates plays such as Ascendas REIT , Ascott Residence Trust and CapitaLand Integrated Commercial Trust are also in the basket. The investment bank projects more than 20% upside for those stocks from their Monday close. Reasons to buy Singapore stocks OCBC's Lee said stocks listed in Singapore give investors a defensive and fairly resilient exposure against a backdrop of expected market turbulence in the near-to-medium term due to factors such as an uncertain regulatory outlook in China. She also said valuations in Singapore are attractive compared with other regional markets. The strategist noted the country's flagging IPO scene could pick up momentum, citing recent announcements like the Singapore Exchange allowing SPACs to list on its platform . "This could potentially help to stem the decline in IPOs and also help to attract companies which are in the high-growth phase," she said. Singapore's government has also announced a series of initiatives to boost the domestic stock market . The measures include investing in a new fund with state investment firm Temasek aimed at supporting "promising high-growth" companies.

A pedestrian looks at Japanese companies' share prices of the Tokyo Stock Exchange displayed on an electronic board in Tokyo on April 30, 2021.

Yuki Iwamura | AFP | Getty Images

Stock investors are desperately searching for stable places to stash their money as markets churn around the world. OCBC Investment Bank says it knows one.