We stick to our view that while STI has touched a low at 3065 (13.1x blended FY13/14F PE) in June, near-term upside should be capped at 3246, which is slightly below the 13.9x (average) blended FY13/14F PE level at 3266. Concerns about the impact of a China slowdown on Asia, STI's low single digit FY13F EPS growth and uncertainty surrounding QE tapering are likely to limit the current rebound upside in the near-term. Time, or a return in confidence that growth is returning, is needed for STI to sustain a rise above this level. Project the 13.9x (average) 12-mth forward PE though, positions the STI at 3430 by year-end.

China economic data releases at 10am this morning is likely to set the tone for the day - 2Q GDP (consensus 7.5%) June industrial production (consensus 9.1%), June FAI ex-rural (consensus 20.2%) and June retail sales (consensus 12.9%).

Ezra Holdingsreported disappointing core net loss of US$58m in 3Q13. Write-offs on legacy projects and project delays lead to negative contribution from subsea. Order win momentum sustained but execution risks will likely overshadow. Our target price is revised down to S$0.90, based on 0.8x P/BV for Ezra's core operations, down from 1.15x P/BV earlier, to account for lower margins and ROEs as well as risks associated with a highly geared balance sheet amidst a potentially rising interest rate environment in future. Downgrade to Fully Valued.

In a BT article, MAS is said to prohibit preferential rates for property loans to clients buying properties. This rule is said to have come into effect from 29 June, at the same time of the introduction of the Total Debt Servicing Ratio ruling. Under the non-preferential rate ruling, financial institutions should not offer any property-related services to customers except for the granting of property loans including not sending property advertisements to their customers or enter tie-ups with property agents/developers. The intent of the above measures is to ensure loan evaluations remains objective. These measures would continue to introduce more caution into the residential market. We believe volumes would be more impacted then ASPs as developers would have holding power with strong balance sheets.

UOB is proposing to offer Singapore Dollar-denominated non-cumulative non-convertible perpetual capital securities. Subject to market conditions, the proposed transaction is expected to be launched today. The net proceeds from the offering are intended to allow the issuer to redeem its outstanding Preference Shares which are callable on 16 September 2013.

Keppel Logistics (KLF), a subsidiary of Keppel T&T, has acquired a 60%-stake in Foshan Sanshui Port Development in Foshan City, Guangdong Province, China for approximately RMB166mil. The other 40% is held by the Sanshui local government. This project will be KLF's second integrated port logistics facility in Foshan City. The 22.7-ha port has a 160m long multi-purpose berth and over 5,000 sm of warehousing space. This will increase KLF's total warehousing capacity to 81,000 sm. In operation since 2000, Sanshui Port has an annual handling capacity of approximately 300,000TEU. The foregoing transaction is not expected to have any material impact on the NTA and consolidated earnings per share of Keppel T&T for the current FY.

Tiong Seng Holdingshas signed a joint-venture agreement to set up a precast plant in Yangon, Myanmar. The total annual capacity of the precast plant is 55,000 cubic metres when fully completed. Tiong Seng will take a 30% equity stake in the JV that is investing $10m in the plant. It will first supply precast components to a potential government affordable housing project.

CapitaRetail China Trust (CRCT) has entered into an agreement to acquire Grand Canyon Mall in Beijing. The mall was awarded to CapitaMalls Asia through a tender at a price of RMB1.74 bn. This follows CRCT exercising its right of first refusal under an existing agreement, to acquire completed shopping malls located in China which are identified and targeted for acquisition by CMA or its subsidiaries. Based on the purchase price, the mall currently has an annualised net property income (NPI) yield of about 3.5%.

China's finance minister has signalled that Beijing may be willing to tolerate economic growth in the second half of the year significantly below 7%. For the full year, growth could be 7% this year. That would mean growth coming in below the government's official target of 7.5%.

In property news, just 50-plus units have been sold at Vue 8 Residence, a 99-year leasehold project in Pasir Ris. Market watchers attributed it to the general air of caution as well as the longer bank loan approval process under the new total debt servicing ratio (TDSR) framework that took effect on June 29. The average prices of transacted units are in the $980-1,050 psf range.

Better-than-expected earnings by Wells Fargo offset a reduced profit forecast by UPS as US markets finished modestly firmer. Equities fluctuated following mixed comments by FED officials regarding tapering time table. The Fed Bank of Philadelphia President, who opposed the central bank's current round of asset purchases, said the Fed should begin tapering in September. However, the Fed Bank of St. Louis President said the central bank shouldn't cut back until inflation accelerates toward the Fed's 2 percent goal. 

Source: DBSV