INVESTMENT bank Goldman Sachs has downgraded the Singapore market to "underweight" while upgrading the Hong Kong market to "market weight" and Indonesia to "overweight".
Timothy Moe, chief Asia-Pacific strategist, said in a media briefing on Tuesday afternoon that the key bank, energy and property sectors in Singapore are more likely to report muted or lower earnings given macroeconomic factors.
"I'm not saying that these headwinds are going to persist forever. But certainly for next few quarters, it will be a more challenging environment for sectors that make up 60 per cent of Singapore's market capitalisation," he said, referring to a comparison of the MSCI Singapore index versus MSCI Hong Kong.
For example, Singapore's banks, which take up 38 per cent of the index, might potentially benefit from interest rate hikes, he said. But because Goldman expects rate hikes to only take place in the third quarter next year, banks here might not see a positive impact on their earnings until 2016.