Morning Market Commentary
STI: -0.73% to 3197.5                                         KLCI: -0.22% to 1788.2
JCI: -2.49% to 4568.7                                         SET: -0.50% to 1445.8
HSI: -0.10% to 22517                                         HSCEI: +0.13% to 10220
Nikkei: -0.75% to 13650                                     ASX200: -0.75% to 5113.9
S&P500: -0.33% to 1655.8                                 Nifty: -4.08% to 5507.9


MARKET OUTLOOK:

By Joshua Tan, Head of Research
 
The correction in equities is underway, as we warned in last Monday’s webinar and last Friday’s morning commentary. Still, we expect this to be a near term correction and that the larger uptrend re-assert itself at some point. We will flag clients when we think that will be in our morning commentary and Monday webinars.
 
Today’s webinar will give our usual blow by blow of macro conditions, market strategy, earnings review, and featured stock, which is GLP.
 
To register for the webinar please click the blue link at the top of this morning note, or to go, www.poems.com.sg > weekly webinar market call by Phillip Research.

(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

Singapore July non-oil exports fell 0.7% Y/y beating expectations of -2.9%. Despite the negative print, on a %y-y 3mma basis the trend is moving toward positive territory and we expect this year’s growth to be on the upper end of MTI’s forecast range.
 
U.S. housing starts rose 5.9% from June to a seasonally annual rate of 896,000 from June’s revised figure of 846,000. This was less than expectations of 900,000.
Consumer confidence unexpectedly dropped in August from a six-year high as Americans faced rising interest rates. The U.Mich Index fell to 80 from 85.1 in July 2007.
 
Eurozone CPI remained unchanged last month at a seasonally adjusted annual rate of 1.6% from 1.6% in the preceding month.
 
In Taiwan, GDP growth slowed down to 2.49% y-y in 2Q13, compared to the 1.62% y-y gain in 1Q13. Private spending rose by 1.69% y-y, compared to the 0.3% y-y gain in 1Q13. Investment slowed to 3.80% y-y, compared to the 6.31% y-y gain in 1Q13. Exports expand by 5.06% y-y, slightly faster than the 5.03% y-y pace in 1Q13. Despite the acceleration in 2Q13 GDP growth, the government cuts its 2013 whole year GDP growth forecast to 2.31%, as compared to earlier estimate of 2.4%. The central bank is holding its benchmark interest rate at 1.875% y-y, marking its longest period of inaction.
 
In Hong Kong, GDP grew by 3.3% y-y in 2Q13, slightly faster than the 2.9% y-y gain in 1Q13. Household spending rose by 4.2% y-y, slower compared to the 6.3% y-y gain achieved in 1Q13. Government spending grew by 3.1% y-y, compared to the 2.1% y-y gain in 1Q13. Investment rose by 6.9% y-y, compared to the 3.3% y-y drop in 1Q13. Goods exports rose by 6.2% y-y, compared to the 8.8% y-y gain in 1Q13. Hong Kong government adjusts its 2013 GDP growth forecast to 2.5-3.5%, from previous 1.5-3.5% range. Despite the well performing 2Q13 economic data, there is still downside risk from China's slowdown.

Regional Market Focus

Singapore

• The benchmark STI closed lower at 3,197.53 (-0.73%). The 3.3bn shares traded were worth S$1.4bn in value.
• The STI may face continued pressure on the back of continued concerns over potential tapering of QE. Our analysts guide for a potential near term selloff in stocks, as per our Morning note’s Market outlook. 
• We peg near-term support at 3,100, while downward pressure is expected to continue from current levels. 
• Top picks for the year are Pan United (Accumulate, TP: S$1.27), SGX (Buy, TP: S$8.30) & Keppel Cord (Accumulate, TP: S$12.25).

Thailand

• Thai stocks ended the session down 7.31 points at 1,445.76 points last Fri, breaking below a key level of 1,450 points in the absence of fresh positive triggers and amid external pressure from fears of a possible QE tapering in the US after the latest batch of upbeat macroeconomic data.
• Short-term positive market drivers appear to be losing steam after second-quarter earnings season wound down last week while fears of US QE rollback came back to grip the market amid net foreign sell-off. Even if the scale of foreign selling remained small, the market seems to lack impetus to rebound.
• At home, there also seems to be no strong fresh positive triggers in sight for the meantime. The second-quarter GDP data due to be released by the NESDB today will be the main economic event today. A Reuters poll of analysts expected Thailand’s economy in 2Q13 to grow by 0.2% q-q against a contraction of 2.2% q-q in 1Q13 and expand by 3.3% y-y against a rise of 5.3% y-y in 1Q13 as a result of slowing domestic demand and sagging exports against the backdrop of a global economic slowdown. Domestic political issues also still need to be closely watched, especially the controversial Bt2tn infrastructure loan bill tabled for debate in parliament this week.
• Today we peg resistance for the SET index at 1460-1475 points and support at 1440-1420 points.  

• Most Indonesian stocks fell Friday (16/08), amidst bearish tone in Asia as investors concerned that the US Federal Reserve would cut its stimulus program as soon as September. The Jakarta Composite Index (JCI) plunged 116.475 points, or 2.49%, at 4,568.654. The steep decline on Friday included all but one major industry sectors, with finance sector fared worst, and mining sector performed best. Among the lagging sectors, finance sector slid 3.81%, miscellaneous industry fell 2.81%, and basic industry sector lost 2.65%. Blue-chip shares also fell, with the LQ45 index declined 22.468 points, or 2.88%, to 758.857. In economic news, Bank Indonesia cut the ceiling on the loan-to-deposit ratio (LDR) of commercial banks to 92% and announced that it plans to increase the secondary minimum reserve requirement for Rupiah deposits to 4%. Separate report showed growth in sales of motorbikes in Indonesia fell fractionally to 21.3 percent in July from a year earlier despite higher fuel prices and interest rates. There were 702,423 motorbikes sold in the month, up 6.5 percent on a monthly basis. Decliners outran gainers 203 to 45 Friday on the Indonesia Stock Exchange, where 3.29 billion stocks worth IDR 4.43 trillion changed hands on the regular board. Foreign investors posted net sale of IDR 891.12 billion.
• With sentiments turned negative amidst higher yields in US treasury, stock will have little support today. We expect the Jakarta Composite Index (JCI) to decline moderately today, and move with minor support and resistance at 4,515 and 4,674.

• The Colombo bourse ended the trading day on a positive note, adding further to the gains recorded on the previous trading day. The ASPI extended gains for the fourth consecutive trading day by gathering 13.11 points or 0.21% to conclude at 6,233.21 and the benchmark index has gathered 103 points or 1.67% during these four trading days. However, the S&P SL20 closed within the negative terrain at 3,491.55, dropping 4.14 points or 0.12%; this was having gained 44.24 points or 1.28% on past three trading days.  The daily aggregated turnover amounted to record 596.14Mn. Under the sectorial round-up, Diversified Holdings (DIV) sector topped the list providing LKR 267.92Mn. Beverage Food & Tobacco (BFT) sector also performed providing LKR 117.15Mn to the daily aggregate turnover. Shares totaling up to 27.16Mn changed hands during the day resulting in a gain of 11.64% compared to the previous trading day. Price gainers surpassed the price losers by 93:81. Foreign participants appeared to be bullish during the day for the 3rd consecutive trading day resulting in a net foreign inflow of LKR 31.05Mn; this was resulted by foreign buying of LKR 190.75Mn and selling of LKR 159.69Mn.

• The Australian share market on Friday finished weaker as profit taking hit the big banks and resource companies. The benchmark S&P/ASX200 index was 38.5 points, or 0.75 per cent lower to 5,113.9 points.
• Today (19/08/13), the Australian market looks set to open lower after US stocks closed on a negative note following a mixed batch of economic data and a big jump in bond yields.
• In economic news on Monday, the Australian Bureau of Statistics (ABS) is due to release new motor vehicle sales for July.
• In equities news, BlueScope Steel, Amcor, Aurizon, The Reject Shop, Federation Centres, Challenger Financial, Dexus Property Group, and Bendigo and Adelaide Bank are all expected to post full year results.

• HSI dropped 21 points or 0.1% to 22,517. CEI gained 13 points to 10,220. The trading volume was HKD67.879 billion.
• Dragged by weak U.S. market, HSI opened low at 22,451 (-88) and went down to day low at 22,311 (-227), but it turned to gain in the morning due to an error buy order by Everbright Securities. For last week, HSI gained 710 points or 3.3%, CEI, outperformed HSI, climbed 621 points or 6.5%.
• Sands China Ltd (1928.HK)’s share price is in up trend and broke record high recently, following interim results released with net profit surged 1.14 times,
• Technically, next resistance and support will be at 22,800 and 22,238 respectively.

Morning Note

Company Highlights

Roxy-Pacific Holdings Limited announced it would not proceed with the S$33.0 million enbloc purchase of Harbour View Gardens, a freehold residential site at Pasir Panjang Road. The Court of Appeal on August 15 dismissed the appeal made by the consenting subsidiary proprietors of Harbour View Gardens for an order to proceed with the sale. (Closing price: S$0.70, -2.778%)

Hoe Leong Corporation Limited announced that its associate company, Semua International Sdn Bhd, a Malaysia-based oil tanker and transport logistic company, has been awarded two contracts from a large oil major worth up to approximately RM150.0 million. The charter contacts are for a period of three years for two of Semua Group’s oil tankers. The contracts contain options for subsequent two years based on mutually agreed terms by both the Semua Group and the charterer. The vessels have commenced work on 1 August 2013. (Closing price: S$0.132, -%)

Mann Seng Metal International Limited announced it has entered into a sale and purchase agreement with Chew Kuan Fah and Ooi Chong Soon for the purchase of their entire shareholding in Marc 16 Equipment Manufacturing Sdn Bhd. The stake represents 100,000 ordinary shares of RM1.00 each in the capital of Marc 16 for a cash consideration of RM269,349.90. (Closing price: S$0.072, -%)

Plastoform Holdings Limited announced that it has, through its wholly-owned subsidiary, Platform2 International Limited, established a wholly -owned subsidiary, iUi AUDIO INC. iUi AUDIO INC is established in California , USA with an initial paid -up capital of US$10,000.00 and is principally engaged in sales administration, import customs clearance and domestic logistics for mobile devices in the US. (Closing price: S$0.033, -%)

Elektromotive Group Limited announced it inked a binding MOU to acquire an aggregate of 2,040,000 shares of Asia Galvanizing Pte Ltd (AGPL) representing 51 per cent of the issued and paid up capital in AGPL for S$7.65 million. The payment will comprise S$3.6 million in cash and the remaining S$4.05 million via the issue of 162 million new EGL shares at 2.5 S-cents each. AGPL is a Singapore based company that provides hot dip galvanising services to the building and construction, oil & petrochemical, marine offshore and general steel fabrication industries in Singapore. (Closing price: S$0.028, +12.0%)

Source: PhillipCapital Research - 19 Aug 2013