What every investor must know about the Singapore market in 2013

IPOs and takeovers will abound.

According to OCBC, while equity indices were generally up in 2012, the markets seem to lack the much needed investor confidence for sustainable gains. While the outlook was largely mixed, most economies were fairly resilient despite the spate of unfavourable news.

Here's more from OCBC:

This was also the case in Asia, as prospects in Asia were somewhat dimmed by the persistent weakness in Europe, US and recently in China. However, the low interest rates environment continued to be conducive for businesses and corporate earnings for the first three quarters of 2012 were generally in line or slightly above expectations.

Corporate earnings growth slowed in 2012
Led by stimulus measures from the US, there were market rallies due to expectations of influx of funds, and this benefited equities although bonds, gold and properties were favoured over equities in 2012.

On the earnings front, the slowdown gathered momentum in 3Q as seen from the contraction in corporate earnings – which was the weakest since 2Q09. Fears of earnings disappointment dented market sentiment and trading volume was fairly anaemic.

IPO, takeover and privatisation likely to continue into 2013
Singapore stocks have outperformed in 2012, and several key sectors even outperformed the Straits Times Index (STI) including some of our favourite sectors such as Oil & Gas, Banking and REITs.

Price drivers for 2013 will continue to depend largely on the outlook for the key external economies as well as a pick up in consumer demand. In addition, we expect the pace of IPO, takeover and privatisation seen in 2012 to continue into 2013.

The latter two will largely be fuelled by still attractive valuations for Singapore stocks. However, price gains in the coming months are likely to be capped by the still- fragile investor confidence.

As such, we expect the STI to continue to trade within a band, supported on the downside by inexpensive valuations and on the upper level by the lack of buying momentum at higher levels.

Any further upside will need to be fuelled by a strong pick up in corporate earnings, which is still on a slow recovery currently as earnings are only expected to grow in the high single-digit level in 2013.