UOBKH cuts STI target, downgrades banks on prolonged Middle East conflict
Raised risks around oil supply could trigger bouts of volatility, says the brokerage
UOB Kay Hian lowered its 12-month Straits Times Index (STI) target by 9.3 percent due to concerns over a prolonged Middle East conflict, higher oil prices, and potential disruptions to sea traffic. The brokerage also downgraded several Singapore banks, including OCBC, and recommended a more defensive investment stance. UOBKH highlighted Singapore real estate investment trusts (S-Reits) and technology picks like Venture Corp as potential investment opportunities, citing their yields above government bonds.
The brokerage warned that heightened geopolitical risks and energy market uncertainties could lead to near-term headwinds, including inflation and volatility. UOBKH downgraded DBS to "sell" and OCBC to "hold," noting that the prolonged conflict in the Middle East could slow down the economy and loan growth. The brokerage also removed SIA Engineering from its "conviction buy" list, citing the aviation sector's exposure to rising jet-fuel prices.
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