Market Strategy: According to DMG, STI +6% so far this year but upside would have been greater if not for dismal performance by key stocks like banks, developers, rig builders, telcos. Notes index's ytd gains driven mainly by 5 stocks - Genting Spore, Jardine Strategic, Jardine Matheson, Jardine C&C, HK Land. Excluding these 5 mainly HK-based names would leave the STI with barely 1% gain.
Expects STI to trend down in 2H given net interest margin squeeze on banks, fallout from recent housing-market curbs, depleting orderbooks of rig builders. Suggests defensive strategy with top picks being ComfortDelgro, SCI & M1.