DBS overweight consumer sector for singapore share market for 2008 :

Outlook for 2008 stock market
We are Overweight on the Consumer sector for 2008, backed
by strong GDP growth, growing affluence, robust employment
figures and the Olympics in China.

Based on our DBS economists’ estimates, China’s GDP is
projected to power ahead with a growth of 11.5% in 2007 and
10% in 2008F. This picture bodes well for consumer stocks, as it
should continue to spur private consumption in China.

Singapore’s GDP growth is also expected to be robust on a
projection of an 8% and 6.5% growth in 2007F and 2008F,
respectively. Employment growth, the government’s drive to
promote tourism and the completion of the Integrated Resorts (IR)
in 2009/10, should all be beneficial for discretionary consumption.

However, cost inflation is a concern, and as such, we favour
Consumer Goods companies with branding (such as China Sport
International, Hsu Fu Chi and China Lifestyle) and/or are in the
upstream food value chain such as China Fishery Group. We also
like Hour Glass as it rides on buoyant economies in the region,
increasing tourist arrivals in Singapore plus it also has an
undemanding valuation of 8.1X FY08 and 7.4X FY09 earnings
based on the closing price of $1.87 on 17 Dec 07. Peace Mark, a
HK listed fashion and luxury watch retailer recently made a voluntary
general offer for Sincere Watch, its closest competitor, at an
attractive PE of 19.5x on FY08 earnings.

For Consumer Services, our top picks are SIA, SPH and Raffles
Medical as we see these as direct beneficiaries of the strong
economy, robust employment and increasing international
patient arrivals. For S-chips, we also like education plays such as
Raffles Ed for its China and regional exposure.