Source: Singapore’s GDP, Trading Economics

Source: Singapore’s GDP, Trading Economics

As Singapore’s economy continues to slow down, the outlook for 2017 is pessimistic with possibilities of a recession. To make the matter worse, the US under Trump’s administration is highly unlikely to ratify the Trans-Pacific Partnership that the Singapore government has pinned its hopes on.

However, growth is expected to remain strong in the ASEAN region, which will be one of the key markets for global growth. ASEAN’s growing economy and its rising middle class have attracted companies to expand their presence in the region. For instance, JAB Holdings has recently announced its intention to acquire local food and beverage firm, Super Group, as part of its plan to expand in ASEAN.

Also, back in 2012, Heineken acquired Asia Pacific Breweries to become its regional hub.

Domestic Consumption or Regional Growth?

Despite all the woes, certain sectors in Singapore are worth looking at and might even benefit investors amidst weakening sentiments in the market. According to DBS research and CIMB, capital goods, transport and supermarkets are the top picks for domestic consumption. Highlighted companies under these three categories include ST Engineering (STE), Auric Pacific (AP), ComfortDelgro (CD) and Dairy Farm (DFI).

As the regional financial hub, Singapore is one of the top choices of destination for public listing. There are a number of companies listed on SGX that have regional exposures in consumer and plantation sector. Top picks for the segments are Thai Beverage (THBEV) and Wilmar (WIL).

From the above-mentioned lists, we have picked out 3 Singapore stocks for investors to look more deeply into.

1. ST Engineering

Source: Singapore Technologies Engineering, Google Finance

Source: Singapore Technologies Engineering, Google Finance

Singapore Technologies Engineering (STE) is a local engineering firm that provides capital goods and maintenance for civil defence and military. Currently, the stock is trading at an attractive indicative yield of 3.06 percent according to Bloomberg. Profits should improve after its loss-making Land Systems unit ceased operations.

Although defence contracts may be a wild card, analysts from CIMB Research gave STE a “Buy” call with a target price of $3.75.

2. Auric Pacific

Source: Auric Pacific, Google Finance

Source: Auric Pacific, Google Finance

Auric Pacific Group (AP) is currently one of the hottest small cap stocks in the market. Various research houses believe that the consumer staples company is significantly undervalued. Its products include Sunshine Bread, SCS butter and Food Junction. Does this ring a bell now?

As the consumer’s spending power in the region increases, foreign companies will be looking for an entry. AP could see itself being acquired, which is similar to the case of Super Group. Analysts from CIMB Research gave AP a “Buy” call with a target price of $1.96.

3. Thai Beverage

thbev-5

Source: Thai Beverage, Google Finance

By far, Thai Beverage Public Co (THBEV) is definitely one of the top stocks to buy for exposure in the ASEAN region. Best known for its Chang Beer, the company expanded from Thailand to across the Indo-China region. The strong branding and presence in the region will enable the company to benefit from the rising middle class in Southeast Asia.

Currently, THBEV is trading at an indicative dividend yield of 2.75 percent. Analysts from DBS Research gave it a “Buy” call with a target price of $0.92

Note: The writer of this article is invested in Super Group.