STI's year-end target maintained at 3,950

It is expected to move sideways as tariff uncertainties resurface.

The Straits Times Index (STI) year-end target remains at 3,950 despite renewed tariff uncertainties and shifting market dynamics, DBS reported.

Whilst the index has gained 6.3% since the US Presidential election, analysts expect it to trade sideways as investors focus on the upcoming 4Q24/FY24 earnings season and President Trump’s policy direction.

The Singapore Budget 2025 and recent General Election developments are unlikely to have a significant market impact.

Analysts favour Sembcorp Industries, AEM Holdings, DFI Retail, and iFAST ahead of earnings season. Sembcorp is expected to deliver strong results and positive guidance, whilst AEM’s 4Q24 performance should set the tone for FY25.

Meanwhile, DFI Retail could see upside from its Yonghui disposal proceeds, and iFAST is positioned for further pension business growth. Conversely, caution is advised on SIA, Genting Singapore, and SATS due to potential headwinds.

Market skepticism surrounds President Trump’s latest tariff moves, which may be used to offset tax cuts.

"Tariffs will be a key source of funding for the Trump administration to balance the
anticipated tax cuts," the report said.

The “Trump trade” has resulted in fewer rate cut expectations, higher treasury yields, and a stronger USD. Stocks expected to benefit include UOB, ST Engineering, ComfortDelGro, Seatrium, Venture, and Frencken, while REITs like FCT, CICT, and MINT could gain as market sentiment shifts.

Moreover, analysts highlighted stocks with resilient earnings, including ST Engineering, backed by a strong order backlog and potential defense spending increases.

Sheng Siong may also attract interest as cost-of-living concerns rise ahead of Budget 2025. ThaiBev’s improving fundamentals and Singtel’s potential from sector consolidation are also key investment themes for the year.

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