Overseas Chinese: Singapore's small and medium-sized stocks are at a watershed moment, recommending nine small and medium-sized stocks | Lianhe Zaobao

OCBC Bank Group Research believes that Singapore's small and medium-sized stocks are at a "watershed moment," no longer neglected and forgotten. The macro uncertainty will pass, and the new journey initiated by stock market reforms and liquidity injection has just begun. Based on three themes of small and medium-sized stocks, OCBC has selected nine small and medium-sized stocks recommended for investors to buy, including Info-Tech Systems and Nordic Group. OCBC Bank Group Research's stock analyst Lin Kangli pointed out at a press conference on Monday (April 13) that OCBC is optimistic about the Singapore stock market and recommends "overweight," believing that in the face of geopolitical shocks, the Singapore stock market is fundamentally resilient and will recover over time after an initial reaction. OCBC Bank Group Research's senior stock analyst Wang Deqing noted in response to a question that this time, under the impact of the Middle East conflict, the performance of the small-cap index has outperformed the Straits Times Index and the mid-cap index, currently up 3% compared to before the conflict erupted at the end of February, while the Straits Times Index has regained lost ground, and the mid-cap index is significantly lagging. As for the three themes of small and medium-sized stocks, the first is value release. OCBC believes that the founders or executives of small and medium-sized companies may hold substantial equity, which will ultimately encourage them to seek opportunities to release value. Further Reading Former OCBC Bank President Huang Bijuan's salary fell 6.3% to 12 million last year The correlation between the Straits Times Index and oil prices has weakened, and the resilience of the Singapore stock market can withstand short-term fluctuations The second aspect is valuation. Although the valuation of small and medium-sized stocks is already higher than the 10-year average in terms of price-to-earnings ratio (P/E ratio), especially for small-cap stocks, the improvement in liquidity supports a P/E ratio above the historical average. In terms of price-to-book ratio (P/BV ratio), the P/BV ratio of small and medium-sized stocks is only 0.2 and 0.3 standard deviations higher than the 10-year average, far behind the situation where the Hang Seng Index is 3.2 standard deviations higher than its 10-year average. Wang Deqing stated that the improvement in liquidity has made analysts more willing to research small and medium-sized stocks. Investors are more willing to give higher valuations or P/B ratios to companies that can provide higher return on equity (ROE). The third aspect is Singapore's structural growth story, especially in the fields of digital transformation (artificial intelligence) and defense. The other seven small and medium-sized stocks recommended by Huashang are: Boustead Singapore, China Aviation Oil (CAO), CapitaLand India Trust, Hong Leong Asia, OUE REIT, Parkway Life REIT, and Stoneweg Europe Stapled Trust