S'pore market cap surges 38.7% in H1

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(SINGAPORE) The first half of 2009 saw a roaring 38.7 per cent surge in
market capitalisation for the Singapore stock market, even though the gain in
June was more like a whimper.

Market capitalisation in June rose by just
1.7 per cent month-on-month to $545 billion, but still a 10-month high since
last August shortly before the Lehman Brothers collapse sparked a stampede out
of equities.

While the first quarter of the year saw market
capitalisation failing to break the $394 billion ceiling set in January, market
sentiment surged at the start of the second quarter to make up for the oversold
state of stocks. April saw counters gaining 12.6 per cent in market
capitalisation month on month and May recorded a further 23.2 per cent surge to
$535.7 billion, as investors rushed back into the market as quickly as they had
rushed out last year.

'In June,
price-earning valuations and price-to-book-values started to normalise, so the
market capitalisation also started to go back to normal,' said Yeo Kee Yan, a
research analyst at DBS Vickers.

The top five companies in the market
capitalisation league retained their May rankings in June, with only SingTel
seeing a dip in market capitalisation, month on month.

Despite growing
another 13.6 per cent in market capitalisation during H1 2009, UOB slipped from
second place at the end of last year to sixth place, as the other heavyweights
bulked up more in comparison.

Of the top five stocks, Wilmar
International recorded the largest year-to-date increase in market
capitalisation, a 79.9 per cent increase to $32.1 billion. Analysts have been
bullish on the agriculture products firm of late. Last week, OCBC Investment
Research initiated coverage of the stock with a 'buy' recommendation, citing
the upside of Wilmar's China operations.

Of particular note for the
first half of 2009 was Chartered Semiconductor Manufacturing, which vaulted
from 96th place at the end of 2008 to 53rd place, more than quadrupling its
market capitalisation to $1.93 billion. After Chartered's lacklustre 2008, DBS
Vickers' Tan Ai Teng is upbeat about the firm's prospects for Q3 this year,
following the company's 'sharp rebound' in Q2.

While property counters
such as CapitaLand, City Developments and Hongkong Land Holdings held fast to
their rankings from a month ago, only Hongkong Land Holdings saw an increase in
market capitalisation in June as investors dithered over analysts' opposing
outlooks for the sector.

In one camp, analysts believe that the property
market is gaining ground, pointing to the recent increase in residential sales
as reason for jubilation.

Credit Suisse analyst Tricia Song noted in a
report last month that private home sales have been clearing at prices that
were '20-80 per cent better than our assumptions' and believes that such levels
are sustainable on the back of lower-than-expected expatriate outflow and job
losses.

A recent Merrill Lynch report also raised price objectives for
CapitaLand, City Developments and Keppel Land but gave investors pause as it
remained less confident about the sector's sustainability post-2010.

UBS
AG's director of wealth management research Thomas Kaegi was not as buoyant
about the property sector. Mr Kaegi told reporters yesterday that he expects a
'modest recovery' only in Q2 2010.

'I am cautious about the renewed
optimism. It looks like just a pickup in transactions, triggered by
developers' price cuts,' he said.

Looking ahead, most analysts have
placed their bets on bank stocks, believing that the contraction for the
financial sector has come to a halt.

'Bank earnings may increase as home
loans go up,' noted DBS Vickers' Mr Yeo. UBS AG's Mr Kaegi reckons that the
manufacturing sector will be the next to recover, while the beleaguered retail
sector will be the last.

The muted increase of market capitalisation in
June also makes a larger statement about the business outlook for the country.
Experts agree that the worst is over for Singapore, but it will be awhile
before the go-go years return.

'The rest of the year will remain
challenging, but we have seen the trough of the business cycle,' said Mr
Kaegi.

While the market has pulled back from the brink, it is unlikely
to soar to dizzying heights this year.

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