KLCI: +0.29% to 1777.9
JCI: +0.30% to 4624.3                                       SET: +1.01% to 1437.5
HSI: +0.94% to 22088.8                                     HSCEI: +0.68% to 9723.9
Nikkei: +2.47% to 14005.8                                 ASX200: +0.19% to 5061.5
Nifty: -0.25% to 5727.9                                       S&P500: +1.25% to 1706.9


MARKET OUTLOOK:
For our short term trading outlook and latest macro update, please see our latest webinar slides: (www.uniphillip.com > Education Programs > Phillip Securities Research Webinar). We also feature Boustead in our webinar which has deep value waiting to be unlocked, and a clear identifiable catalyst.

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:

China’s official PMI picked up slightly to 50.3 in July from 50.1 in June, indicating a mild expansion in the nation's manufacturing business. This reading contradicts to HSBC manufacturing PMI, which fell to 47.7 and indicated a contraction. China growth outlook this year remains a key risk even though the government has pledged to keep growth with a 'reasonable zone'.
 
The Federal Reserve Open Market Committee, or FOMC, decided at its July meeting on Wednesday to continue its two major forms of stimulus: keeping the $85bn bond-buying program known as quantitative easing and to keep interest rates at zero. While no one expected a rate hike at the meeting, analysts were surprised the FOMC statement provided no signal on when, and how, the Fed will begin to taper its asset purchases.
 
USA manufacturing grew in July as the ISM's monthly report on manufacturing index rose to 55.4 in July from June's 50.9 reading. The advance beat economists' estimates for a smaller increase to 52.0.
The number of Americans filing new claims for unemployment benefits fell unexpectedly last week, touching a five and half year low, suggesting a steadily improving labour market. Initial claims for state unemployment benefits dropped 19,000 to a seasonally adjusted 326,000, the lowest level since January 2008, the Labor Department said today.
 
The Eurozone's manufacturing sector grew in July for the first time in two years as factories in Germany and Italy resumed growth, and those in Greece reported the slowest decline since the start of 2010. The manufacturing purchasing managers' index rose to 50.3 in July from 48.8 in June, putting it above the 50 index that separates growth from contraction for the first time since July 2011. The latest reading was revised higher from an early estimate of 50.1.
 
Indonesia’s July consumer prices rose 8.61% ypy.
 
Thailand’s July consumer prices rose 2.0% yoy almost in line with estimates of 2.1%
 
Singapore's manufacturing activity expanded for the fifth consecutive month in July, as factories received more orders and raised their inventory stockpiles. The overall purchasing managers' index was 51.8 in July compared with 51.7 in June, according to a survey released Thursday by the Singapore Institute of Purchasing and Materials Management. A reading above 50 signals expansion, while a reading below 50 signals contraction.
 

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Regional Market Focus

Singapore

• The Straits Times Index (STI) ended 21.36 higher or 0.66% higher to 3,243.29 taking the year-to-date performance to +2.41%.
• The top active stocks were DBS (+3.23%), Singtel (unchanged), Hankore (-3.85%), Golden Agri (unchanged) and Keppel Corp (+0.58%)
• STI is still trading in a support/resistance and consolidating. A breakout above 3277 will resume the uptrend; a break below 3205 will imply further downside. Major clusters of support exist from 2930 to 3110.
• Although biased to the upside due encouraging macro-economic data, we remain cautious this week due to potential short term weakness and significant economic news. The FED is continuing their quantitative easing while the number of Americans’ unemployment benefit claims has dropped to a five year low.
• Singapore’s manufacturing activity expanded for the fifth consecutive month in July, as factories received more orders and raised their inventory stockpiles.
• We are positive on Banks (DBS and UOB), SGX, Telcos (Singtel and M1), SATS, Pan United and Boustead.

Thailand

• Thai stocks rebounded nicely on Thu after US QE concerns eased and data showed better-than-expected manufacturing PMI in China but trading volume remained thin amid domestic political pressure which prevented the SET index from breaking above 1440 points.
• More gains could be in store for the SET index to test key resistance levels of 1440 and 1460 points today driven largely by bullish external sentiment, taking cues from gains in US and European equities and global oil prices on better-than-expected economic data out of major economies and the Federal Reserve and European Central Bank’s move to maintain QE, which continued to support global economic recovery. Oil prices received a boost from fears of supply disruptions in Libya, Iraq and Nigeria.
• Domestic political worries during this weekend until next week may probably weigh on the market in late trading as a result of a possible risk aversion selling while light trading volume could leave the market vulnerable to the elevated level of intraday volatility.
• Today we peg resistance for the SET index at 1440-1460 and support at 1420-1400. 

Indonesia

• The Jakarta Composite Index (JCI) finished with moderate gain Thursday (01/08), amidst higher closes in Asian stock markets, as the US Federal Reserve refrained from providing clues about the scale of its bond buying, and after US economic data showed faster-than-expected growth. The Jakarta Composite Index (JCI) gained 13.959 points, or 0.30%, to end at 4,624.336. The advance on Thursday was propped up by gains in 7 of the nine major industry groups, led by miscellaneous industry sector that surged 3.26%, and followed by basic industry sector and trade, services and investment sector with 0.75%-gain each. The LQ45 index added 2.244 points, or 0.29%, to close at 774.146. From the economic front, Indonesia’s trade balance in June showed a USD 846.6 million deficit, bringing the cumulative deficit figure for the first half of the year to USD 3.31 billion. The data, released by Statistics Indonesia, showed imports in the first half this year was USD 94.36 billion, higher than exports of USD 91.05 billion. The same agency reported consumer prices rose 3.29% in July – the highest inflation since 2008 – after the government raised the price of subsidized fuel. Inflation in July brought inflation for the year to 6.75%. In corporate news, DBS Group Holdings Ltd pulled backed-off from its USD 6.5 billion bid for Indonesian lender Bank Danamon Indonesia (BDMN), after Bank Indonesia – the central bank - sought to limit the proportion of Danamon that DBS was able to acquire to 40%. Stocks of BDMN plunged 14.42% to IDR 4,450 per share on Thursday. 131 shares rose, and 125 shares fell Thursday on the Indonesia Stock Exchange, where volume on the regular board reached 2.85 billion shares worth IDR 4.06 trillion. Foreign investors accumulated net purchase of over IDR 3.3 trillion.
• With strong leads from the US markets overnight and positive start in Asia today, the Jakarta Composite Index (JCI) looked set for another climb. On the downside, however, with inflation accelerated to the highest level of 8.61% in July (yoy), pessimistic outlook may weigh on Indonesia’s market today. We expect the JCI to advance today, with minor support and resistance at 4,576 and 4,657, respectively.

Sri Lanka

• The Colombo bourse ended the trading day on an upbeat sentiment, resulting in the indices to close within the positive terrain. The market moved up at a moderate pace during early hours, however the bourse boosted mainly towards the second-half of trading. The benchmark ASPI index closed at its intraday peak of 6,156.60 gaining a sizable 119.38 points or 1.98%, while recording the highest gain after 14th September 2012 (a gain 149.68 points). The S&P SL20 too gained a notable 48.61 points or 1.42% to settle at 3,477.57, witnessing its largest gain since 20th May 2103. The total market capitalization leaped to LKR 2.37Tn, while extending the year to date gain to 9.31%. The market PER and PBV stood at 16.29x & 2.19x respectively. A series of off-market deals totaling up to LKR 1.16Bn overshadowed and limited the on-board activity to LKR 388.79Mn, whilst accounting a share of nearly 75% of the daily aggregated turnover which amounted to LKR 1.55Bn; the turnover noted a significant gain of nearly 71% against the previous trading day. Under the sectorial summary, Plantations (PLT) sector dominated the list providing LKR 694.70Mn. Diversified Holdings (BFI) sector stood next in line providing LKR 603.14Mn. Shares totaling up to 76.45Mn changed hands during the day, resulting in a momentous rise of 425.15% compared to the previous trading day. With regard to share price movement, price gainers slammed the price losers by 141:54. Foreign investors maintained their bearish stance to record a net foreign outflow of LKR 441.89Mn for the third successive trading day, which was resulted by foreign selling of LKR 622.84Mn and buying of LKR 180.95Mn. The net foreign outflow for the past three trading days aggregated up to LKR 1.15Bn, dragging the year to date net foreign inflow (LKR 15.86Bn) below the LKR 16Bn mark once again. With regard to the local FOREX market, the USD closed at LKR 133.24/- selling and LKR 130.04/- buying.

Australia

• The Australian share market on Thursday edged higher despite the negative impact of speculation banks could be hit with a deposit levy. Reports the federal government wanted banks to pay a deposit insurance levy resulted in a panicked sell-off among the big four banks. The benchmark S&P/ASX200 index was up 9.5 points, or 0.19 per cent, at 5,061.5 points.
• Today (02/08/13), the Australian market looks set to open substantially higher after sharp rallies on Wall Street following strong economic data from China, Europe and the US. A battery of better-than-expected headlines included data showing strong manufacturing activity in the eurozone and China, the lowest reading of weekly US jobless claims since January 2008 and decisions by the European Central Bank and Bank of England to maintain low interest rates.
• In economic news on Friday, the Australian Bureau of Statistics is expected to release the producer price index for June quarter and the overseas arrivals and departures figures, also for the June quarter.
• No major equities news is expected.

Hong Kong

• HSI gained 205 points or 0.94% to 22,088. CEI rose 65 points or 0.68% to 9,723. Trading volume was HKD46.885 billion.
• China official PMI was released as 50.3, beat market expectation and PBOC conducted reverse repurchase again, stimulate HK market going up. State Council confirmed to strengthen urban infrastructure construction, CNBM (3323.HK) and Anhui Conch (914.HK) climbed 4.4% and 2.8% respectively. CSR (1766.HK) and CSR Times Elec (3898.HK) surged 7.7% and 8% respectively.
• Macau’s gambling revenue climbed 20% yoy in July. MGM China (2282.HK), Melco Int’l Dev (200.HK) and SJM Holdings (880.HK) rose 2.9%, 1.9% and 1.9% respectively.
• Technically, HSI climbed above the key resistance level at 22,000, the next resistance will be at 22,200 and support will be at 21,831.

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Morning Note

Company Highlights

Sound Global Ltd. wishes to announce that on July 2013, Sound Global won the bid for the Second Sewage Treatment plant in Fuqing City, Fujian Province and the sewage treatment plant (BOT) project in Gaoshanzhen and Yuxizhen, Fuqing City. Investment and construction of the project will be carried out by Sound Global, with a total investment amount of approximately RMB350 million. The total water capacity is 80,000tons/day. Subsidiary project 1, the Second Sewage Treatment Plant utilizes “Primary Sedimentation Tank +A/A/O + High Efficiency Sedimentation Tank + V-shaped Sedimentation Tank” technology and is constructed as a underground (semi-underground dual-level covered) structure. It is the first underground sewage treatment plant project in Fujian Province. Fuqing City, the service location of subsidiary project 1, is ranked at a leading position among the top 100 counties in China. Subsidiary project 2, the sewage treatment plant in Gaoshanzhen, Fuqing City and subsidiary project 3, the sewage treatment plant in Yuxizhen, Fuqing City are located in important counties in Fujian Province. The construction of this group of projects bears great significance to the realization of sustainable development in Fuqing City.  (Closing Price S$0.615, +2.5%)

CapitaLand’s wholly-owned serviced residence business unit, The Ascott Limited, has acquired an operating serviced residence in Hong Kong for HK$462.3 million (approximately S$75.5 million). The property will be leased back to the seller or its nominated entity for two years. At the end of the lease in 2015, the property will be reconfigured and rebranded by Ascott. The serviced residence has a prime location at No.138 Connaught Road West in Hong Kong Island which overlooks the Victoria Harbour. It is a five-minute walk to the new Sai Ying Pun Mass Transit Railway station that will be operational in 2015, and is surrounded by Hong Kong’s authentic cultural, dining, shopping and leisure attractions, including Sun Yat Sen Memorial Park and Macau Ferry Terminal. With the International Finance Centre, trendy Soho and Central areas just two metro train stops away, the serviced residence is perfectly suited for both business and leisure. (Closing Price: S$3.27, +1.2%)

Sembcorp Industries announce that it will be increasing its green energy generation capacity with its largest energy-fromwaste plant in Singapore to date. The company will invest over S$250 million to build, own and operate a facility capable of producing 140 tonnes per hour of steam using industrial and commercial waste collected by Sembcorp’s solid waste management operations, the leading operator in Singapore. The development of this plant is in line with the company’s drive to offer the best and most competitive solutions to its customers, while helping them reduce their carbon footprint. To be located in the Sakra area of Jurong Island, the new facility will consist of two boilers capable of producing a combined 140 tonnes per hour of high-pressure process steam. This investment will be funded through a combination of bank borrowings and internal sources. To be completed in early 2016, the facility will offer an economical, environmentally-friendly source of steam to serve the needs of petrochemical manufacturers in the vicinity. The plant will offer a significant reduction in greenhouse gas emissions compared with a coal-fired steam plant, cutting carbon dioxide emissions by around 50%. The plant will be fuelled by around 1,000 tonnes of industrial and commercial waste per day, which is roughly 14% of the total tonnage of waste bound for incineration in Singapore every day. The facility strengthens synergies between Sembcorp’s energy business and its solid waste management operations, through the conversion of waste, which would otherwise be sent for disposal, into energy in the form of steam for Sembcorp’s customers (Closing Price: S$5.06,-0.4%)

Hiap Hoe Limited announced its maiden foray into Australia. The Group has been awarded a tender for a 3,795 square metre site located at 6 – 22 Pearl River Road, in the broader Docklands precinct of Melbourne, Australia, at a purchase price of A$28.8 million (S$33.6 million). Mr Teo Ho Beng, Hiap Hoe’s Executive Chairman and Chief Executive Officer said, “We are delighted to have acquired 6 – 22 Pearl River Road as it will serve as the foundation of our maiden overseas flagship development. Situated in the highly sought after NewQuay precinct, at the edge of Victoria Harbour, the planned development will be an iconic landmark in Docklands, towering over all other buildings in the precinct, with commanding views from all angles. The distinctive waterfront development offers residents an attractive lifestyle experience with its close proximity to the CBD – from the tranquillity of a panoramic sea view to the hustle and bustle of the vibrant business district. Being our first mixed-used residential cum hospitality project outside Singapore, we will replicate the unsurpassed quality and service standards that have underpinned Hiap Hoe’s signature developments over the years.” (Closing Price: 0.740, +1.4%)