SG Strategy: Nomura has SG Strategy Report. House generally positive about the outlook for mkts and more prepared to add to positions. Note that a strong currency, reasonable valuations and negative real interest rates will likely support SG’s mkt outlook in 2011. Expect GDP growth to slow to 5.3%, which is consistent with SG’s long-term sustainable growth…..
Add that greater cooperation in ASEAN will improve trade and FDI flows, while better SG-Malaysia relations could accelerate cross-border investments. For sectors….
1) Bank margins remain a concern, investors are hesitant about SG banks given margins outlook. A shift in sentiment could come when investors see that interest rates have bottomed, esp if MAS were to maintain its current stance on the SGD. House top picks are OCBC and DBS, Neutral on UOB.
2) Commodities: Strong earnings outlook should help rerate upstream names, House have Buy call on Noble given strong earnings momentum.
3) Offshore: Outlook looks overcrowded, but note that order flows will likely remain strong, underpinned by semi-submersible and Petrobras orders.
4) Telco: Note that capital management might be on the cards, with potential for Singtel of a surprise special div when Co announces its results in May.
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