hike and a guidance that the S$ will strengthen further.S$ appreciation from here. At the same time, the MAS 1) re-centred its exchange

• Winners from a strong S$ are Property, Media, Gaming and Banks.

Beneficiaries of a stronger S$ are 1) S$-asset plays; 2) businesses with domestic

revenues and US$-costs. Banks are less clear proxies to the trend of S$-strength

(since interest rates will be capped), they gain from a revival of loan volumes and

fee opportunities but S$ interest rates will be capped. As yields get depressed, we

think yield plays will also gradually grind up. Telcos are also more mixed as Starhub

and M1 will be benefit, but SingTel has translation negatives. Similarly, for

Transport, SIA and SMRT gains but ComfortDelgro and NOL have negatives.

•

S$ stand out as 1) exporters; 2) businesses with US$-based revenues and

domestic cost base; and 3) companies who have expanded operations to countries

with weaker currency prospects.Losers from a strong S$ are Conglomerates and Tech. Losers from a stronger

Figure 1: Stock comparisons

Target Core 3-yr EPS

from 3,160 to 3,300.

the Singapore government released sterling 1Q10 GDP figures (+13.1% yoy,

+32.1% qoq), the strongest sequential growth in three decades. Our economist

promptly raised his 2010 real GDP forecasts from 6.5% to 9.4%. As one of the most

open economy, Singapore has been the first to go into recession and also shown

the strongest momentum on the rebound. Our new FSSTI target is based on a

bottom-up methodology and now implies 15.2x CY11 P/E, similar to implied 15.1x

P/E earlier in December. This reflects the earnings upgrade in cyclicals we have

seen in the past 1-2 months.