Singapore-listed palm oil stocks stand to gain as prices rise, ESG risks ease

Some could also benefit from further capital inflows as part of MAS initiative

- Kang Wan Chern Deputy Business Editor

decades, many investors have steered clear of oil palm plantation stocks in Malaysia and Indonesia owing to environmental concerns, which posed financial and reputational risks. But a rollback of rules under US President Donald's Trump administration could ease the environmental, social and governance (ESG) constraints on the sector.

(PHOTO: REUTERS)

Plantation stocks, which have lagged behind rising palm oil prices for much of the past decade, could make a comeback as tighter supply and easing environmental, social and governance (ESG) risks draw investors back.

Some counters could also benefit from further capital inflows in the months ahead, as selected asset managers prepare to deploy funds into promising Singapore stocks as part of a government-led effort to boost the local stock market.

In an Oct 2 report, Aletheia Capital analyst Nirgunan Tiruchelvam noted that tighter crude palm oil (CPO) supplies and strong demand from Asia are expected to drive up prices, with India set to increase palm oil imports and China likely to continue buying as its economy recovers.

Combined with volatile weather patterns such as El Nino, global palm oil supplies could fall to a multiyear low by 2027, pushing prices even higher, Mr Tiruchelvam said.