May 5, 2011

SINGAPORE EQUITY
Investment Research

DMG & Partners Research Singapore Private Circulation Only

STRATEGY
Leng Seng Choon, CFA MARKET STRATEGY
+65 6232 3890
sengchoon.leng@sg.oskgroup.com

Joshua Low A trading opportunity post Polling Day

+65 6232 3884
joshua.low@sg.oskgroup.com
The Singapore General Elections’ (GEs) Polling Day will take place this Sat 7
May 2011. Based on the past five GEs, there is no clear historical trend as to
how the STI will perform over a one-month period post Polling Day. However,
when we analyse the STI performance against the percentage of votes won by
the People’s Action Party (PAP), we noted a discernible positive relationship.
Key observations:
• In the 2001 GE, the PAP won 75% of votes, the highest over the recent five
GEs, and this was followed by a 11.9% rise in the STI for the one-month
period post Polling Day.
• In the 1991 GE, the PAP only won 61% of votes (lowest over the past five
GEs), and this led to a 3.1% STI decline over the following month.

Figure 1: STI performance is positively correlated with PAP percentage

winning votes

Source: Bloomberg data & Singapore Elections data

Correcting for external factors, we also analysed the relative performance of

the STI against the MSCI Asia Pacific index. Again, we noted that the STI
typically outperforms if the percentage of votes won by PAP is high.

We believe the results for the coming GE will impact the STI over the next few
weeks. There is therefore a trading opportunity. If one believes the PAP will
win a higher percentage of votes, he should be buying into the current equity
market weakness. Our top picks are ComfortDelgro, Keppel Corp, M1 and
Noble. If one believes PAP will achieve a lower percentage of votes, then he
should be reducing his equity holdings.

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corporate finance or its dealing activities; this report is therefore classified as a non-independent report. Please refer to
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 Figure 2: STI’s relative performance is positively correlated with PAP
percentage winning votes

Source: Bloomberg data and Singapore Elections data

Figure 3: STI did well in 2001 following high PAP percentage votes win

Source: Bloomberg data & Singapore Elections data

Figure 4: Key statistics from the recent five GEs

STI
% change in performance
No. of seats % change in MSCI Asia relative to
% of won by STI 1 mth Pacific Index 1 MSCI Asia
Election Polling votes PAP/total following mth following Pacific Index
Year date for PAP seats polling day polling day (ppt)

1988 3-Sep-88 63 80/81 -4.4% 4.9% -9.3

1991 31-Aug-91 61 77/81 -3.1% 7.5% -10.6

1997 2-Jan-97 65 81/83 3.1% -7.3% 10.4

2001 3-Nov-01 75 82/84 11.9% 2.3% 9.6

2006 6-May-06 67 82/84 -9.0% -10.3% 1.3

2011 7-May-11 ??? ??? ??? ??? ???

Source: Bloomberg data and Singapore Elections data

See important disclosures at the end of this publication DMG Research 2

See important disclosures at the end of this publication
DMG & Partners Research Guide to Investment Ratings

Buy: Share price may exceed 10% over the next 12 months
Trading Buy: Share price may exceed 15% over the next 3 months, however longer-term outlook remains uncertain
Neutral: Share price may fall within the range of +/- 10% over the next 12 months
Take Profit: Target price has been attained. Look to accumulate at lower levels
Sell: Share price may fall by more than 10% over the next 12 months
Not Rated: Stock is not within regular research coverage

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