KLCI: +0.06% to 1786.7
JCI: +0.06% to 4635.7                                    SET: +0.12% to 1455.4
HSI: +0.12% to 21303                                    HSCEI: +0.13% to 9445.6
Nikkei: +0.23% to 14506                                ASX200: +0.15% to 4981.1
Nifty: +0.36% to 6030.8                                  S&P500: +0.14% to 1682.5

MARKET OUTLOOK:
 
For our outlook on markets, please watch our Market Outlook webinar (www.uniphillip.com > education programs > phillip securities webinar). We also highlighted OUE and its new REIT in the webinar.

(PhillipCFDs and ETFs for trading the macro outlook can be found in the Global Macro report. PhillipUT Wrap Account offers tactical asset allocation of unit trusts without front loading sales charge.)

MACRO DATA:

In US, retail sales rose by 0.4% in June, less than the forecast 0.8% growth, after the 0.5% increase in May, reflecting a faltering recovery in the nation's consumer spending, which contributes to about 70% of the economy. Retail sales excluding autos and gasoline unexpectedly fell 0.1%, while the market was predicting a acceleration to 0.4% growth from the 0.3% gain achieved in May.
 
In China, GDP growth slowed down to 7.5% in 2Q13, trailing the market expected 7.6% y-y pace, after the 7.7% y-y gain in 1Q13. Industrial production rose by 8.9% y-y, slower than than the market expected 9.1% y-y growth in June, after the 9.2% y-y gain in May. Retail sales growth picked up to 13.3% y-y in June from prior 12.9% y-y gain in May. Year-to-date FAI growth slowed down to 20.1% y-y in June, trailing the market expected 20.2% y-y gain and prior 20.4% y-y gain in May. The data added to our case that China's economy slowdown would extend during the phase of restructuring forged by the government. The government has indicated increased tolerance in economic slowdown, lining up with the determination to reform the economy for a sustainable growth. The nation's economic growth may for the first time after 1998 miss the government's growth target (7.5% for 2013 whole year).
 
In Singapore, retail sales advanced 2.1% m-m on a seasonally adjusted basis in May, while the market was predicting a 1.0% m-m drop, after the 5.3% m-m gain in Apr. Retail Sales Ex Auto rose by 3.1% y-y in May, compared to the 0.2% y-y gain achieved in Apr.

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Regional Market Focus

Singapore

• The benchmark STI closed flat at 3,236.82 (+0.02%). The 2.0bn shares traded were worth S$1.0bn in value.
• Trading activities remain weak on the back of weaker China data. Investors are also awaiting key speeches by US Fed later this week.
• On SG Banks, we note Moody’s downgrade on outlook for Singapore banking system. We however remain positive, as we estimate the increase in interest income to be greater than the increase in credit cost. Furthermore, the increase in interest income through higher margins is recurring, while credit cost is expected to increase but on a gradual basis.
• We expect the STI to consolidate at current levels, with key near term support at 3,200 levels.
• Top picks for the year are Pan United (Buy, TP: S$1.21), SGX (Accumulate, TP: S$8.00) & Keppel Cord (Accumulate, TP: S$12.34).

Thailand

• Thai stocks whipsawed between positive and negative territory throughout the day on Mon before the SET index finished the session up a tad 1.69 points at 1455.4 points after China reported GDP growth slowed in 2Q13 to 7.5% y-y in line with market expectations.  
• Renewed small foreign buying of Thai shares yesterday was in line with the strength of the baht. In our view, we still see return of foreign buying as only short-lived after recent heavy sell-offs on speculation that the US Federal Reserve would not unwind its QE program anytime soon. Heavy institutional selling emerged in both equities and derivatives markets.
• Even though data showed US retail sales rose less than expected in Jun 2013, accelerating growth in New York state manufacturing in Jul, bolstering the view of economists that growth was likely to pick up soon and rosy earnings from Citigroup lent support to the market and provided a slight boost to sentiment.
• The SET index is likely to stay stuck in a tight range today ahead of US Federal Reserve Chairman Ben Bernanke’s testimony before congressional panels on Jul 17 and bank earnings results in Thailand. For trading ideas, we continue to advise investors to look for good earnings and dividend plays. 
• Today we peg resistance for the SET index at 1460-1480 and support at 1440-1420.

Indonesia

• The Jakarta Composite Index (JCI) edged higher on Monday (15/07), after moving mostly in negative territory, amidst mostly up-day for stock indexes in Asia. The JCI eked out 2.621 points, or 0.06%, to 4,635.729. Four of the 9 main sectors close in green, led by mining sector that gained 1.64%, followed by consumer goods sector with 1.21%-climb, and miscellaneous industry sector with 0.68%-rise. The LQ45 index edged 0.03% higher to close at 777.903. Most stocks performed weakly due to depreciating Rupiah, that went beyond 10,000 per US dollar for the first time since Sep 2009 on concern slowing growth in China will dampen exports. Indonesia’s ministry of industry on Monday issued low-cost green-car (LCGC) price rule, that said LCGC will only cost IDR 95 million (USD 9,500) at the maximum. But price can be adjusted to track inflation, exchange value, and cost of goods, as well as transmission type and safety features. Shares of auto maker Astra International (ASII) rose 0.76% to IDR 6,650, and Indomobil Sukses Internasional (IMAS) gained 0.94% to 5,350. Still from the automotive industry, data released by Indonesia’s automotive association (“GAIKINDO”) showed that auto sales slowed to 2.5% growth in June, compared to 4.2% sales growth in May. 121 shares advanced, and 128 shares declined Monday on the Indonesia Stock Exchange, where 2.59 billion shares worth IDR 3.86 trillion traded on the regular board. Foreign investors’ transactions accumulated to a net purchase of IDR 16.2 billion.
• Indonesian stocks looked set for a rebound today, after Fitch Ratings’ comment that the recent interest rate hike will be positive for the country’s banking stability. The comment highlighted view that higher rates will help mitigate credit risks accumulated from several years of rapid growth. On the downside today, positive moves on stocks may be capped by slower growth in automotive sales in June. We estimate the JCI to move higher today, within price band of between 4,560 and 4,679.

Sri Lanka

• The Colombo bourse witnessed a drop during the day ending its two consecutive days rally, resulting in the indices to conclude within the red terrain; this was mainly due to the prevailed selling pressures and the sluggish participation of the investors seen during the trading day. The ASPI index closed 33.64 points (or -0.55%) lower at 6,028.74; this was having gathered 82.22 points or 1.37% during the past two trading days.  The S&P SL20 closed at 3,385.43 losing 7.47 points (or -0.22%). The daily turnover of LKR 328.54Mn, noted an increase of 35.81% against the previous trading day. With regard to the sectorial contribution, Bank Finance & Insurance (BFI) sector topped the list providing LKR 91.45Mn. Information Technology (IT) sector stood next in line making a contribution of LKR 75.39Mn to the turnover. A total of 72.34Mn shares changed hands during the day, resulting in a momentous gain of 313.46% against the previous day. With regard to the share price movements, 129 companies lost while 50 companies gained A net foreign inflow of LKR 43.20Mn was recorded during the day for the third consecutive trading day, resulted by foreign purchases worth LKR 63.76Mn and sales of LKR 20.56Mn; this pushed the YTD net foreign inflow to record LKR 15.79Bn.
• The Bourse started the week with a discouraging gear, resulting in relatively low turnovers being logged from its previous week. Despite the dips observed on the first two trading days the bourse managed to gain notably on Wednesday and Thursday nullifying the losses being recorded on the first two trading days; however, those gains weren’t adequate to record an overall weekly gain as market fell on Friday too. The ASPI dipped 19.44 points or 0.32% during the week, nevertheless the S&P SL20 index managed to gain a minute 1.97 points to close the week at 3,385.43. The weekly turnover stood at LKR 1.47Bn, indicating a drop of 54.53% against the previous week. The weekly turnover consisted with foreign purchases worth of LKR 299.65Mn, whilst recording a weekly net foreign inflow of LKR 126.29Mn; this was a reduction of 74.24% compared to the previous week’s net foreign inflow. Shares totaling up to 158.27Mn changed hands during the week; this was an increase of 24.29% compared to the previous week. As at the week’s closure, the total market capitalization stood at LKR 2.32Tn recording a year to date gain of 6.82% and the market PER(X) and PBV(X) stood at 16.10 and 2.20 respectively. The local FOREX markets closed the week with, the USD selling at LKR 132.57/- and buying at LKR 129.37/-.

Australia

• The Australian share market on Monday closed higher for a fifth straight day, helped by encouraging signs for the housing sector which drove a rise in banking shares. The benchmark S&P/ASX200 index was up 7.2 points or 0.14 per cent to 4,981.1 points.
• Today (16/07/13), the Australian market looks set to open higher, following Wall Street's lead after the Dow Jones and the S&P 500 closed at all-time highs for the third straight session as in-line Chinese economic growth data offset disappointing US retail sales figures. US retail sales rose just 0.4 per cent in June, below the 0.7 per cent expected by analysts. But China's second-quarter gross  domestic product growth came in at 7.5 per cent, in line with expectations and better than what some experts had feared.
• In economic news on Tuesday, the Reserve Bank of Australia  releases the minutes of its July board meeting.
• In equities news, Rio Tinto is scheduled to release its second quarter operations review.

Hong Kong

• HSI swung between gain and loss, and closed at 21,303 (+26). CEI gained 11.9 points to 9,445. Trading volume was low again at HKD45.98 billion.
• China released 2Q2013 GDP growth of 7.5%, which was lower than 7.7% in previous quarter but in line with market consensus. Market reacted positively and climbed to the day-high of 21,392 (+165) in the morning.
• Haitong Securities (6837.HK) and Citic Securities (6030.HK), up 3.8% and 2.1% respectively, led CEI up after China Securities Regulatory Commission increased RQFII quotas from $80 billion to $150 billion. Chinese government announced a plan to promote use of energy-saving automobile, BYD Company (1211.HK), Tianneng Power (819.HK) and Chaowei Power (951.HK) climbed 10.9%, 24.6% and 24.8% respectively.
• Technically, the next support and resistance levels will be at 21,000 and 21,642 respectively.

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Morning Note

Company Highlights

OKH Global Ltd announced that it has signed a non-binding MOU with Pan Asia Logistics Singapore Pte. Ltd. (“PAL”), to establish a joint venture to develop, own and manage modern logistic properties across Asia. Under the terms of the MOU, OKH Global will acquire a 40 percent ownership stake in the proposed joint venture, while PAL will acquire the remaining majority stake. For a start, the proposed joint venture shall acquire Pan Asia Logistics Investment Pte. Ltd., a wholly-owned subsidiary of PAL which owns three properties located in Singapore, Malaysia and Korea. (Closing Price S$0.440, +7.3%)

Hong Leong Asia Ltd announced that with effect from 17 July 2013, Mr Goh Cher Shua will be appointed the Chief Financial Officer (“CFO”) of the Company in place of Mr Hoh Weng Ming. (Closing Price S$1.610, +0.0%)

Oxley Holdings Limited announced that the Company had entered into a joint venture agreement with Worldbridge Land Co Ltd, pursuant to which the parties shall establish a joint venture company (the “Development Company”) to develop the land owned by Worldbridge situated at Village 14, Sangkat Tonle Bassac, Khan Chamkamor, PhnomPenh, Cambodia. Each of the Parties shall hold 50% equity interest in the Development Company, provided that the Company shall be entitled to hold its interest through its subsidiary registered in Cambodia. (Closing Price S$0.360, +0.0%)

DBS Group Holdings Ltd announced that it has, through Heedum Pte. Ltd. (a wholly-owned subsidiary of DBS Bank Ltd), completed the acquisition of Choicewide Group Limited’s remaining 3⅓% stake in Central Boulevard Development Pte Ltd (“CBDPL”) and its associated shareholder loans, in accordance with the terms of the Put Option (“Completion”), for an aggregate consideration of approximately S$115 million. Following Completion, DBS will own a one-third equity stake in CBDPL and hence in Marina Bay Financial Centre Tower 3.
(Closing Price S$16.490, +0.7%)