KLCI: +0.13% to 1788.7
JCI: +0.75% to 4679                                             SET: +0.46% to 1458
HSI: +0.28% to 21371.9                                        HSCEI: +0.65% to 9480.9
Nikkei: +0.11% to 14615                                       ASX200: -0.09% to 4981.7
Nifty: +0.30% to 5973                                           S&P500: +0.28% to 1680.9


MARKET OUTLOOK:

For our shorter term outlook on markets, please watch our Market Outlook webinar (www.uniphillip.com > education programs > phillip securities webinar). We also highlighted OUE and the new OUE H-REIT in the webinar.

For our longer term outlook on markets, please see our latest Global Macro Asset Strategy report below.

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

MACRO DATA:

U.S. housing starts and permits for future home construction unexpectedly fell 9.9%m-m to a seasonally adjusted annual rate of 836,000 units in June. That was the lowest level since August last year. U.S. citizen’s mortgage loans applications dropped 2.6% in the week ended on July 12, improving from the previous week’s -4.0%.

In China, FDI rose significantly by 20.1% m-m in June, after the tiny 0.3% m-m gain in May. The government finance minister said there would not be large scale stimulus this year. The nation`s economic growth slowed to 7.5%. We expect the GDP growth to continue to slow down into the second half of the year, and caution that the government may, for the first time since 1998, miss its growth target.

Singapore’s non-oil domestic exports (NODX) slid 8.8% from a year earlier, falling for a fifth month. Economists expected a 5.8% decline. Despite the set back in NODX, we do note that total exports on a 3 month moving average basis are actually trending into expansion territory from a year earlier.

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Regional Market Focus

Singapore

The benchmark STI closed lower at 3,208.33 (-0.52%). The 3.2bn shares traded were worth S$1.2bn in value.

We expect the STI to close higher today, on the back of positive comments by US Fed.

Fed Chairman emphasized that economic (including higher employment, growth, inflation) and financial conditions would have to improve before the start of tapering of QE. The increase in Fed fund rates will also not occur in the near term, which we estimate to be end 2014.

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 edged up a mere 6.63 points to 1,458.08 points on Wed as investors awaited the US Federal Reserve Chairman’s semiannual monetary policy testimony to Congress to look for clues on QE tapering plan. 

We expect the SET index to remain stuck in a trading range of 1440-1470 today after the first day of Fed Chairman’s semiannual testimony to Congress indicated the US central bank stuck to a timeline that it first outlined in Jun to start tapering its US$85bn a month bond buying program this year but the plan might be altered if economic conditions changed. Most stock markets around the globe little reacted positively to Fed’s testimony while awaiting further clues from the second day of its testimony today.

Even though foreign investors remained on the buy side in the Thai stock market, the amount was not strong enough to reflect a sustained return to the market while foreigners held slight net short positions in derivatives market. However, the strength of the baht to 30.95 to the US dollar this morning should help limit the market’s decline to a certain extent. Other investor types also remained hesitant to return to the market in a serious manner. Overall we believe short-term trading will likely continue to dominate the market going forward.

Today we peg resistance for the SET index at 1465-1480 and support at 1440-1420.

Indonesia

The Jakarta Composite Index (JCI) ended a flat session with moderate gain on Wednesday (17/07), as markets in Asia traded in mixed directions, with investors waited cautiously ahead of Federal Reserve Chairman Ben Bernanke’s congressional testimony later in the day. The benchmark index of Indonesian stocks rose 34.962 points, or 0.75%, to finish at 4,679.001, with six of the 9 major industry sectors ended in green. Consumer goods sector fared best with 2.50%-gain, followed by construction, property and real estate sector with 2.05%-rise, and trade, services and investment sector with 1.11%-advance. The LQ45 index added 6.178 points, or 0.79%, at 784.715. The Rupiah traded at 10,103 against the US dollar, down 0.3% from the prior day. 10-year government bond yield stood at 8.301%, up 7.6 basis points from the previous day. On the economic front, Bank Indonesia reported retail sales grew slower in May at 8.6% year-on-year, from 10.0% in April, with slower sales of food, beverages, and tobacco. Retail sales is expected to remain sluggish in June, due to Muslim fasting month and after the fuel price hike. 3.92 billion shares with a total value of IDR 4.89 trillion changed hands on the regular market Monday on the Indonesia Stock Exchange, where gainers outpaced losers 171 to 91. Foreign investors posted net purchase of IDR 144.27 billion, up from net sale of IDR 56.99 billion on Tuesday (16/07).

Indonesian stocks may see a moderate climb today, following the positive closes on US markets overnight and higher start in Asia today, after comment the Fed chairman Ben Bernanke that the US central bank bond buying program is subject to broader view of the economy. On the downside, weak Rupiah may still limit gains. We expect the JCI to moderately advance, with support and resistance each at 4,600 and 4,686.

Sri Lanka

The bourse stretched further in to the red territory, recording yet another day with losses; as the prevailing lowly buying sentiment persists in this week also. Further, this resulted in the ASPI to close below 6,000 levels once again at 5,982.35 (down by 25.30 points), noting its lowest value after 9th July 2013. The S&P SL 20 too closed on the negative side at 3,376.73 losing 9.69 points or 0.29%. Additionally, the slothful participation of the investors resulted in charting the lowest turnover being logged for the year (LKR 191.74Mn). Under the sectorial summary, Bank Finance & Insurance (BFI) sector provided LKR 69.03Mn, dominating the list while accounting to 36% of the total turnover. Hotels and Travels sector added LKR 41.48Mn to the daily turnover. The daily volume amounted to 12.80Mn shares, indicating a drop of 19.74% against the previous trading day. With regard to share price movement, 107 companies lost while 60 companies gained. Foreign participants appeared to be bullish during the day for the 6th consecutive trading day resulting in a net foreign in flow of LKR 14.24Mn; this assisted the year to date net foreign inflow to reach LKR 16.49Bn. The local FOREX market for the day closed with, the USD selling at LKR 133.04/- and buying at LKR 129.84/-.

Australia

The Australian, share market on Wednesday closed slightly lower as investors waited for an update on economic stimulus measures in the US from that country's top central banker.   A strong production report from BHP Billiton boosted sentiment in the resources sector, but that was offset by losses in other sectors. The benchmark S&P/ASX200 index was down 4.3 points or 0.09 per cent to 4,981.7.

Today (18/07/13), the Australian market looks set to open higher following gains on Wall Street after US Federal Reserve chairman Ben Bernanke said tapering of stimulus measures was not on a "preset course". In testimony to Congress, Dr Bernanke reiterated that the Fed would likely scale back its $US85 billion-a-month bond-buying program later this year, but only if the economy improves.

In economic news on Thursday, the National Australia Bank is due to release its business survey for the June quarter, while HIA-RP Data Residential Land Report for the March quarter is also due out. 

In equities news, Woodside Petroleum is expected to post its second quarter report, while Duet Group and SP Ausnet have annual general meetings scheduled. 

Hong Kong

HSI and CEI gained 59 points or 0.3% to 21,371 and 61 points or 0.7% to 9,480 respectively. Trading volume was HKD48.46 billion, the third day lower than HKD50 billion.

China FDI climbed 20% in June to $14.4 billion, the largest increase in more than 2 years. But the market stayed silent and waits for Bernanke’s speech, the trading volume was still low.

China coal and cement sector led CEI up, China Shenhua (1088.HK), Anhui Conch (914.HK) and CNBM (3323.HK) gained 5.3%, 6.1% and 3.6% respectively. Luk Fook Holding (590.HK) surged 6% after reported SSSG of 83% for HK & Macau business, 117% for Mainland China business in the quarter ended June 13. King Fook Hold (280.HK) climbed 17.5% after announcement of ending its brokerage business.

Technically, the next support and resistance levels will be at 21,000 and 21,642 respectively.

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Morning Note

Company Highlights

COSCO Corporation announced that COSCO (Nantong) Shipyard Co. Ltd., a subsidiary of the Company’s 51% owned subsidiary, COSCO Shipyard Group Co. Ltd., has secured contract valued over USD200 million from COTEMAR S.A. De C.V., a company incorporated in Mexico, to build one Harsh Environment Semi Submersible Accommodation Vessel. This vessel will be built to GustoMSC Ocean500 design and have capacity of 750 POB, DP3 ynamic Positioning system and is designed to operate in the Santos Basin, Gulf of Mexico and in the North Sea. The vessel is scheduled for delivery in 24 months time. (Closing Price S$0.725, -0.7%)

Ley Choon Group Holdings announced that Ley Choon EWC Sdn Bhd, a 51% subsidiary of the Company in Negara Brunei Darussalam (“Brunei”), has secured Brunei Dollar 29.6 million worth of new contracts for the construction of a flyover bridge at Jalan Gadong, Jalan Telanai, Brunei and for infrastructure works involving the supply and installation of sewerage systems at Berangan, Kianggeh and Subok, Brunei. (Closing Price S$0.178, +0.0%)

CWT Limited announced that in relation to the divestment of its shareholding in PT Straits Bullion, referred in its announcements dated 22 April 2013 and 30 April 2013, the Divestment has been completed for a final cash consideration of USD 806,000. On completion, CWT has transferred the shares in PTSB to its partner in PTSB and no longer holds any interest in PTSB. (Closing Price S$1.460, -1.0%)

Mermaid Maritime Public Company Ltd announced that Asia Offshore Drilling Limited (“AOD”), an associate company, has taken delivery of its third new build jack up rig, AOD III from Singapore based builder Keppel FELS Ltd. The Company founded AOD in 2010 and currently holds a 33.76% stake in the venture. Seadrill is AOD’s manager and owns 66.23% of its shares. AOD III  will now be mobilized to the Middle East to begin its three-year contract with the Saudi Arabian Oil Company (Closing Price S$0.320, +1.6%)