(SINGAPORE) Third-quarter earningscould signal the upswing of the pendulum, as analysts scour for signs that recovery in corporate Singapore is on its way.

But the bounce in earnings this time is not expected to beat the sharp recovery following the 1998 Asian financial crisis, analysts note.

'It's more about the general impression than the absolute numbers,' said Chan Tuck Sing, dealing director at UOB Kay Hian.

'People would be looking for some evidence that corporate performance has bottomed out and has shown some improvement,' he added. 'If a company reports earnings that are down on a year-on-year basis, that's no big surprise. But if they report that things are looking better, orders are coming in, then that will be perceived positively.'

Chua Hak Bin, head of Singapore research at Citi, expects a V-shaped earnings recovery in the coming quarters, mirroring the economic recovery.

He expects recovery in earnings per share (EPS) to sit between the 178 per cent jump in EPS in the 12 months from the trough in the 1998 Asian financial crisis, and the 57 per cent growth in 2001 following the dotcom recession.

'The earnings recovery from this recession will likely be strong, beating consensus expectations, but may not be as sharp and quick as the 1998 episode,' he said. 'Export recovery is weak and the property price recovery at the high end has been more modest.'

Banks will be reporting earnings on the back of a growth in bank lending to businesses in August over July, after nine straight months of declines.

Total consumer loans continued to grow in August, thanks to the surge in housing loans.

But while mortgage loans are expected to pick up pace next year, growth in system loans - or total loan excluding inter-bank lending - is not expected to be significantly stronger, said Kenneth Ng, head of research at CIMB-GK Securities, in a client note.

'The best part of Singapore's loan growth spurt is over,' said Mr Ng. 'In an inflation-controlled environment, we expect lower margins for all three banks as a new batch of foreign competitors emerge.'

Though Morgan Stanley analysts are positive about Singapore banks' 'rock-solid credits', they caution that the banks' loan portfolios are highly geared towards property-related sectors, which make up 41 per cent of total loans.

'Much of the concern relates to the significant property supply over the coming years,' said analysts Desmond Lim and Viktor Hjort in a recent report.

But they added that losses will become material only if property prices fall at least 30 per cent between now and the end of next year.

OCBC was the most aggressive in terms of property loans with a more-than-double growth in building and construction loans between 2005 and 2008, said the Morgan Stanley analysts. UOB was the most conservative in this area, given that much of its loans growth originated from lower- risk housing loans, they added.

Meanwhile, CIMB-GK's Mr Ng has recommended that investors switch to property stocks from banks, as the property sector could benefit from the influx of foreigners as well as hopes that interest rates will remain depressed.

He also noted that the conditions now are more akin to the situation in 2003/2004, when bank and property stocks were first aligned but the latter moved on to outperform in the following few years.

As for real estate investment trusts (Reits), hospitality plays such as CDL Hospitality Trusts and Ascott Residence Trust could show some growth this quarter, DBS Vickers Securities analyst Derek Tan told BT.

'The tourism statistics are showing some signs of life and improvement. Retail Reits should also show some better-than-expected resilience,' added Mr Tan.

For the manufacturing sector - including technology companies - sales numbers posted in the third quarter could indicate that real demand, rather than inventory restocking, is now in place, noted UOB Kay Hian's Mr Chan.