STI's pullback to 3180 last Friday is in line with our view that the index will likely turn choppy heading towards September with near-term support at 3170. Past this choppy period in the near-term, we see STI rising to the 13.9x (average) FY14F PE at 3390 by year-end. We also maintain our view that the correction triggered by QE tapering talk back in May has ended at 3066. Unless fresh macro uncertainties strike, we do not expect a re-test of this level.

Off the 2Q results season, we cut the earnings forecast for stocks under our coverage slightly by 2.5% for FY13 and 1.7% for FY14F. We are now looking at a marginal 1.6% growth for FY13F and a higher 13.4% for FY14F, based on DBSV basket of stocks.

S-REITs are likely to underperform in the current environment where bond yields are underpinned by an impending cut in QE. Among the blue chips, bank stocks have outperformed as loan growth improves and NIM remain stable. Still, a pullback to consolidate recent gains is possible. We see support for UOB shares at $20.90 and that for OCBC at $10.22.

Among the SMCs, we look for recovery names that offer yield as well, such as Venture Corp and Jaya. Venture Corp shares offer a 7% yield and 2H is expected to show improvement with new customer contributions. Our analyst is optimistic of Jaya's transformation into a ship charterer from a builder. Revenue visibility is improving as the group has secured several chartering contracts in recent months. Stock offers 5.7% forward yield.

Banyan Tree Holdings, an operator of spas and resorts, is seeking to expand its presence in Europe and the Americas amid signs that their economies are recovering. The company plans to revive projects in Spain, Greece and Mexico, which it abandoned after the 2008 global financial crisis. Banyan Tree has signed two contracts to run properties in southern Spain, and is in talks to resume a couple of projects in Greece, according to chairman Ho Kwon Ping.

CapitaMalls Asiahas entered into a memorandum of understanding with Changi Airport Group to jointly develop the concept and plans for the proposed redevelopment of the car park site fronting Terminal 1 at Singapore Changi Airport. The Project will involve the construction of a new mixed-use complex offering aviation and travel-related facilities, a wide range of retail offerings, as well as unique leisure attractions.

Joyas International Holdings intends to diversify its business to include a) Education Business in PRC and b) Resources Business. The Group intends to diversify into the business of mining, processing and sale of natural resources (in particular nickel) in Hong Kong, the PRC and Indonesia. In conjunction with the new strategy, it is acquiring 80% stake in China Technical Institution Holdings and 80% stake in Pac Resources Holdings. It is also granting share options as part of consideration for the proposed acquisitions. 

Cedar Strategic Holdings proposed to undertake a renounceable non-underwritten rights issue of up to 3,002.2m new shares at an issue price of S$0.005 per Rights Share, on the basis of one Rights Share for every two existing shares. The Issue Price represents a 37.5% discount to the last transacted price. The group also announced that it has entered into a Framework Agreement with leading global construction firm, China Gezhouba Group, to undertake the Group's future real estate development projects in the PRC as main contractor.

In property news, a small residential site at Sturdee Road, which is expected to yield about 265 homes, has been made available for application under the Reserve List of the Government Land Sales (GLS) Programme. The 99- year leasehold plot, which measures about 65,783.6 sq ft, has a maximum gross floor area of about 230,250.6 sq ft. Maximum building height is 30 storeys, or 150 metres above mean sea level. 

At least a couple of deals in Good Class Bungalow Areas (GCBAs) have been sealed lately. These include a newly built house on Second Avenue that has been sold for $37m or $1,851 psf on a freehold land area of 19,987 sq ft. Another recent deal involves the sale of a 21,388 sq ft freehold vacant site in Leedon Park by a seasoned bungalow trader for $36.88m or $1,724 psf. Activity has started to return to the GCB market after a knee-jerk reaction last month following the introduction of the Total Debt Servicing Ratio (TDSR) framework effective June 29.

New home prices in China continued to climb in 69 of the 70 cities last month. Guangzhou posted the biggest gain, rising 17% y-o-y. Prices in Beijing and Shanghai increased 14% each. All three cities had their biggest gains since the government changed its methodology for the data in January 2011.

US indices fell moderately as investors stayed fixated on how incoming data will affect the FED's intention to reduce stimulus. The moderate decline came as 10-year treasury yields rose to 2.83%, the highest since July 2011.

July new home sales had climbed 5.9% to 896k annualized rate from 846k the previous month. The Michigan consumer confidence index fell to 80 from 85.1 last month, which was the highest since July 2007.

Source: DBSV