KLCI: +0.26% to 1810
JCI: -1.03% to 4718.1                                         SET: -0.79% to 1501.4
HSI: +0.24% to 21968                                        HSCEI: -0.02% to 9778.5
Nikkei: -0.32% to 14731                                     ASX200: +0.36% to 5035.1
Nifty: -1.44% to 5990.5                                       S&P500: -0.38% to 1685.9

MARKET OUTLOOK:
For our short term tactical outlook, please see our webinar slides: (www.uniphillip.com > Education Programs > Phillip Securities Research Webinar). Apart from the market outlook we feature the REIT sector – should you hold it, buy it, or sell it?

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:

In China, HSBC preliminary manufacturing PMI fell to 47.7 in July, the lowest reading in 11 months, compared to the 48.2 reading in June, signaling a deepening slowdown in the nation's economy.

In Japan, exports rose by 7.4% y-y in June, a gain for the 4th straight month, due to the deemed cheaper products following the weakening yen. Imports rose by 11.8% y-y in June. Japan's shipment to EU rose by 8.6% y-y, the first gain in 21 months. Exports to US rose by 14.6% y-y while those to China gained 4.8% y-y.

USA: The Mortgage Bankers Association reports that US citizens that applied for mortgage loans dropped 1.2% in the week ended on July 19, bettering the previous contraction of 2.6%. U.S. new home sales rose 8.3% last month to a seasonally adjusted pace of 497,000. That is up from 459,000 in May, which was revised lower. While sales are still below the 700,000 pace consistent with healthy markets, they have risen 38 percent in the past 12 months. That’s the biggest annual gain since January 1992.

Eurozone Composite Purchasing Managers Index logged 50.4 points, above the 50-mark signaling growth, and a bigger-than-expected rise according to analysts after posting 48.7 points in June. This data hints that the Eurozone may be on the road out of recession. French manufacturing PMI rose to a seasonally adjusted 49.8, from 48.4 in the preceding month, beating expectations of 48.8. France’s service PMI also rose to 48.3, beating expectations of 47.5. Germany’s manufacturing PMI rose to a seasonally adjusted 50.3, from 48.6 in the preceding month, bearing expectations of 49.2. Their service PMI also beat expectations of 50.7, logging in at 52.5.

Vietnam’s July’s inflation rate accelerates to 7.29% yoy beating estimates of 7.1%. This is the highest increase since May 2012. Note that its central bank cut repurchase rate to 5.5% last week.

Sri Lanka’s Central Bank kept its reverse repurchase rate at 9% and repurchase rate at 7%, in line with economists’ expectations.

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Regional Market Focus

Singapore

• The Straits Times Index (STI) ended +21 points higher or +0.65% higher to 3,274.76, taking the year-to-date performance to +3.40%.
• We mentioned that the STI was negotiating resistance at 3260 and a successful breakout and holding above this line implies further upside to a target zone of 3350 to 3400. In addition, we were biased to the upside due to performances and correlations to other indices and commodities.
• In line with our expectations, the STI broke out of 3260 but on average volume. The 3260 to 3300 is actually a resistance zone and some consolidation can be expected, but we are still biased to the upside.
• Top picks currently are Pan United (Buy, TP: S$1.21), SGX (Buy, TP: S$8.30) & Keppel Corp (Accumulate, TP: S$12.25).

Thailand

• Thai stocks traded in a tight band in the morning before the SET index reversed course to trade sharply lower in the afternoon and finish the session down 11.95 points amid economic slowdown concerns and domestic political worries but managed to stay above 1500 points on Wed.
• Today we expect the SET index to trade choppy in a range of 1480-1520 points. Despite pressure from overnight Wall Street losses and resurgent US dollar, which sent the baht lower to around 31.06 to the greenback this morning (0750 hrs Thailand time), we believe the downside appears limited for Thai stocks in view of positive factors from optimism over economic recovery in the US and Europe and hopes of new stimulus measures from China. However, domestic political worries may put a cap on the market’s upside potential as political temperature is set to rise early next month after the parliament reconvenes amid controversies over the draft Bt2trn infrastructure development loan bill and the draft reconciliation bill. 
• Even if there is still room for trading opportunities, we think investors should scale back equity exposure to 50% of the portfolio if the SET index fails to hold above 1500 points.
• Today we peg resistance for the SET index at 1520-1530 and support at 1500-1480.

Indonesia

• Most Indonesian stocks declined Wednesday (24/07), amidst mostly bearish markets in Asia after a report of downbeat manufacturing data in China, and as the Rupiah remained pressured. The Jakarta Composite Index (JCI) slipped 49.056 points, or 1.03%, at 4,718.103. The decline on Wednesday included all nine major industry groups, with construction sector the hardest hit. Index of stocks in construction, property and real estate sector plunged 1.72%, agriculture sector fell 1.54%, and miscellaneous industry sector lost 1.49%. Most blue-chip shares also fell, with the LQ45 index shed 9.558 points, or 1.20%, to 789.351. The Rupiah traded at around 10,200 against the US dollar, 0.3% stronger than a day earlier. Yield for 10-year Indonesian government bond was 7.430%, down 41.7 basis points from the previous day. Decliners outpaced gainers 193 to 73 Wednesday on the Indonesia Stock Exchange. Volume declined to near 2.82 billion shares, with a total value of IDR 4.12 trillion. Foreign investors’ transactions accumulated to net purchase of IDR 85.59 billion.
• The Jakarta Composite Index (JCI) may see another decline today, as weakness in the Rupiah remained and amidst weak lead from US markets overnight and negative start in Asia this morning. Concerns about slowing manufacturing in China may weigh on commodity, heavy equipment and exporters’ shares. On the upside, however, buying on bargain stocks in defensive sectors may help the index sustain negative tones today. We expect the JCI to decline today, and move within 4,623 – 4,827 price band.

Sri Lanka

• The market was unable to sustain the observed positive stance during the past three trading days, resulting the indices to conclude on different directions. The benchmark ASPI ended its 3 day momentum, where it accumulated a total of 101.89 points or 1.7% to close on negative space at 6,079.14, lowered by a minute 5.10 points or 0.08%. However, the S&P SL20 index (3,448.11) managed to pitch-in a further 12.02 points (0.35%), retaining further in green terrain. Most importantly, the index has gained a notable 71.38 points or 2.10% during the past 4 trading days. The total market capitalization as the day’s end was recorded at LKR 2.34Tn, with a year to date gain of 7.93%. The market PER & PBV stood at 16.09 & 2.16 respectively. The daily turnover was recorded at LKR 291.61Mn, noting a decrease of 28.60% against the previous trading day. Shares totaling up to 13.20Mn changed hands during the day. With regard to the sectorial contribution, Diversified Holdings (DIV) sector topped the rest subscribing LKR 76.11Mn to the turnover. Bank Finance & Insurance (BFI) sector added LKR 58.34Mn. Price losers outstripped the price gainers by 128:68. A net foreign inflow of LKR 106.81Mn was recorded during the day, resulted by foreign purchases worth LKR 118.59Mn and sales of LKR 11.77Mn; the YTD net foreign inflow currently stands at LKR 16.84Bn. As at the daily closure, the USD stood at LKR 133.20/- selling & LKR 130/- buying.

Australia

• The Australian share market on Wednesday finished firmer with resource companies shaking off a slowdown in Chinese manufacturing activity.  The benchmark S&P/ASX200 index was up 18.0 points, or 0.36 per  cent to 5,035.1 points.
• Today (25/07/13), the Australian market looks set to open higher despite falls on Wall Street but after gains on European markets following encouraging eurozone data.
• No major economic news is expected on Thursday.
• In equities news, Newcrest Mining and Oz Minerals both are expected to post quarterly results, OceanaGold is slated to post first half results, while Macquarie Group has its annual general meeting scheduled. The NAB's National Small Business Summit continues in Brisbane.

Hong Kong

• HSI gained 53 points or 0.24% to 21,968. CEI dropped 1.65 or 0.02% to 9,778. Trading volume declined to HKD49.8 billion.
• HSBC China PMI preliminary index (July) was released at 47.7, the lowest in 11 months and reflected worse manufacturing activities. HSI fell more than 100 points after the index released. But we think the worse PMI may trigger market expectation to more policies from China government to support the economy and so it may not be too negative sign.
• Apple Inc reported 3Q2013 results that beat estimates. It triggered mobile device sector to perform well. Sunny Optical (2382.HK), AAC Tech (2018.HK) and Fujikon Ind (927.HK) gained 4.9%, 3.2% and 4% respectively.
• Technically, HSI closed above 250-MA in the 2nd day, but is now near the upper Bollinger bands and it climbed without significant trading volume support recently, we expect there will be a small correction in short term. 22,000 will be a key resistance and the next one will be at 22,200.