We maintain our STI 3200 objective while noting that the climb will be gradual. Technically, near-term support is at 3088 with a firmer range at 3035-3070 should the STI pullback.

Despite recent actions by the ECB to stabilize the Eurozone crisis, the FED's QE3 and recent recovery signs in the US labour and housing markets, we think investors are likely to continue adopting a generally 'risk-off' stance with only selective interest among beta plays.

The Singapore government announced fresh mortgage curbs to cap upward price pressures caused by low interest rates and fast credit growth. Under the new MAS guidelines, maximum tenure for all new residential property and refinancing loans will be capped at 35 years for both individual and non-individual borrowers effective 6 Oct 2012. In addition, loans with >30 years tenure will face tighter loan to value limits. For individual borrowers -if residential loan tenures are >30 years or if loan period extends beyond the retirement age of 65 years, loan-to-value (LTV) limit will be 40% for borrowers with outstanding residential loans and 60% for borrowers with no existing residential loans. For non-individual borrowers, LTV is lowered from 50% to 40%.

The new rules are aimed at increasing prudency as longer loan tenures amid a low interest rate environment effectively boost purchasers' purchasing power but downside risk is their inability to service mortgage installments when interest rates rise. Over the past 3 years, the average loan tenure for new residential properties have been increasing from 25 years to 29 years and more than 45% of new residential loans have tenures >30 years. Stay defensive ahead of year end; top picks are Frasers Centrepoint Trust, Suntec REIT, CapitaMalls Asia and Wing Tai.

In terms of impact on the banks, it was reported in Business Times that over 45% of new home loans have tenures exceeding 30 years, though banks have not disclosed mortgage loan tenures in their books. Mortgage loans have moderated since Aug-10. Our analyst expects mortgage loan growth to gradually reduce for the rest of the year but supported by drawdown from previous mortgage applications. She forecasts mortgage loans to grow at 10% for 2012. FY13-14F mortgage loan growth would likely reduce further as impact of the new measures kick in. UOB has largest mortgage loan exposure while OCBC's traction from Great Eastern and Bank of Singapore clearly differentiates itself with UOB. Prefer OCBC to UOB.

Global Logistics Properties has sold a 16.7% stake in the total outstanding equity of GLP Japan Logistics Partners (JV with CIC) to CBRE Global Multi-Manager for JPY7.6b (US$98m). The group will hold a remaining 33.3% share in this fund post sale. This transaction will enable GLP to monetise part of its investment and to recycle capital. The group is expected to rake in US$6m from the sale, to be booked into earnings in the next quarter.

OCBC and CIMB Group could be considering bidding for General Electric's US$1.6 bn stake in Thailand's Bank of Ayudhya, according to a report in Business Times. GE's finance unit owns 25% of Thailand's fifth-largest lender. GE sold 7.6% of Bank of Ayudhya to institutional investors last month, and said at the time that it is reviewing "strategic" options for its remaining holding.

CapitaCommercial Trust and CapitaMall Trustannounced a S$34.7m asset enhancement initiative (AEI) for Raffles City Tower, the 42-storey office tower of Raffles City Singapore, and is expected to achieve a projected return on investment of 8.6%. The asset enhancement works will start in November 2012. It will be carried out in phases progressively until 2Q 2014 so as to minimise inconvenience to existing occupiers.

It was reported in Newswire that Malaysia's cabinet had discussed a much-awaited proposal to slash crude palm oil export taxes to 8-10% from 23%. However the cabinet has postponed taking any decision on the proposal; as it needed more time to study the plan, a government official said. Concurrently, it was also reported that the government will soon decide on the proposal to lower taxes to between 8 and 10% from 23% currently.

Resale prices of non-landed private homes rose in the third quarter, even as transaction volumes fell 7.3%. Overall resale prices gained 3.2% to hit a record $1,156 psf, led by a 2.5% m-o-m increase in September, data from the latest SRX Residential Property Flash Report showed. The rest of central region (RCR) posted the strongest quarterly gain of 7.1% for resale non-landed in Q3, hitting an historic high of $1,199 psf. This was followed by a smaller gain of 3% in outside of central region (OCR) to $921 psf, and a muted increase of 0.75% in the core central region (CCR) to $1,738 psf. Resale transaction volume fell 7.3% to 3,296 transactions from 3,555 transactions in Q2.

Source: DBSV