KLCI: -0.02% to 1786.4
JCI: +0.18% to 4644                                          SET: -0.27% to 1451.5
HSI: +0.04% to 21312                                        HSCEI: -0.28% to 9419.5
Nikkei: +0.64% to 14599                                    ASX200: +0.10% to 4986
Nifty: -1.25% to 5955.3                                       S&P500: -0.37% to 1676.3


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, CPI rose by 0.3% m-m in June, faster than than market expected 0.3% m-m pace, after the 0.1% m-m gain in May. On y-y basis, CPI advanced 1.8% y-y, compared to the 1.4% y-y pace in May. Industrial production rose by 0.3% m-m in June, the biggest gain in 4 months, meeting the market expectation, after staying stagnant in May. Capacity utilization rate rose to 77.8% from previous 77.6% reading.
 
In Euro Zone, CPI rose by 0.1% m-m in June, meeting the market expectation. On y-y basis, CPI rose by 1.6% y-y, the same pace as it was in May. Core CPI growths stays at 1.2% y-y. European Central Bank President Mario Draghi earlier this month took what he called an “unprecedented” step and told investors that interest rates in the 17-nation euro area would stay low as the economy struggles to emerge from recession, lending is weak and inflation pressures remain subdued. The ECB’s benchmark rate is at a record low 0.5 percent.
 
In UK, inflation accelerated less than economists forecast in June as airfares and food costs offset an increase in fuel prices. Consumer prices rose 2.9 percent from a year earlier, compared with 2.7 percent in May.  The Bank of England, which targets a 2 percent inflation rate, forecasts that price gains will cool toward the goal as one-time factors drop out of calculations. Governor Mark Carney will next month present the Monetary Policy Committee’s review of policy guidance as a way to maintain stimulus in the economy and stoke a recovery.
 

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Regional Market Focus

Singapore

• The benchmark STI closed lower at 3,224.96 (-0.37%). The 3.3bn 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 M1, our analyst continues to be positive due to continued Data-monetizing leading to strong service revenue, and stable y-y growth. Dividend yields remain attractive at 4.7%.
• 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 traded in the red in another volatile session on Tue before the SET index ended the day down 3.95 points at 1451.45 points in light turnover of Bt35mn ahead of the US Federal Reserve’s semiannual testimony on monetary policy to Congress.
• Foreign buying spree continued in the Thai bourse but the amount remained modest, reflecting a lack of conviction for a serious return to the Thai stock market while the baht extended its gains.
• US equities ended the session modestly lower on Tue in line with other global bourses. Trading volume dropped below the year’s average as traders turned cautious ahead of the Federal Reserve Chairman’s semiannual testimony to Congress to look for clues on the timing of the QE exit. Market expectations earlier held that the Federal Reserve might not start unwinding its QE program anytime soon.
• In our view, there remains a significant risk to the downside for the market, while the room for upside appears limited. For trading strategy, we advise investors to selectively accumulate stocks on weakness with focus on good earnings and dividend plays. Cut loss if the SET index breaks below a key level of 1400.
• Resistance for the SET index is seen at 1460-1480 and support at 1420-1440 today.

Indonesia

• Indonesian stocks ended flat on Tuesday (16/07), amid mixed tones in Asia that saw positive momentum from higher closes on US markets overnight pared by concerns about China’s economic slowdown. The Jakarta Composite Index (JCI) eked out gain of 8.310 points, or 0.18%, to close at 4,644.039, with 4 of the nine major industry sectors supported the climb. Miscellaneous industry sector led with 2.75%-advance, followed by construction sector that rose 2.59%, and trade and services sector with 0.84%-climb. Blue-chip stocks posted modest gain on Tuesday, with the LQ45 index added 0.634 points, or 0.08%, to 778.537. Investors also seemed to hold back ahead of Ben Bernanke’s testimony before the US House Financial Services Committee on Wednesday (17/07) that may give another hint as to when the Federal Reserve will cut back its bond purchase program. 128 shares climbed and 121 shares fell Tuesday on the Indonesia Stock Exchange, where regular market volume reached 3.7 billion shares valued at IDR 4.78 trillion. Foreign investors posted net sale of IDR 56.99 billion.
• The Jakarta Composite Index (JCI) may post a decline today, as concerns about slower exports and weakening Rupiah remained. The drop in US markets overnight would also weigh on Indonesia’s market today, with sentiments turned cautious before the testimony of US Federal Reserve’s chairman – Ben Bernanke – before the US House Financial Service Committee later today. We expect the JCI to retreat today, with support and resistance of 4,600 and 4,686, respectively.

Sri Lanka

• The market extended its losses as ASPI dived in further to the red terrain, charting its negative closure for the 3rd successive trading day. The bourse dropped below the 6,000 mark in the morning session to fall to an intraday low of 5,985.14; however, the late market rally minimized the losses which had been logged, assisting the ASPI (6,007.65) to close 7 points above the 6,000 level.  The S&P SL20 too closed within the red terrain losing 0.32% (or 11.02 points) to settle at 3,386.42. As at the daily closure, the total market capitalization decreased to LKR 2.31Tn indicating a year to date gain of 6.45%. During the day 6 negotiated deals totaling up to LKR 386.65Mn were noted; this accounted to 52.41% of daily aggregated turnover of LKR 738.09Mn. Under the sectorial round up, Diversified Holdings (DIV) dominated the rest, providing LKR 361.85Mn. Bank Finance & Insurance (BFI) sector too provided a notable LKR 225.26Mn; further, BFI managed to capture the highest investor interest during the day noting 1,137 trades resulted in a total quantity of 4.73Mn shares changing hands. Moreover, 80% of the daily turnover was accounted by the two sectors DIV and BFI. A total of 15.95Mn shares changed hands, indicating a drop of 53.23% against the previous trading day. Price losers outstripped the price gainers by 110:61. Foreign participants were bullish during the day for the 05th   consecutive trading day where foreign buying of LKR 473.23Mn overtook foreign selling which amounted to LKR 53.69Mn; this added  LKR 420.54Mn to the year to date net foreign inflow of LKR 16.47Bn.The local FOREX market for the day closed with, the USD selling  at LKR 132.71/- and buying LKR 129.51/-.

Australia

• Australian shares ended a marginal 0.1 per cent higher on Tuesday in thin trade, hurt by worries over slowing economic growth in Australia's biggest trading partner China and bucking record gains in Wall Street.
• Rio Tinto Ltd climbed 1.4 per cent after the world's second-biggest miner posted strong production figures for the second quarter and maintained the production guidance for 2013.
• The S&P/ASX 200 index added 4.9 points to 4,986.0, according to the latest data. The benchmark has risen for six straight days but trading volumes remained thin as investors were still cautious about the global economic outlook.
• The Reserve Bank of Australia, in the minutes of its July meeting published on Tuesday, maintained its easing bias but noted that the weakening Australian dollar added to inflation risks. (Source: Reuters)

Hong Kong

• HSI gained 9 points or 0.04% to 21,312. CEI dropped 26 points or 0.28% to 9,419. Trading volume was low at HKD48.45 billion
• There were 25 stocks reached 52-week high yesterday, including Tencent (700.HK), Tsingtao Brew (168.HK), China Longyuan (916.HK) and Mengniu Dairy (2319.HK).
• Chinese photovoltaic sector gained after State Council raised 2015 total installed capacity target by 75% to 35 million kilowatt. GCL-Poly Energy (3800.HK), Comtec Solar (712.HK) and Singyes Solar (750.HK) surged 6.7%, 4.6% and 5.1% respectively. Netdragon (777.HK) dropped 21.2% after announcement of proposed disposal of 57.41% of interest in 91 wireless websoft Ltd to Baidu.
• Technically, the next support and resistance levels will be at 21,000 and 21,642 respectively.

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Morning Note

Company Highlights

Enviro-Hub Holdings Ltd announced that its subsidiary, EH Property & Investments Pte. Ltd. (“EH Property”), has incorporated a new wholly-owned subsidiary in Singapore, known as “EH Property Management Pte. Ltd.” (“EHPM”). EHPM has, upon incorporation, an initial issued and paid-up share capital of S$100 comprising 100 ordinary shares and will be principally engaged in providing property management services. The Company currently holds 51% shareholding interest in EH Property, with the remaining 49% shareholding interest being held by BS Capital Pte. Ltd., a company wholly-owned by Mr. Raymond Ng Ah Hua, a controlling shareholder and the Executive Chairman of the Company. (Closing Price S$0.098, +1.0%)

Interra Resources Ltd announced that its jointly controlled entity, Goldpetrol Joint Operating Company Inc., has completed drilling infill development well YNG 3255 in the Yenangyaung oil field in Myanmar as an oil producer. Interra has a 60% interest in the Improved Petroleum Recovery Contract of the Yenangyaung field and also owns 60% of Goldpetrol which is the operator of the field. (Closing Price S$0.470. +1.1%)

Hong Fok Corporation Limited announced that its wholly owned subsidiary, Yat Yuen Hong Company Limited, has entered into various agreements with Yotel Asia Pacific Pte Limited and its affiliates (“Yotel”) in order to appoint Yotel as the Manager of the hotel to be built on the existing car park block of International Building on part of Lot 956X at 360 Orchard Road Singapore. (Closing Price S$0.695, +0.0%)

Federal International (2000) Ltd announced that the Company has signed a Memorandum of Understanding (“MOU”) with Firstlink Investments Corporation Limited (“Firstlink”) on 16 July 2013. The MOU relates to the proposed co-operation between the Company and Firstlink in relation to the Group’s waterplant in Panzhihua, China. (Closing Price S$0.026, +4.0%)

Noble Group Limited announced that the Singapore Exchange Securities Trading Limited (the “SGX-ST”) has on 16 July 2013 given its in-principle approval for the listing and quotation of 2,841,448 new ordinary shares of HK$0.25 each in the capital of the Company (the “New Ordinary Shares”) to be issued. (Closing Price S$0.905. -1.1%)

Lion Asiapac Limited announced that an amount of RMB 28.10 million has been injected into Yangzhou Lion Property Development Co Ltd (“YL”), a new subsidiary of the Company incorporated in Yangzhou, the PRC. The registered capital of YL is US$30 million (to be contributed in RMB equivalent). An amount of RMB 28.10 million (approximately US$4.56 million), being the initial 15% of the registered capital of YL, has been injected by LAP Development Pte Ltd, a wholly owned subsidiary of Lion Asiapac Ltd, into YL and verified by the auditors of YL, pursuant to the relevant PRC regulations. The balance 85% of the registered capital is required to be injected by February 2015, in accordance with the relevant PRC regulatory directive. (Closing Price S$0.170, +0.6%)