We believe the Singapore market has shifted into a more gradual ascend compared to the fast paced climb that lifted the STI by 13% in mid Nov to reach 3320 in early February. Liquidity has pushed STI's forward PE up to its average of 14.1x, and has the potential to lift the index closer to 3600 by year-end based on FY14F earnings. While temporary choppiness is expected in the near term, we maintain our view that equities will rise further in 2013, with momentum picking up in 2H. We expect earnings to trough and further re-rating will require earnings upgrades.

In terms of stock picks, we prefer to go for earnings resilience or yield plays for the Big Caps. We like Global Logistics (earnings stability and acquisition growth), ComfortDelgro (stability and yield play), Hutchison Port (stability and yield), and Keppel Corp (earnings visibility and yield). Key sectors within the Small-Mid Caps sector which outperformed big caps were capital goods (within the industrial sector) - oil and gas equipment and construction equipment sectors, while small cap REITS outperformed its large cap counterparts with 16% earnings rise, mainly from acquisitions boosting its low base. We expect the recovery momentum in the offshore services vessel sector to gain traction, as contract backlog has been building up momentum in 1Q13. Top picks are Ezion and Kreuz, niche players in a global market. Construction equipment and supply players will benefit from robust demand for infrastructure projects in this region but will be less affected by curbs on foreign labour - our picks are Tat Hong, Pan United, Tiong Woon and Sin Heng. We picked REITs that offer superior growth prospects - Fraser Commercial Trust (CAGR of 19%), Mapletree Commercial Trust (CAGR of 6%) or REITS with a strong acquisition pipeline- Cache Logistics and Far East Hospitality.

DBSV Research issues an Equity Explorer report on Tiong Woon with fair value of S$0.45, offering potential upside of 29% from current price. Tiong Woon is a one-stop, integrated services provider of cranes and heavy lifting equipment. It is leveraging on the buoyant offshore market and the increased infrastructure spending in Singapore as our population grows. About 10% to 20% of Tiong Woon's FY12 revenue comes from the construction sector in Singapore. Tiong Woon is expected to turnaround this year on the back of improving industry backdrop. The last two quarterly results have also shown significant improvement. We believe a 9x FY14F PE is fair, vs target multiples of 12x for Tat Hong and 11x for Sin Heng.

Singapore Press Holdings is planning an initial public offering of its properties in Singapore. The planned listing will take the form of a real estate investment trust. SPH did not detail which properties will be included in the REIT or the size of the planned IPO. The company owns retail malls including the Paragon Shopping Mall in the Orchard shopping district.

Otto Marine has entered into a shipbuilding contract with a renowned Indonesian operator to build two units of 5150 HP Anchor Handling Tug Supply (AHTS) Vessels for an agreed price of US$27.8m.

Asiatic Group is placing 50m new shares at an issue price of S$0.065 each. The issue price represents a discount of approximately 7.14% to the last weighted average price. The net proceeds of about S$3.2m will be used to fund current energy projects and for working capital purposes.

Speculative demand for industrial properties has eased, following the seventh round of cooling measures, arresting the problem of spiraling prices. Demand for strata factory units slipped from 133 in the 28-day time-frame before the introduction of the seventh cooling measure to 118 in the period after. The monthly average demand for strata factories also fell, to 173 transactions in the period from Jan 12, after hitting a high of 321.8 transactions per month on average in the second half of 2012 to Jan 11, 2013.

China's trade data surprised on the upside in February, with exports rising more than 20% last month, a positive sign for China and its trading partners. Exports jumped 21.8% y-o-y to US$139.4 billion in February, while imports fell 15.2% to US$124.1 billion. As a result China posted an unexpected trade surplus of US$15.3 billion.

Inflation in China rose to 3.2% y-o-y in February, up from 2.0% in January, to a 10-month high. Month on month the consumer price index rose 1.1%, its highest increase in 13 months, with food prices a significant driver of the rise.

China's producer price index fell 1.6% y-o-y in February. The fall was deeper than the 1.5% decline forecast by the market. Month-on-month, producer price index rose 0.2%, a sign that pricing in China's industrial sector is beginning to stabilise as the recovery in China gathers pace.

China unveiled a government restructuring plan, cutting cabinet-level entities by two and dissolving its powerful Railways Ministry, as the country's new leaders look to boost efficiency and combat corruption. The reforms mark the biggest reduction in ministries since 1998 when then-premier Zhu Rongji oversaw the overhaul of the State Council, and coincides with growing public concern over transparency and overlapping bureaucracies.

Source: DBSV