SG Market

SG Market: Wall Street's earnings-driven advance may rub off on Spore shares, with moderation in 3Q10 economic growth not likely to weigh as outcome well-flagged after 2Q10 strong performance. 3Q10 GDP +10.3% yoy vs 2Q10 +19.6%, down 19.8% qoq vs 2Q10 +27.3%. Having ended above 3,200 yesterday for 1st time since May 08, STI resistance now tipped at 3,268 (May 08 peak).

Newsflow generally thin, save for some minor contract announcements with Silverlake securing $30m upgrading project from unnamed SE Asian bank, Ezion JV clinching US$28m vessel-chartering contract & Otto Marine settling contract dispute with GC Rieber Shipping. With the prospects of Fed monetary easing looming, we are seeing abundant liquidity being channeled into equities.
*Expect funds flow to stick with the index names like the banks, rigbuilders (KepCorp, SembMarine).

*City Dev spiked up yday ahead of big upgrade by Credit Suisse, citing sale of MBFC1 has created new price benchmarks for commercial properties in the area. This may trigger re-ratings for other related property plays such as HKLand, SingLand, OUE & Suntec Reit.
*Commodity plays Olam & Noble likely to remain in focus with USD weakness. Plantation stocks saw broad rally yday on expectations of firmer CPO prices following forecast of lower soybean crop in US.

*Spore 3Q GDP rose 10.3% yoy vs +10.8% estimate but shrank 19.8% qoq; remains on track to meet 13-15% growth forecast for 2010. Growth was led by the mfg sector +12.% followed by services sector +10.2%.
*MAS will steepen & widen currency band to curb inflation. SGD breaches US$1.30 to US$1.2909, its highest level since 1981. Companies, which are long SGD but short USD set to benefit. Key gainers are SIA (lower fuel bill & aircraft depreciation), SPH (lower newsprint costs), while ST Engrg & tech companies with significant USD revenue or debt exposure will be hit.

On the stock ratings front:
*City Dev target price raised to $17.16 from $13.18 at Credit Suisse
*SGX target price raised to $11.20 from $9.40 at Credit Suisse & raised to $10.60 from $9.00 at Citigroup
*SIA target price raised to $19.90 from $17.90