THERE is plenty of pessimism around the world about shares and the economic picture in general, but a growing number of experts are citing Singapore as the bright exception.
The local stock market is on the favoured lists of regional strategists, with Swiss bank UBS recently tagging it with "most preferred" status among Asia-Pacific bourses.
Credit Suisse has also deemed Singapore, along with Thailand, as its preferred South-east Asia market.
That the benchmark Straits Times Index (STI) has gained more than 15 per cent this year is testament to its appeal in a weak global environment.
Sweeteners are aplenty - the rich pickings of high dividend stocks, undemanding valuations, a strong Singapore dollar, low interest rate environment and a market flush with liquidity.
Singapore firms are also much better capitalised today and so better prepared for any storm that might lie ahead.
Yet risks remain, chief among them being a collapse of the 17- nation euro zone. The economic recovery in the United States remains anaemic and a hard landing of China's economy is still possible.
"Yes, the global economy is slowing," said Mr Kenneth Ng, CIMB Singapore's research head.
But he pointed out that the STI is trading below its historical average although it is hovering at a one-year high.
"Almost everyone is positioned for the eventual 20 per cent crack in equity prices before biting but what if that day never comes?" added Mr Ng.
The STI's rise this year has been far from smooth, punctuated by periods of panic selling. It added 14 per cent over the first quarter, slowed in the second and kicked off again this quarter.
Mr Kelvin Tay, UBS Wealth Management's regional chief investment officer, expects the "rocking back and forth" of Asian capital markets to persist over the next few quarters depending on how the US economy, the euro zone debt crisis and the Chinese economy pan out.
"Nothing has changed to suggest that the Asian capital markets are likely to break out of this mode," said Mr Tay.
However, local firms have strengthened their balance sheets to fuel expansion and have been active in capital management.
Citi Research noted: "The silver lining is that Singapore's listed firms are generally better capitalised now (than) just before the global financial crisis, leading some to explore equity buybacks as valuations receded to lows in early June."
Eight of the 30 STI constituent stocks have conducted share buybacks this year, led by Olam International, which bought shares worth $97 million over the first six months.
Buybacks send a positive signal to the market as they reflect the firm's belief that its shares are trading below their intrinsic value. They also result in increased valuations of the outstanding shares, lending the stock some price support.
UBS said the Singapore equity market offers one of the highest dividend yields in Asia thanks to the increased listing of high-dividend yield stocks such as real estate investment trusts (Reits) and business trusts in recent years.
Investors flocking to these stocks, however, have made them a tad pricey, particularly the Reits and telcos.
Citi Research suggests that investors evaluate other firms with better valuations for a more favourable risk/reward profile.