The bears have gotten the better of the Singapore stock market in the opening round of 2016, leaving equities dazed and bruised from the worst start since 2008.
But analysts think there is life yet in Singapore shares, and sectors like banks and dividend-paying counters could still pack a punch as the fight wears on.
About S$51.5 billion in value was wiped out from the Singapore market in January, going by data compiled by The Business Times. The market capitalisation of the Singapore market fell 6 per cent this month to S$804.9 billion from S$856.4 billion in December; this made for the worst start to any year since 2008, when total market cap fell 14.1 per cent to S$685 billion.
Year on year, the value of the market is down 18.2 per cent.
The pain was well distributed, with 520 losers and 120 gainers, or about four stocks down for every one up. Most major industry segments lost value during the month. The financial sector, one of the more resilient sectors a year ago, fell 11.7 per cent month-on-month.
Conglomerates, including Keppel Corp and Sembcorp Industries, fell 10.5 per cent.
Nomura strategist Mixo Das said: "Singapore has underperformed regional markets. Most of the downside has come in due to China - Hongkong Land, Global Logistic Properties, Hutchison Port Holdings Trust - or energy-related - Keppel, Sembcorp Marine, Yangzijiang Shipbuilding Holdings - risks, together weighing on the banks, and some one-offs - Noble Group."
The good news for investors is that the massive sell-off in January may have uncovered some value ready for picking.
The banks, in particular, have fallen squarely into bargain hunters' crosshairs after a brutal beatdown.
Mr Das said: "Banks are too cheap to ignore and the non-performing loan concerns are overdone for the current state of the economy."
Kum Soek Ching, head of South-east Asia research at Credit Suisse Private Banking Asia-Pacific, said she believes that the bank bounce could come sooner, rather than later. "We see short-term rebound potential in the Singapore banks, which are quite oversold on worries over their loan book exposure to the oil-and-gas sector, and are trading at a 2016 estimated price-to-book ratio of just 0.8 to 0.9 times."
"Greater visibility on their asset quality at the Q4 results reporting could see share prices recovering," Ms Kum added
Ms Kum also sees opportunities in selected offshore and marine stocks that have "more than priced in order cancellation risk".
The property sector, which is trading at a deep discount of 0.7 times book value, is also attractive from a risk-adjusted basis, with the potential for policy loosening spurring gains later.
But volatility lies ahead.
Ms Kum said: "Investors will have to be nimble enough to take profits upon a rebound, and place stop-loss levels on their positions."
For Mr Das, long-term structural growth companies that either generate growth overseas or which stand to benefit from government priorities are also worth a look. Yield is also a good measuring stick for stock selection at this time.
"While value as a style doesn't really work in Singapore, yield does. So, picking up some high-yielding stocks where there is greater clarity on the dividend payouts is a good idea," he said.
This article was first published on January 30, 2016.
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