Singapore stock market cheap in P/E terms after recent pullback on increased global risk aversion, but stock-specific factors rather than broad earnings upcycle will increasingly dictate how shares perform, says CIMB according to Dow Jones.

The research house notes 18.2% EPS growth expectation for 2010 “very reasonable” compared with current valuations of 14.9x FY10 P/E, 13.3x FY11 P/E, long-term average P/E of 15.9x; “although cheap in P/E terms against history, our base-case earnings estimates right now assume that problems in the euro zone will hurt at the margin but not derail the global recovery completely. If events prove such assumptions invalid, earnings risks will emerge.”

CIMB advocates investment strategy that considers global growth risks, aligns stock picks “to a more defensive Asian consumption theme”. Cites Keppel Land (K17.SG), Fraser & Neave (F99.SG), Cerebos Pacific (C20.SG), Genting Singapore (G13.SG), SIA Engineering (S59.SG), Cache Logistics Trust (K2LU.SG) among favourites.

Keeps year-end STI target at 3,300. STI up 5.3 points at 2,838.99.