Singapore market set for 2021 recovery; safety measures a new normal for firms that can reopen

Singapore

EVEN as the gradual easing of circuit breaker measures see delayed reopening for some sectors, government stimulus, ample liquidity and investor willingness to look beyond 2020 could prevent the Singapore market from sinking to previous crisis levels, according to a CGS-CIMB report.

CGS-CIMB expects the Straits Times Index stocks' earnings per share to decline around 22 per cent for FY20 and grow 10 per cent in FY21, faring better than during the Asian financial crisis or the global financial crisis (GFC) where earnings per share fell 28 per cent year on year.

Led by banks and airlines, earnings per share further contracted 56 per cent and 9 per cent a year after the Asian financial crisis and GFC respectively.

But compared to previous economic downturns, Singapore banks have preemptively made allowances based on their view of the macro environment amid the Covid-19 pandemic. Therefore, barring an increase in Covid-19 cases, banks could lead the way to recovery in FY21 with earnings growth of 4 per cent, according to CGS-CIMB analyst Lim Siew Khee in the report.

Furthermore, the government's job support scheme, prudence by corporates and incoming support packages to be announced on May 26 will mitigate some of the impact of the extended circuit breaker and "defray an ugly earnings crash", said Ms Lim.

As businesses look forward to the gradual reopening of the economy, firms that have been allowed to resume operations on June 2 told The Business times that many measures implemented during the virus outbreak will be sustained.

DBS, for instance, highlighted how Covid-19 has brought about a digital shift within the company and among its customers. Digital platforms such as virtual meetings, digital learning and eTownhalls that were used as part of safe distancing measures "are likely to remain important fixtures", said a DBS spokesperson.

It is also running remote working experiments to gain more insight on how work from home arrangements can be deployed across the bank even after Covid-19 passes.

At the same time, is is expecting the adoption of digital services by its customers to be accelerated due to the shift in consumer behaviour as a result of circuit breaker and safe distancing measures. The bank now expects to see some one million customers go fully digital by the end of this year, instead of end 2021.

At OCBC bank, even as staff are allowed to return to the office to work, safe distancing measures will still be in place, according to OCBC's head of group corporate security Francisco John Celio. This includes having staff operate under split operations and staggered work hours as well as equipping designated customer-facing staff providing financial advisory services with face shields as part of additional safe management measures.

Likewise, Singtel will step up on additional safe distancing measures such as having digital check-in systems across all its work premises.

In addition, with some of its operations impacted by the mandatory quarantine and stay home notices for its contractors' migrant workforce, it will need to ensure that contractors continue to observe proper health monitoring of staff and undertake safe operating measures when more workers are deployed for critical projects, said Singtel.

From June 2, more essential staff will be placed on duty at Singtel, with about 30 per cent of its workforce returning to the workplace "in a gradual and calibrated manner".

While firms on the retail front have yet to get the green light to operate, they are actively preparing for the resumption of business.

Said a spokesperson from Frasers Property Retail: "Various safe distancing measures, such as contact tracing and temperature taking will continue to be in place as we look forward to progressive resumption of the operations for the malls."

It will also progressively roll out its new ultraviolet-disinfecting autonomous mobile robots across its malls, starting with Northpoint City this month.