Macquarie names under-the-radar stock picks it says can deliver total returns of 24%

[SINGAPORE] While the Straits Times Index (STI) is expected to remain range-bound this year, weighed down by large banks, a “rich field for alpha” is emerging among Singapore’s under-researched small and mid-cap (SMID) stocks, said a Jan 16 report by Macquarie Equity Research.

The research house estimates its non-index top picks could deliver a total shareholder return of 24 per cent, driven by a confluence of favourable factors such as stock market reforms, lower interest rates and a strengthening Singapore dollar.

Macquarie analysts noted in the report: “Dominated by financials and S-Reits (71 per cent of the STI), the Singapore equity market is top-heavy. There is much more diversity under the surface, and we have met a range of interesting under-researched companies over the past two years”.

Top alpha picks

Macquarie initiated coverage on three “alpha” picks – Bumitama Agri, Frencken Group and UOB-Kay Hian – all with an “outperform” rating.

• Bumitama Agri : Macquarie is bullish on crude palm oil prices for 2026 and identified Bumitama Agri as a key beneficiary. As a pure upstream planter, the firm is seen as a direct proxy to crude palm oil’s price recovery. The analysts highlighted the company’s “disciplined agronomic practices” and sector-high yields as key differentiators. Bumitama Agri has a target price of S$1.70.
• Frencken Group : The tech supply chain remains a focus due to the global AI cycle. Macquarie expects Frencken to benefit from a resurgence in semiconductor orders in the second half of 2026, alongside potential upside from its industrial automation and automotive segments. Its target price is S$1.76.
• UOB-Kay Hian (UOBKH): As Singapore’s largest retail broker by sales force, UOBKH is positioned as a direct leverage play on broadening market liquidity and rising retail participation. Macquarie sees the brokerage benefiting from the stock market revival in Singapore, as well as activity in Hong Kong and Malaysia. UOBKH has a target price of S$3.12.

Beyond its new initiations, Macquarie highlighted other top picks leveraging key 2026 themes:

• iFast : Rated “outperform” with a target price of S$11.50, iFast is favoured for its direct leverage to wealth management trends and broadening market participation.
• First Resources : Another upstream crude palm oil producer rated “outperform” with a target: S$2.30, benefiting from the bullish palm oil outlook.
• Parkway Life Reit (PReit): With a target of S$4.90, PReit is Macquarie’s pick for the S-Reit sector. The analysts predict the three-month Sora interest rate will fall below 1 per cent by mid-2026, providing a favourable environment for defensive Reits.

The liquidity tailwind

A key catalyst for the SMID segment is the Equity Market Development Programme of the Monetary Authority of Singapore (MAS). 

Under this initiative, the MAS is deploying up to S$5 billion into strategies managed by Singapore-based asset managers with a strong focus on local listed equities. Of the S$5 billion, S$3.95 billion has already been awarded to nine funds to date.

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Coupled with reforms to strengthen investor confidence and a dual-listing framework with Nasdaq, these measures are expected to crowd in private capital and broaden liquidity beyond the blue chips, the Macquarie analysts said. 

Risks to watch

While the outlook is positive, Macquarie cautioned that market sentiment and liquidity remain key risks. 

“Significant changes in market sentiment might lead to lower liquidity for SMID stocks, and a re-focus into large caps,” the analysts wrote, noting that this flight-to-safety behaviour is often observed during risk-off periods.