STI to hit new high

Some of the reasons that I have turning bullish on our STI market, going forward into 2008:

1) Our econonmy should be able to achieve 7.5% growth to 8% growth for 2007.

2) According to our MTI, S'pore economy should be expanding again at 4.5% for 2008. S'pore should expand by another 4% to 5% for 2009 despite a possible U.S recession in 2008. 2008 & 2009's growth supported by the IRs prjects, Jurong Island projects, more private & public housing projects in 2008 to 2009.

3) Contrary some bearish expectations, our corporate earnings should be still growing by 3% to 5% for 2008, lead by banks, property & Oil & Gas companies.

4) They are full of spare/excess liquidity in our banking system. According to recent MAS official report, our local residents deposits has risen to $232billion in Oct 2007. All this are excess funds/excess liquidity not invested in stock market yet. This figure should rise further in Jan 2008 when all employees receive their year end bonus by lastest Jan 2008.

Please note that stock markets are driven by liquidity also, beside fundamentals.

5) On a global scale, the spared/excess liquidity by the Soveriegn Wealth Funds (SWFs), other Oil Exporters, China & S'pore Govts, could easily exceed USD7 trillions, should be much more. Not forgetting, the Oil exporters will get richer in the next 12 months to 24 months as long as Nymex stay above USD70 for the next 12 to 24 months. Saudi's SWFs alone, already USD900billion easily.

6) What the SWFs is doing to rescue to U.S. banks now, is not even 10% of their SWFs. Hence, the U.S. banks should be prepare for any possible "hostile takeover" by the SWFs, if the subprime mess get worse.

7) Decoupling is already happening, otherwise Dow Jones should be 8,700 by now.

Please note that i am only 80% confidence that STI would hit 4100 by April 2008. My confident level would only increase to 90% if Dows would drop further to 10,500 in 2008.

Sell Dows & buy STI market is my strategy for 2008. STI may have 30% to 40% chance to hit 4410 by Dec 2008.