Warrants Highlight

China A50 spikes 3.6%

Investors who wish to take a leveraged view on the Chinese markets may consider Macquarie’s China A50 warrants.

Shanghai Composite Index back above 2,000
Despite having US indices slipping on Monday and Tuesday after a contraction in the manufacturing sector as well as a stalemate in the Congress budget talks, Asian indices held their own. Most Asian indices ended positive for the day, led by China. The MSCI Asia Pacific Index added 0.3% day on day.

Yesterday, the Shanghai Composite Index outperformed the MSCI Asia Pacific index and rallied 2.9% day on day (dod), the highest increase since 7th September, breaking past the 2,000 mark to close at 2031.91. The index had been trading below the 2,000 support level for a week, since 27th November when it slid 1.3% dod.

Not surprisingly, the China A50 also outperformed the regional benchmark index and closed up 3.6%.

Talks of urbanization pulled markets higher
The performance of Chinese indices followed a meeting of the ruling party’s top leaders headed by new leader Xi Jinping. A released statement said that China will make policies “more targeted and effective, and predetermine or fine-tune these policies at an appropriate time and appropriate way”.

The country’s official Xinhua News Agency said that “China will expand domestic demand, actively promote urbanization, strengthen real-estate controls and support small business.” Also, the government will encourage consolidation in industries with overcapacity so as to keep investment growth steady.

Chinese economic data improving
Earlier this week, China’s HSBC manufacturing PMI showed that the sector accelerated for the first time in 13 months. The reading came in at 50.5 for the month of November, crossing the 50 mark for the first time since October 2011. A reading above 50 signals an expansion in the sector while a reading below 50 implies a contraction.

According to the Dow Jones Newswires, “the rise adds to recent signs of a rebound in the world’s second-largest economy and will likely boost the market’s confidence in the Chinese economic outlook for the rest of the year.”

Singapore Market Wrap

China boosts Singapore market

The china region rose more than 3% on Wednesday, giving the lacklustre Singapore market a timing boost. State television quoted that Xi Jinping, head of the Chinese Communist Party, stating that China will continue to enhance it's economic policies going into 2013 to ensure steady economic growth. The STI increased 0.5% to 3,075.92 while the China A50 rose 3.6% to 7203.54 for the trading session.

Call STI 3100MBeCW130228 (RF9W) exercise level 3,100.*
Put STI 2950MBePW130228 (RG0W) exercise level 2,950.*

Call CN8000MBeCW130130 (Q7GW) exercise level 8,000.*
Put CN7000MBePW130130 (Q7HW) exercise level 7,000.*

Olam woes continue
Olam continued its decline by plunging 5.3% day-on-day to $1.515, erasing gains made earlier this week, with a total of 72 million shares exchanging hands. This sell-off came a day after Olam indicated it's plan for a rights issue that consisted of warrants and bonds, with investors adopting a cautious attitude towards further news coming out from Olam and Muddy Waters, whom criticized Olam's accounting practices.

Call Olam MB eCW130603 (R3LW) exercise price $1.80.*

SGX trading volume grows
Singapore Exchange (SGX) announced that securities and derivatives trading grew in November compared to a year earlier. Securities market turnover increased 8% to S$23.7 billion while the value of bond listings shot up 91% year-on-year to S$15.3 billion. Financial Derivatives rose 23% in volume to 7.19 million contracts with Equity index options volume more than tripled to 630,292 contracts due to an increase in Nikkei 225 Index Options interest. SGX rose 1.3% to $6.94 on Wednesday.

Call SGX MB eCW130502 (RE5W) exercise price $7.20.*
Put SGX MB ePW130502 (RD5W) exercise price $ 6.50.*

Overnight Market Wrap

Technology stocks, worst performer in the S&P

After a strong session from Asia, the S&P snapped its two-day decline to close up 0.2% for the day. Out of the 10 sectors in the index, technology stocks were the worst performing and slid 1.3%. This was reflected in the NASDAQ which fell 0.8% last night.

Yesterday, equities rose when some Republicans signed a bipartisan call in order to find a common ground through compromise. The letter called for exploration of "all options" and President Barack Obama said that the budget talks could be resolved in a week if the Republicans move. (Bloomberg)

In economic data, factory orders in October climbed by the most in eight months while service industries unexpectedly grew at a faster pace in November.

Overnight Markets

Indices	Last	Change
STI	3075.92	0.5%
HSI	22270.90	2.2%
DJIA	13034.50	0.6%
S&P 500	1409.28	0.2%
Nasdaq	2973.70	-0.8%
China A50	7203.54	3.5%

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