SINGAPORE: Stocks of listed companies dealing in properties have fared the best in 2012.
Data from Bloomberg, compiled by OCBC Investment research, showed the ST RE Hold & Dev Index gained some 53.2 per cent as of 12 December. The index comprises property stocks from companies like Fragrance Group, CapitaMalls, Keppel, Wing Tai and Ho Bee Investments.
Sentiment in these segments was boosted by the record property sales and rising prices in Singapore.
The ST Real Estate Index came in second, gaining 44.9 per cent.
Some experts say property stocks may see some correction in the coming months, but overall they do not foresee too many surprises in Singapore's stock market in 2013.
Kelvin Tay, chief investment strategist at UBS said: "I think next year is going to be very similar to this year actually, because where real interest rates are concerned, they are still pretty much negative. We do expect the (Singapore) dollar to actually strengthen further, and we are looking at a target of 1.19 to the US dollar in the 12 months, so if that is a case it means that a lot of the high-yielding stocks we like this year will still be in focus for 2013."
This year has not been rosy for some SGX-listed companies. Their corporate earnings have been hit by the economic headwinds from Europe, US and China in 2012.
OCBC Investment research said in its latest report that earnings in the third quarter of 2012 has been the weakest since the second quarter of 2009, raising fears of earnings disappointment.
2012 also saw Singapore making structural changes to its economy, like reducing its reliance on foreign manpower.
"A sector that I would avoid are those that will feel the biggest punch from the productivity drive from the government - they have already stopped or at least they have restricted the number of foreigners and those sectors that are aligned or dependent on foreigners such as F&B, retail, as well as construction sector," said Terence Wong, co-head of research at DMG & Partners.
"All these will probably feel the crunch at the year end - as you see more complaints, I think the margins will continue to come off and I don't think that is a good place to park your money."
To seek refuge from volatile markets, equity investors have turned to real estate investment trusts (REITs), which give steady income.
Besides REITs, traditionally defensive stocks with attractive dividends, like telcos and banks, have also found favour with investors.
Telcos and banks are providing yields around 4 and 5.8 per cent, according to Credit Suisse estimates.
Still, some upbeat analysts say Singapore stocks are now attractively valued and are poised for higher growth.
Nomura noted that the the market is trading at an FY13F P/E of 12.5x on EPS growth of 11 per cent.
Chew Soon Gek, head of strategy and economic research in Asia Pacific for Credit Suisse Private Banking said: "The Singapore stock market looks fairly attractive - I think on our fair value dividend discount model, we are expecting a target of 3400 on the STI, valuations are reasonable and the PE on a forward basis at 13 times and the price to book is 1.4 times so it is fairly neutral to slightly cheap on a ten-year history."
Looking ahead, experts warned of continued volatility in global markets that may have an impact on Singapore.
This includes the looming risks for the US fiscal cliff, as well as continued uncertainties in Europe.
They added that investors can still find good investment opportunities in the market but they need to be selective in their stock picks.
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