Here’s how investors can keep their footing as the stock market wobbles

Stick with USD-denominated companies, analysts urge.

Singapore’s stock market was rocked by steep declines and unconvincing rebounds following China’s decision to devalue the RMB.

For investors looking to take advantage of the volatility, experts note that deeply undervalued stocks and companies with USD-denominated earnings may provide the best defense against the market’s wild swings.

“While waiting for the dust to settle, we highlight deeply undervalued stocks and companies that offer US$ earnings. We favour CapitaLand, DBS and First Resources, OCBC, SCI and SingTel,” UOB Kay Hian analyst Andrew Chow said in a report.

However, he warned that investors should remain cautious as the sharp volatility could cause markets to overshoot on the downside.

Ong Kian Lin, analyst at RHB Research, noted that investors should be wary of forex-exposed stocks as China’s devaluation might trigger weakening across most ASEAN currencies.

“We do not think that the CNY devaluation is a 'one-off' adjustment and expect capital outflows caused by the ensuing weakening ASEAN currencies to persist for some time as investors continue to switch to safe haven assets such the USD or USD-denominated paper/notes/bonds,” Ong said.

“We urge investors to stay cautious on forex-exposed companies for now.We recommend investors to stay defensive in this climate,” he noted.

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