STI to post a 14% earnings growth for 2022: report

Financials and telecommunications will be the largest contributors to growth.

The Strait Times Index (STI) will likely post a 14% earnings per share (EPS) growth for 2022, said UOB Kay Hian, adding that the stock market will perform well in the second half of the year.

"We believe inflation concerns should subside in the latter half of 2022 and the Straits Times Index (STI) should be able to perform due to the prevalence of quality, value and dividend stocks relative to its regional peers," UOB Kay Hian said.

"Since there will no longer be a synchronous global cycle, country risk will return and our view is that Singapore presents a lower risk vs other countries in the region," the analyst added.

In a report, UOB Kay Hian said most sectors will continue to the EPS growth for 2022, except for aviation and healthcare.

Out of all sectors, financials and telecommunication will be the largest contributors to the earnings growth for the year.

With a 14% earnings growth forecast, UOB Kay Hian revised its STI target to 3,390 from 3,500. The new target is a 10% upside from its current levels.

"We believe this is fair given moderating earnings growth and potential risks to the economy and thus our forecasts," UOB Kay Hian said.

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