Brokers' take

Singapore market KGI Fraser, Jan 4

2015 had not been a good year for most investors, with the Straits Times Index (STI) shedding 14.3 per cent. While the year started firm with the European quantitative easing, we saw risk sentiments deteriorate in the second half after the devaluation of the Chinese yuan, decline in commodity prices and the anticipation of the US Federal Reserve rate hike. The hardest hit was undoubtedly the oil & gas sector, where we saw declines of 46.7 per cent for Ezion, 46.8 per cent for Sembcorp Marine and 26.5 per cent for Keppel Corp. In 2016, we still do not see much positive catalysts in the oil and gas sector with oil price remaining near multi-year lows. However, we note that the oil & gas stock prices have already come down significantly and are beginning to converge with our target price, in line with our bearish view. We are also expecting more Fed fund rate hikes after the first. This should bode well for the banking sector in the short term, with "Buy" calls on DBS (target price: S$20.38) and OCBC ( target price: S$10.00). However, worsening non-performing loans could keep a lid on recovery, for example, if more defaults occur in the oil & gas sector. On the other hand, we are positive on real estate investment trusts (Reits), as we explained in our sector note, with lower long-term interest rates and cheap valuations after steep decline in stock prices.

Triyards Holdings | Buy Jan 4 close: S$0.44 Target price: S$0.61 OCBC Investment Research, Jan 4