Correction in stocks provides selected buying opportunities: analysts

SINGAPORE : Amid the market volatility, analysts say they expect the jitters to remain for the next few weeks but they do not see the recent sell-off as the end of the bull cycle for stocks.

According to some market-watchers, the correction is presenting buying opportunities in certain sectors.

Investors in the region remained nervous on Tuesday after the sharp sell-off of the previous session on growing concerns over the US housing credit crisis.

There was also caution ahead of the US Federal Reserve's meeting on interest rates.

Analysts say they do not expect the markets to calm down any time soon.

They expect the markets to remain nervous and volatile at least for the next few weeks but most are optimistic that this is not yet the end of the bull cycle.

Some analysts say investors should not give up on equities just yet, but exercise caution.

Christoffer Moltke-Leth, Saxo Capital Markets' senior manager and head of sales trading, said: "I think the Singapore market is quite resilient. The index starts to look very well supported around the 3,150 area.

"If you see a further 6 maybe 8 per cent correction, it will be an excellent buying opportunity. I don't expect that much, actually, because if you look at the banks, they have some collateralised debt obligations (CDO) exposure but they are not nearly as exposed as other companies in the region."

According to market watchers, strong fundamentals in the economy and strong profit announcements here and around the globe would also help prop the market.

Loh Hoon Sun, Managing Director, Phillip Securities, said: "In Singapore, the banking sector is always a good sector, although the banks here are also in some ways involved in this sub-prime loan through their CDOs. But I think their exposure are quite small.

"I think (the) banking sector will continue grow, especially with the recent selldown in the banking stocks. Oil and gas, for example, marine sector, will continue to be good, with the high oil price."

The STI is now up more than 10 percent so far this year.

Some analysts are forecasting a further upside of about 5 per cent by the end of the year. - CNA/ch

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