There could be further downside risk to consensus earnings estimates should a full-scale trade war break out

US President Donald Trump's "Liberation Day" has prompted the UOB Kay Hian research team led by Adrian Loh to estimate that the Straits Times Index component stocks will suffer 1.5% drop in earnings this year, versus earnings growth of 1.3% for the broader universe of Singapore stocks.

"The selloff driven by the US’ unprecedented and perplexing tariff plans has liberated many investors of profits this year," says Loh.

"In our view, there could be further downside risk to consensus earnings estimates should a full-scale trade war break out given the interconnected nature of companies in Singapore," adds Loh.

From a previous year-end 2025 target of 4,115 points, UOB Kay Hian's revised target for the index is now 3,720 points, which is pegged to a PE multiple of 13.4x which is not "view as stretched for a Singapore market that is long on quality defensive names."

Given the fluidity of market conditions, investors ought to pay closer attention to so-called "domestic-focused stocks" with names under UOB Kay Hian's coverage including Centurion Corp, ComfortDelGro C52, Hong Leong Asia H22, Pan-United Corp, PropNex, Raffles Medical Group Bsl, Sheng Siong Group Ov8, SIA Engineering.

For REITs, the picks are also Singapore-focused names such as CDL Hospitality Trust, Far East Hospitality Trust Q5t, Frasers Centrepoint Trust J69u, Keppel REIT, Lendlease REIT, and Parkway Life REIT.

STI drops 1.8% at 11:32 am, Apr 9th.