3 High-Quality Singapore Stocks to Buy During a Recession

June 13, 2023

As Singapore’s economic indicators point towards a potential technical recession, investors are faced with uncertainties and the need to navigate turbulent markets.

In such challenging times, it becomes crucial to identify defensive stocks that have historically shown resilience and potential for growth.

In a recessionary environment, I believe these three high-quality Singapore stocks offer a compelling case for their inclusion in your portfolio.

1. Sheng Siong

Sheng Siong Group Ltd (SGX: OV8), a leading supermarket chain in Singapore, has a strong track record of withstanding economic downturns.

The company’s defensive nature arises from its business model, which revolves around selling consumer necessities.

In times of crisis, consumer spending patterns often prioritise essential goods, providing stability and growth opportunities for companies like Sheng Siong.

As households adjust their budgets during economic uncertainty, Sheng Siong’s ability to provide affordable options, while also maintaining consistent demand, makes it an attractive investment.

2. ST Engineering

Singapore Technologies Engineering Ltd (SGX: S63), or ST Engineering, is a diversified engineering and technology conglomerate with a history of outperforming during crisis periods.

The company’s broad range of business segments, including aerospace, electronics, and land systems, contributes to its ability to weather economic storms.

The engineering company’s robust revenue visibility of about two years – combined with a dividend per share (DPS) of 16 Singapore cents – provides stability for investors in the current macroeconomic environment.

ST Engineering’s extensive portfolio allows it to leverage its technological expertise across various sectors and adapt to changing market dynamics.

Concerns surrounding the company’s debt levels should be alleviated by its capacity to generate significant free cash flow.

As global aviation traffic continues to recover, a gradual reduction in the net-debt-to-equity ratio is expected.

Moreover, the company’s strong focus on innovation and research positions it well for long-term growth, making it an appealing choice for investors seeking stability during times of crisis.

3. SGX

During periods of economic uncertainty, investors often seek refuge in well-regulated financial markets, which can offer stability and safe investment opportunities.

Singapore Exchange Limited (SGX: S68), also known as SGX, is the sole stock market operator in Singapore and plays a vital role in facilitating capital flows.

SGX’s established reputation, efficient infrastructure, and robust regulatory framework make it an attractive destination for both domestic and international investors.

Furthermore, the diverse array of financial instruments and products offered by SGX allows investors to hedge risks and find opportunities even in turbulent market conditions.

Invest in defensive stocks during uncertainty

As Singapore grapples with the potential of a technical recession, astute investors are exploring defensive stocks that can provide stability and growth during crisis periods.

Sheng Siong, ST Engineering, and SGX represent three such companies with unique characteristics that make them attractive investment options.

Sheng Siong’s resilience in consumer spending patterns, ST Engineering’s ability to weather crisis periods and offer long-term growth, and SGX’s reputation as a haven for investors during market volatility mean they’re well-placed to outperform during a downturn.

By carefully considering these stocks in their investment strategy, investors can position themselves to weather the storm and potentially reap rewards over the long run.

Disclaimer: ProsperUs Investment Coach Billy Toh doesn’t own shares of any companies mentioned.

Billy Toh

Billy is passionate about the capital market and believes in investing for the long haul. Prior to this, he was an economist at RHB Investment Bank, covering Thailand and Philippines market. He also worked as a financial journalist at The Edge Malaysia and has experience working with an asset management firm. Aside from the capital market, Billy loves a good conversation over a cup of coffee, is a fitness enthusiast and a tech geek.

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