There is less negative pressure in markets following the ECB's and Fed's unlimited liquidity injection. However, for this rally to be sustainable, we need to see less disappointment in headline news, followed by growth indicators turning decisively positive. Our regional strategist sees three key risks in ASEAN as an out-performing region: (1) profit-taking in other markets; (2) lack of sectors to rotate into now that domestic demand sectors have generally out-performed the market; and (3) policy tightening as inflation has bottomed and is increasingly threatened by strong domestic demand and global liquidity.

For the Singapore market, it is only cheap on dividend yield and P/B ratio compared to the rest of the region. Its earnings and ROE outlook are less attractive. Consensus' general Overweight position and the market's relative out- performance could limit further upside. Yield compression and a slower 2H12 are likely reasons to take profit. However, the market will continue to be supported by strong yield plays. Our analyst picks Suntec REIT and FCT. Key picks are the Oil & Gas plays like SembCorp Marine are Ezion. We also like ASL Marine and STX OSV.

It was reported in newswire that Malaysia will consider possible changes to its crude palm oil export tax regime on Friday, 12 Oct12, following talks with Indonesia's Agriculture Minister. This includes limiting plantation expansion to support falling prices. Indonesia's Agriculture Minister, however said that there are no plans for both countries to work together on joint palm oil export tax proposals. To help prevent further declines in palm oil prices, both countries have agreed to work together to manage supplies and work closely on environmental issues. Two possibilities of cooperation with Indonesia were mentioned:

1. Reduce palm oil plantation expansion (e.g. through replanting of palm trees that are more than 25 years old)

2. Increase palm oil use/consumption in Malaysia by promoting biodiesel usage. The same policies had previously been undertaken during 2008-2009 GFC. Pending new policies, there is no change to our forecasts, TP and recommendation on CPO stocks within our coverage.

The same policies had previously been undertaken during 2008-2009 GFC. Pending new policies, there is no change to our forecasts, TP and recommendation on CPO stocks within our coverage.

JES Internationalhas marked its expansion into the offshore support vessel (OSV) market with a new order for a UT 755 LN platform support vessel. The contract for an undisclosed sum came from a new Norwegian customer. This is the first offshore support vessel it has been contracted for, having

built commercial shipping vessels before. Delivery of the vessel is expected to take place at the end of 2014.

Substantial shareholder of Viz Branz, Mr Ben Chng Beng Beng, has disposed 57m shares or 16.06% stake, to Lam Soon Cannery for S$41.9m at the sale price of S$0.735 per share. Subsequent to the disposal, Mr Chng has 19.83% stake in the company.

Retailer Courts Asiahas launched its initial public offering (IPO) for a mainboard listing, with 178m shares priced at 77 cents each. This is the group's second attempt at a listing after an earlier effort in 2010, which was later withdrawn. Courts Singapore was also previously listed on the SGX, before being taken private by Singapore Retail Group (SRG) in 2008. For the $137m IPO, Courts Asia is offering 60m new shares while SRG is offering 118m existing shares. The public offer opens from 9am today and closes at noon on Thursday, with listing on SGX expected to take place on Oct 15. The bulk of the net proceeds from the IPO will go towards its expansion into Indonesia, a market which it pulled out of previously along with Thailand.

The MAS has announced a new regulatory regime to streamline and enhance the disclosure of interests in listed companies, with reporting obligations extended to chief executive officers who are not directors and to interests in foreign companies with a primary listing on SGX. The new measures take effect on Nov 19. Currently, under the Securities and Futures Act (SFA), directors and substantial shareholders of listed companies are required to report to SGX on their interests and changes in interest in securities.

The IMF slashed its global growth forecast and warned things could get much worse if the eurozone crisis persists. The Fund cut its growth forecast for this year to 3.3%, from its July estimate of 3.5%, with Asia still leading the pack of expanding regions while Europe contracts an expected 0.4% this year. Growth will only hit 3.6% next year - lower than the 3.9% predicted in July - as even powerful emerging economies like China, India and Brazil hit the brakes, the Fund said.

Prime office rentals continue to slide in Q3 despite improvement in vacancies. Grade A vacancies fell in Q3 to 6.8% from 7.9% in Q2, according to an industry report. Overall Grade A rent in Q3 2012 fell 3.6% from the previous quarter to $9.13 psf. The largest drops were recorded in the core CBD areas of Marina Bay and Raffles Place, where rents slipped by 2.5% and 3.9%, respectively. Rentals in the City Hall and Marina Centre vicinity fell 1.8% in Q3 after remaining flat in the previous quarter.

US markets retreated ahead of European finance ministers met to discuss Spain's overhaul effort and closer banking cooperation. Stocks should start on a calmer note following yesterday's 31pt sell-down in the STI in reaction to MAS's latest property measures. However, any rebound will likely be tame given a lack of catalyst and as the 3Q results season draws closer.

Source: DBSV