Thursday, June 28, 2012

OCBC upgrades residential sector

OCBC Research has rated the residential sector “Overweight” and expects mass market prices to remain high.

“Our analysis of household income and system liquidity shows that mass-market prices will likely stay supported in FY 2012 and we forecast prices to increase by zero percent to five percent.”

As for the high-end market, OCBC said that the latest cooling measures will likely cause a 10 to 20 percent drop in prices over FY 2012.

“We see value, however, in high-end property relative to the mass-market segment and other comparable cities, and also judge that luxury developers’ equities have baked in excessively pessimistic expectations.”

Due to its mass market exposure, City Dev’s rating was upgraded to ‘Buy’ from ‘Sell’, with its increased fair value (FV) estimate sitting at S$11.53.

At the same time, CapitaLand has a ‘Buy’ rating with an FV of S$3.21 while Keppel Land has a ‘Hold’ rating and an FV of S$3.32.

With its limited land bank, UOL has been downgraded to ‘Hold’ with an unchanged FV of S$4.80.

Meanwhile, OCBC noted that U.S. stocks fell as investors raised concerns over Europe. Spain has formally asked for assistance in its banking system while Cyprus intends to ask for financial aid.

Singapore will likely feel a few effects of these global market trends.

With the more than one percent retreat on Wall Street overnight and the poor Nikkei start, down 0.4 percent, local sentiment is expected to weaken.

“As such, the STI which fell nearly 0.5 percent yesterday could slip further towards its 3-week uptrend support and 2800 immediate support for a test today,” said OCBC.

If these supports are breached, the index could fall “quickly towards the 2760 (minor trough) subsequent support thereafter”.

“On the upside, the immediate resistance is still pegged at the 2862 minor peak, as the next vital obstacle lies at the 2900 key support-turned-resistance.”

View the original article here

Source From Property Guru

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