CIMB Research raised its rating on Singapore stocks to overweight from underweight, and highlighted inexpensive valuations in the offshore marine sector.
Singapore stocks, being more exposed to external economies and markets, stand to benefit from the improving macro environment, with better-than-expected employment and production figures from the United States, the brokerage said.
"Singapore has been an underweight for some time and with a recovering growth and return-on-equity trend, it is time to put the market back into the spotlight," CIMB said in a regional strategy report. It downgraded Thailand to neutral and Malaysia to underweight and retained its overweight rating on Indonesia.
It said Singapore has also been a significant underperformer since the peak of 2007, and valuations remain cheap despite the run-up in recent months.
The benchmark Straits Times Index has gained 12 percent this year, but underperformed markets in Vietnam, Philippines and Thailand.
The broker's ASEAN 4-Model portfolio includes Singapore-listed offshore vessel builder STX OSV Holdings Ltd , and Keppel Corp and it has an outperform rating on both stocks.
(Reporting by Charmian Kok in Singapore; email@example.com)