Left Brain Right B - the DBS Vickers Securities Equities Research

Regional Equity Strategy 4Q 2009
Strategy Overview: Asia Equity
Asia Equity
In limp mode
The end of US recession in June sealed the end of the
financial crisis in our view and we continue to stay on the
positive side in the fourth quarter. At the very least,
investors can expect 7% return based on an average
quarterly performance, in view of the still positive
momentum. Longer term, we are looking at index gains
of close to 18% by end of 2010. We recommend staying
invested.
We acknowledge that Asia's valuations are getting stretched and that investors
are increasingly concerned about the withdrawal of stimulus packages and
formation of asset bubbles in Asia. Given the strong rally in the last six months,
these worries may serve as reasons for profit taking. However, support levels
using P/B at one standard deviation, suggests that the correction may not be
severe. We recommend portfolio re-balancing to exploit the opportunities and
mitigate risks for better upside this quarter
Export-oriented economies and markets with higher Industrials and Technology
exposure will benefit more from the upturn. We recommend Overweight in
Singapore, Thailand, Korea and Taiwan. These markets are also laggards where
valuations are still attractive. Hong Kong and China are downgraded to Neutral
from Overweight over higher volatility arising from uncertainty over forthcoming
macro policy changes in China. We reduce Indonesia and India by one notch to
Neutral and Underweight respectively. These two markets are the best
performing markets this year. We recommend taking profit to switch into
laggard markets. Malaysia remains an Underweight
Joanne Goh • (65) 6878 5233 • joannegohsc@dbs.com
Page 6
www.dbsvickers.com
Refer to important disclosures at the end of this report
sa: TW
"This report has been re-printed with permission from DBS Group Research (Regional Equity Strategy) of DBS Bank Limited" disclosures on page 37 of this report