We maintain our view for STI 3150 to hold intact in the current year-end lull with upside bias towards 3290 (13.9x or average FY14F PE). Weighed down by the risk of rising current account deficits and political uncertainties, South East Asian equities have clearly underperformed their North East Asian counterparts in recent months. 

Capital outflow from this region has weighed on Singapore equities. But Singapore remains a safe haven as the country has been enjoying current account surplus and economic growth is picking up. As a result, Singapore equities have outperformed their neighbours.

Within the STI key component stocks, we maintain our positive view on banks as they are a proxy to Singapore?s GDP recovery. Our pick is OCBC. Growth names remain in our radar. Ezion offers the highest growth of 63%, backed by new contracts, charter income and margin expansion. Osim benefits from rising consumption in China while Midas is a recovery play on expectations of more high speed bullet train contracts from China. Goodpack rides on US/Europe recovery.

Amid the current year-end lull, look for companies that tend to pay out good dividend when they announce their 4Q/FY results by end-Feb. Venture Corp tops the list with its once-a-year payout and 6.4% yield. This is followed by Yangzijiang and Tiong Seng that also pays out once-a-year at a 4% yield. Next come China Merchant, which has benefited from better traffic numbers & lower finance costs. China Merchant has a semi-annual payout and 6.5% FY13F yield. (Read Report)