Singapore shares declined, led by losses in commodity companies such as Wilmar International Ltd, as investors turned cautious ahead of earnings announcements for the last quarter of 2012.
The benchmark Straits Times Index was down 0.2 percent at 3,210.95, extending Monday's losses. The MSCI's broadest index of Asia-Pacific shares outside Japan lost 0.7 percent.
Palm oil firm Wilmar fell 2.8 percent to S$3.50, while commodities trader Olam International Ltd lost 2.1 percent to S$1.605.
CIMB Research expects China-related stocks to continue to perform strongly, riding on hopes of a recovery in the second-largest economy in the world.
"There is little reason to doubt that the STI cannot surpass that post-global financial crisis high, now that financial markets look unlikely to breakdown in a big way," said CIMB, which has a year-end target of 3,316 points for the STI.
Its top picks are companies with significant exposure to China, including CapitaLand Ltd, which is Southeast Asia's largest property developer, lender DBS Group Holdings Ltd and Wilmar.
1417 (0617 GMT)
(Reporting by Charmian Kok in Singapore; Editing by Prateek Chatterjee; firstname.lastname@example.org)
14:07 STOCKS NEWS SINGAPORE-Private home rents may fall by up to 5 pct - DTZ
Property consultant DTZ expects rents of Singapore's private residential units to fall by up to 5 percent this year compared with a slight rise in 2012 due to a large oncoming supply of new flats and slowing population growth.
Singapore's home prices and rents have remained firm despite government efforts to cool its red hot housing market, buoyed by strong investor interest as a result of low interest rates and a tight labour market.
DTZ estimates that around an average of 19,225 private homes will be completed per year from 2012-2016, sharply higher than an annual average of 9,136 units in the previous 10 years. The bulk of the new supply will also be in the suburbs, which will create more pressure in those areas, the property consultant noted.
"This increase in supply will also be exacerbated by slower growth in the non-resident population as a result of government measures to tighten foreign labour. Vacancy rates have already been rising and as a result of the supply, we expect rents could fall," said DTZ's associate director of research, Lee Lay Keng.
She expects private home prices to remain flat or rise by up to 2 percent this year. Based on the government's preliminary estimates, prices of private homes grew by about 2.8 percent in 2012.
"Even with six rounds of cooling measures, purchasers' demand tends to bounce back after two to three months. Low interest rates and high employment will continue to support demand," Lee said at DTZ's property seminar.
As a result, Lee said more government measures could come that may include restrictions on renting out public housing units, raising down payments for buyers purchasing their second or subsequent homes.
Singapore's largest residential developers include CapitaLand Ltd and City Developments Ltd, whose shares have outperformed the broader market in 2012. 1348 (0548 GMT)