S$100 online at httpwwwbusinesstimescomsg A SINGAPORE PRESS HOLDINGS PUBLICATIDr

Fastest recovery on record is cause for concern Sentiment index reaches heady pre-crisis levels of Q3 2007

By TEH HOOI LING write-ups of the ING invesshy egiest Markus Rosgen the real economy it is no surshy[SINGAPORE] While the jushy tor sentiment index was market recovery weve prise that earnings revishyry is still out on whether the that the index has reached seen this year has been the sions have shown the recovery we are seeing toshy the heady pre-crisis levels fastest in percentage terms strongest recovery since dashyday will be V or a W of the third quarter 2007 since the inception of Citis ta began in 1990 shaped investors are beshy That was when the outshy database in the mid-1970s Earnings revisions he coming as euphoric as they look was considered ulshy In valuation terms this noted have moved beyond were during the height of tra-rosy and the Dow Jones has also been the fastest reshy those that followed the the stock market boom in Industrial Index was at covery on record and the 1990 recession the 19978 the third quarter of 2007 - 13895 points en-route to one which has discounted crisis the 2001 recession which is worrying some hit 14164 points just 10 the furthest out The and are above both the market observers days later In Singapore price-to-book value today 2000 and 2007 market

Last week International the Straits Times Index endshy of 2x finds itself at the same peaks Netherlands Group (ING) a ed at 364541 on Sept 28 level as year three or four It is hard to see how it global financial institution 2007 and climbed to a of the last six recoveries is going to get better for based in Netherlands reshy record high of 383119 on since 1970s observed Mr earnings revisions from leased its ING Investor Oct 11 2007 Rosgen in a recent report here In fact we are startshyDashboard Sentiment Inshy So has investor sentishy On the earnings front it ing to see the first signs of dex for 13 markets in the ment run ahead of fundashy was a similar story Earnshy downward revisions to Asia Pacific mentals Noted a savvy prishy ings did not decline as earnings said Mr Rosgen

Almost all Asian counshy vate investor The numshy much during this cycle as But the good news is we tries reported consecutive berssuggest strongly we they did during the 2001 cyshy are entering a favourable improvements in investor are at or close to a cle the 199798 cycle or period in terms of sentiment during ~he secshy short-term top the 1980s recession So year-on-year comparisons ond and third quarters But Indeed according to Citishy with markets antiCipating a This time last year a lot of a fact that escaped most groups Asian equities strat- vigorous recovery in the economic activities had al-

CAD probes transfer of millions ~----=

Hang Seng (RHS)

co REGN NO 198402868E MICA (P) 123082009

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most ground to a halt So it earnings revisions make it is nearly impossible for hard to see further year-on-year numbers to near-term upside n he conshyget worse in the next few cluded months Export growth and Daiwa Securities 5MBC export prices should be posshy analyst Tham Mun Hon alshyitive from now till early secshy so noted that the Asia Pacifshyond quarter 2010 ic region ex-Japan has

But the snag is at 21 been the first to emerge times book and 169 times from the global slowdown mid-cycle earnings much But we believe most of the of that expected improveshy good news has been priced ment is already in the price in and that funds in ow is of Asian equities Market likely to remain quite weak would need to give some unless we see a further up shyperformance back in order grade of the regions ecoshyto move higher Negative nomic growth outlook

Monday October 19 2009

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Gabriel Yap senior dealshying director at DMG amp Partshyners Securities however takes a different view He believes Asian market valushyations are still not over-stretched The quality of the earnings of big cap stocks is good Meanwhile small cap stocks still lag the general market in terms of valuation he added

Hut purely from stand point of market prices where do we stand today The Dow Jones Industrial Index crossed the psychoshy

logically important 10000 level last week for the fIrst time in more than a year Still it is 30 per cent off its October 2007 peak Singashypore and Hong Kong are about 20 to 25 per cent off their 2007 peaks while Chishyna is still down by a whopshyping 45 per cent

But given that we are supposed to have just gone through the worst crisis since the Great Depression perhaps this is as good as it gets or can get one year on

• BT 1019 2009 Fastest Recovery on Record is Cause for Concern
• BT 1019 2009 Fastest Recovery on Record is Cause for Concernpdf