STI May Rise To 2850 If Troubles Averted - UBS

UBS says Singapore market may avoid repeat of its Asian crisis tumble as long as governments act to stop credit troubles evolving into full blown economic crisis. Broker compares current STI correction to performance in 1998-1999 Asian crisis, says STI may recover to around 2850, on similar PE to past recessions, if strong policy responses from Asian governments avert crisis. But warns if full blown economic meltdown occurs, STI could match decline seen in Asian crisis, which would see it head down to 1500. Notes STI down 43% so far from Oct. 2007 peak vs 63% correction seen in Asian crisis. Advises investors to remain defensive, stick to high quality big caps, stocks that have consistently shown robust free cash flows and return on capital.