Singapore's ongoing economic restructuring might serve as a drag on corporate earnings in the New Year, according to analysts at UBS and Nomura.
Nomura is forecasting a 2.4 per cent GDP for 2013, to reflect constraints from tight labour policies, as well as sluggish global growth.
"Inflation is also likely to remain elevated, putting pressure on costs and corporate profits," it said.
According to UBS, domestic conditions will pose challenges for Singapore equities.
However, Singapore’s small, open economy traditionally benefits from a pick up in global growth. Additionally, loose global monetary conditions also
favour Singapore, given the sovereign’s solid triple-A credit rating and strong corporate balance sheet.
UBS stock picks focuses on focuses on companies which benefit from a global cyclical recovery and at the same time have demonstrated a high propensity for generous dividends to shareholders. Its top picks are: CapitaLand, CapitaCommercial Trust, DBS, Keppel Corp, Genting Singapore, Noble, Suntec REIT, SingTel, Tiger Airways.
Nomura favours companies that generate more earnings overseas than domestically and have defensive dividend yields. These include Keppel, SCI, Jardine Matheson, ST Engineering, Comfort Delgro and SATS.