Standard & Poor's Equity Research Upgrades Energy Sector to Overweight from Marketweight

Singapore, August 04, 2006.

Standard & Poor's Equity Research, the leading provider of independent equity research, has upgraded its recommendation on Asia's Energy Sector to Overweight from Marketweight, following the increase in its 2006 and 2007 crude price forecasts (WTI) to US$72/bbl and US$76/bbl from US$68/bbl and US$66/bbl.

The significant increase in projections comes on the back of recent developments including a pick-up in global demand, especially from China, and an update from Global Insight which revises expectations for crude prices to average US$80/bbl this winter and not fall below US$70/bbl until 2009.

Standard & Poor's Vice President of Equity Research, Ms. Lorraine Tan, said, "We believe downside risk is relatively low at present with most stocks facing potential earnings upgrades. The valuations of companies with upstream assets, namely PetroChina, Sinopec and CNOOC appear to factor in a long-term average crude price of around US$40/bbl. We believe that the industry realizes the potential scarcity is possibly not reflected in current valuations, and this is likely to lead to more mergers and acquisitions."

"We are also keen on the oil support services segment, especially those in drilling. Stocks we like include China Oilfield Services Ltd. and Malaysia's SapuraCrest Petroleum," she adds.

Standard & Poor's Equity Research has also downgraded its view on Asia's Technology Sector given recent signs of excess inventory across the semiconductor industry. Both Taiwan Semiconductor Manufacturing Corp. (TSMC) and United Microelectronics Corp. have indicated a higher inventory level of PC-related chips. "Nonetheless, we continue to favor TSMC as a defensive play in the cyclical downturn in the industry, due to less margin impact compared with those for its peers," said Ms. Tan.

Concluded.

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