Warrants Highlight

HSI down 1,000 points in two weeks

Macquarie is listing new HSI warrants with the following lower strikes this morning.

Macquarie’s HSI warrants

The HSI had a good start this month, hitting a high of 22,111.3 on 2 November. The last time the HSI traded above 22,000 was on 2 August 2011. Shortly after, however, the HSI broke its previous low and traded lower. From the close of 2 November, the HSI has fallen 4.5% while the regional benchmark index dropped 2.6%.

Elections a bane on markets?
After the US elections were over, investors turned their attention to the ‘fiscal cliff’ and their concerns were seen in the global equity markets. The S&P has dived 5.3% since 6 November’s close while the HSI has fallen 4.5% since 7 November’s close.

Yesterday, Hong Kong’s sovereign parent, China, concluded their Congress meeting announcing that Xi Jinping is replacing Hu Jintao as head of the Chinese Communist Party. The announcement did little for the stock markets and the HSI fell 1.6% day on day.

Hong Kong still no 1 shopping haven
In other news, the South China Morning Post released an article on Tuesday mentioning that Hong Kong is still the top destination for mainland shoppers. This is most likely due to its close proximity to China as well as its tax-free shopping and reputation for genuine goods.

Although the city has seen an increase in anti-mainland sentiments, Marcos Chan, national director and head of research for Greater Pearl River Delta at Jones Lang LaSalle feels that “the number of people interested in coming to Hong Kong would be much greater than those afraid of coming to the city”.

Retailers seem to feel the same way and luxury-brand companies compete for space to sell goods to the mainland Chinese tourists. This year, Hong Kong topped New York’s Fifth Avenue 11-year reign of being the word’s most expensive district for retailers. According to the Economic Times, average annual rents at Causeway Bay on Hong Kong Island rose 35% compared to the end of June a year ago, commanding HKD 2,630 a square foot now.

For the first nine months of this year, the city’s tourism board estimates that tourist spending rose 18%, supported by a 31% increase in visitors from the mainland. Last year, the shopping expenditures of mainlanders accounted for HKD110.8 billion (27.3%) of Hong Kong’s total retail sales, which is almost 6% of the city’s GDP.

GDP expected to increase in third quarter
Later in the afternoon, Hong Kong is scheduled to announce its third quarter GDP figures. According to Bloomberg, GDP is expected to increase after declining the previous three months.

Singapore Market Wrap

Negative news all day round

Singapore's retail sales rose 2.5% year-on-year (y.o.y), lower than Bloomberg's survey of 3.9% and it's previous 3.2%. Further news on Chinese banks' rising bad loans by the China Banking Regulatory Commission and slower growth of Germany's GDP wrapped up another disappointing day. The STI fell 1.1% to 2945.9 day-on-day (d.o.d).

Call STI 3100MBeCW130131 (PA7W) exercise level 3,100.*
Put STI 2800MBePW130131 (PA8W) exercise level 2,800.*

Olam reports profit growth of 26.2%
Olam's revenue for its Q1 2013 jumped 45.2% y.o.y to S$4.7 billion, with profit after tax and minority interest coming in at S$43.2 million, a 26.2% increase. Olam's Group CEO expects the margins in non-food category to improve as market demand recover. Its food raw materials division continued its growth due to it's resistance to recession. Olam rose 1.7% to $1.79 for the trading session.

Call OLAM MB eCW130201 (Q4MW) exercise price $2.00.*

A strong quarter for Bumitama
Bumitama's 3Q 2012 net profit grew 59.2% y.o.y to IDR$178 billion on a revenue of IDR$846 billion. It's CEO Mr. Gunawan Lim credited the Group's efficient crude palm oil (CPO) extraction rate as well as it's fundamentals such as significant land bank and young plantation, that allowed the group to have positive growth despite challenging market conditions and declining palm oil prices. Bumitama dropped 0.5% to $1.035 d.o.d.

Call Bumitama MBeCW130603 (RD1W) exercise price $1.10.*

Overnight Market Wrap

S&P lowest in three months

The S&P continued to slide yesterday, falling 0.2% to close at 1,353.3. The fall was led by consumer staples after Walmart's third quarter earnings disappointed. The counter fell 3.6% day on day.

Last night, jobless claims came in higher with 439,000 people filling for unemployment. Although claims are the highest since April 2011, the markets did not spiral down as investors were expecting the increase.

The surge in jobless claims came at the back of Hurricane Sandy, which swept the Northeast region of the US. This resulted in the New York office losing electricity and was unable to take in claims. Hence, many people did not manage to file for unemployment immediately, leading to an inflated number last week. Going forward, economists expect the number to remain inflated over the next few weeks.

Overnight Markets

Indices	Last	Change
STI	2945.92	-1.1%
HSI	21108.90	-1.6%
DJIA	12542.40	-0.2%
S&P 500	1353.33	-0.2%
Nasdaq	2836.94	-0.3%
China A50	7039.87	-1.1%

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Ex-dividend dates:
Fri 7 Dec: SPH ($0.17)