CIMB Market outlook Strategy - Accelerating earnings momentum

Maintain OVERWEIGHT with higher index target of 3,230 from 2,950 previously. We maintain our OVERWEIGHT call on the JCI with a higher index target of 3,230 from 2,950, still based on a bottom-up approach, implying 17x and 14x CY10-11 earnings. This comes on the back of a 3-5% earnings upgrade chiefly driven by robust 4Q results and, in part, by improving macros. While the index new high and its P/E's parity with its 3-year MA suggest the market may have priced in high expectations, we view an OVERWEIGHT is supported by a still modest growth forecast and narrowing yield spread over bonds. We see a potential near-term catalyst coming from earnings upgrades, likely following the 1Q result season, while declining capital cost remains a mid-term justification for further multiple re-rating.