Singapore telco stocks "at risk" as tapering looms

See why investors should stay away.

In its latest equity research, Barclays suggested that investors stick to “growth and yield” picks across Asia and be wary of high-priced yield stocks such as smaller Singapore telcos.

"We love 'growth and yield' theses, and across Asia ex-Japan Telecom Services, we see Advanced Info Service (AIS), China Mobile (CM), PT Telkom, SingTel and SK Telecom (SKT) fitting optimally. Bharti Airtel and HKT offer only growth (Bharti) and only yield (HKT), but each is a strong case, and hence, these two fill out our regional top picks list (all rated OW). We think high-priced yield with little else is at risk as tapering looms – Malaysia, Taiwan and smaller Singapore telcos fall in this group," said Barclays.

The research firm added that it does not like expensive stories that have materially re-priced on yield. It also advised against companies which have "structural question marks that first need to be answered" such as Chunghwa Telecom (CHT), Maxis, Telekom Malaysia (TM) and StarHub -- four Taiwan, Malaysia and smaller Singapore stocks that fit that category.

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