Citi Strategy

Citi Strategy: Citi has FSSTI Target of 3450 for 2011. Note that although SG may underperform, sees 20-30% upside in selected names. STI target represents 1.78x P/B, +0.5SD above mean, and well below ‘bubble’ 2.3-2.4x levels of past cycle peaks. Top picks: DBS, Keppel Corp, Yangzijang, Genting, ComfortDelGro, M1, AREIT, and Allgreen…

Expect Banks and property segments to be buoyed by liquidity, and ample global liquidity suggests continued SGD strength, low interest rates and buoyant commodity prices. Add that banks have lagged, yet are at record earnings, NIMs look close to bottom and business lending is recovering….

Add that in a low-rate environment, property office values could rise and mass market residential and REITs remain attractive. O&M is seeing a new rig replacement cycle underpinned by a strong demand outlook and firm oil prices….

GDP growth to moderate, but still resilient - GDP growth is expected to moderate
to +5.5% in 2011 from +15% in 2010 but activity remains well above the 2007/08
peak with recent manufacturing and export data, resilient services and new
capacity additions suggesting growth upside risks.