For Singapore’s stock market investors, volatility continues as we enter the last month of the first half of 2022.
This is not a surprise since global uncertainty reigns given the outlook for monetary policy, high inflation, economic growth, and rising geopolitical tensions.
With so much negativity in the stock market, how should investors position themselves? It all depends on your investment risk appetite, time horizon and investment goals.
Overall, I think that the pullback and uncertainty in the stock market provides opportunities for investors to build a resilient portfolio.
In this article, I’ll share five top Singapore stocks that offer resilient, safe and dependable returns.
They should also hopefully help investors to navigate the current market volatility.
1. Mapletree Commercial Trust
Large local REIT Mapletree Commercial Trust (SGX: N2IU), also known as MCT, recently won approval for a merger with peer Mapletree North Asia Commercial Trust (SGX: RW0U) as it looks to be rebranded as Mapletree Pan Asia Commercial Trust (MPACT).
MPACT will be the third-largest Singapore REIT (S-REIT) by market capitalisation.
What is interesting is that MPACT will serve as the proxy to key markets across Asia given its footprints in five markets across the region with 18 diversified real estate assets.
It will have a diversified portfolio with 44% in retail, 35% office and 21% in business parks.
If all goes according to plan, the merged entity (MPACT) will be listed in August this year.
Aside from the prospect of a more diversified portfolio following the merger, MCT itself owns the largest shopping centre in Singapore; VivoCity.
At its current price of S$1.83, MCT has an attractive dividend yield of 5.6%.
2. Ascendas REIT
I think it is a good opportunity for long-term investors to beef up their position in REITs during the current downturn.
With this in mind, I think Ascendas REIT (SGX: A17U) offers both a hedge against inflation as well as growth potential with its data centres.
I believe the industrial REIT also offers diversification away from the reliance on the recovery in the retail sector.
Given the higher demand for logistics and data centre space in the long term, this should help to sustain the REIT’s long-term growth.
It also has a healthy gearing ratio of 36.8% as of 31 March 2022.
At S$2.84 per share, Ascendas has a dividend yield of 5.4%, which is fairly attractive and even higher than Singapore’s core inflation number.
3. AEM Holdings
One of the semiconductor players in Singapore that has caught my eye is AEM Holdings Ltd (SGX: AWX).
The company provides comprehensive test solutions for semiconductor manufacturers and the broader electronics sector, and has manufacturing plants located in Singapore, Malaysia, Indonesia, Vietnam, China and Finland.
While the current share price of S$4.45 represents a decline of more than 14% in recent times, I think it is a good buying opportunity for long-term investors.
AEM’s earnings are backed by strong orders and a positive structural growth story within the semiconductor space.
In fact, the latest global semiconductor industry sales in April increased by 21.1% year-on-year (yoy) to US$50.9 billion.
It was also 0.7% higher than the March 2022 total of US$50.6 billion. The monthly sales data are compiled by the World Semiconductor Trade Statistics (WSTS) organisation and represents a three-month moving average.
Aside from that, AEM is also trading at an attractive level with a price-to-earnings (PE) ratio of 14.2 times and a dividend yield of 2.3%.
4. Raffles Medical Group
I think long-term investors should also look into the healthcare space and Raffles Medical Group Ltd (SGX: BSL), also known as RMG, should help to beef up your portfolio.
RMG is an integrated healthcare provider that is serving patients across Asia in five countries and 14 cities.
While the Group’s near-term earnings could be affected by the tapering off in its COVID-19 support activities as the pandemic wanes, RMG’s regional patients should return as international travel resumes.
Raffles Hospital Shanghai has also started operations, which means that RMG has hospitals in three major cities in China; namely, Chongqing, Beijing and Shanghai.
This is on top of the well-known Raffles Hospital Singapore that serves its home market.
5. Sheng Siong
Last but not least, I think investors should buy Sheng Siong Group Ltd (SGX: OV8) for their portfolio given the resilience of its business.
Sheng Siong is one of the largest supermarket chains in Singapore and operates a total of 65 outlets on the island.
The management team aims to open three to five outlets per year over the next three to five years, focusing on areas where it does not have a presence.
Aside from its long-term growth, Sheng Siong will also benefit from rising inflation. The supermarket chain has a strong track record of maintaining its margin despite the cost pressures.
On top of that, Sheng Siong’s position as a value-for-money supermarket chain will also benefit from the inflationary pressure.
This comes as consumer expenditure levels are likely to trend down as the euphoria from the reopening of international borders will be outweighed by inflationary pressures.
As more people opt for more economical options, such as having more home-cooked meals, Sheng Siong will more likely be able to raise prices to pass on the costs while preserving its margins.
I believe Sheng Siong is a defensive option given the volatile market conditions that investors face today.
Plenty of opportunities but the key is diversification
The stock market weakness offers plenty of opportunities for long-term investors to accumulate companies with strong fundamentals, great business models and value.
However, I think the key remains in the diversification strategy.
Despite the risk-off sentiment, it would be foolish to overlook companies with strong growth potential.
It is also important for investors to balance their portfolio to ensure dividend counters can offset the volatility from growth in their portfolio.
It is not all “doom and gloom”, even if most investors are likely see their portfolio end in the red during the first half of this year.
With a diversified portfolio, long-term investors will benefit from the inevitable recovery in the stock market.
Disclaimer: ProsperUs Investment Coach Billy Toh doesn’t own shares of any companies mentioned.
