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Wednesday, March 08, 2006

Be very selective on longs

Singapore bourse: Yesterday's price action on the ST Index was
not
indicative of market mood. Market breadth was extremely low with
2.44
stocks declining for every 1 stock gaining. The ST Index had declined
to a
low of 2473, within our stated support at 2470-2475 but quickly
reversed
its losses in afternoon as a handful of index stocks were pushed
into
positive territory. Sing Tel for example was pushed up form $2.62 to
near
day's high of 2.67. The stock however faces significant
resistance at
$2.70.Likewise DBS and SIA rebounded in afternoon session and were the
main
reason behind the index positive close at 2502. We still remain
cautious of
the Singapore bourse and still maintain our sell into
strength
recommendation as the index approaches 2520. At this stage, investors
need
to be extremely selective. Among index stocks, SIA and SPH are the
two
stocks which are still trending strongly and offer decent upside
potential.
SIA could head up towards $15.50 while SPH which had emerged from a
strong
base at $4.20-4.26 could head up towards $4.65. We do not see
any
significant upside for small caps in general and at best they could
base
build while the index heads higher. Interest could also be
restricted to
new issues.




Best Regards

K Ajith

64195411

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