STI: -0.14% to 3084.4                                         KLCI: +0.08% to 1722.5
JCI: -1.18% to 4120.7                                         SET: -0.67% to 1329.2
HSI: +0.65% to 22005                                        HSCEI: +1.44% to 10075.1
Nikkei: -0.18% to 13636                                     ASX200: +0.24% to 5135.4
Nifty: +0.09% to 5476.5                                      S&P500: -0.40% to 1656.8              

 
MARKET OUTLOOK:
By Joshua Tan, Head of Research

Two forward looking indicators have declined in the US – first new home sales, then non-defense capital goods excluding aircraft. 3q13 GDP is not off to a good start which now raises concern for our thesis of a stronger 2H13 recovery. The S&P500 reacted negatively to this data point so continue to stay cautious as this selloff is still working itself out.
 
For the market outlook for the week, please go to www.uniphillip.com > education programs > Phillip Securities Research webinar.

This week’s webinar also gives an update on the Offshore & Marine sector.

(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’s manufacturing output increased 2.7% y/y in July 2013.  In contrast, on a seasonally adjusted month-on-month basis, output contracted 1.9%. According to Economic Development Board, manufacturers produced more electronics and transport engineering companies increased output in July 2013 as compared to a year ago. Electronics output rose 3.5% y/y, buoyed by higher export demand in the other electronic modules & components, computer peripherals and semiconductors segments. On the other hand, transport engineering cluster increased 13.9% y/y, due to the higher contributions from rig building and ship conversion projects, as well as more repair and maintenance jobs from commercial airlines.
 
Thailand’s trade deficit widened to $2.28 billion in July from $1.91 billion in the previous month, the Ministry of Commerce said. Exports contracted 1.48% from a year earlier while imports swelled by 1.08%. The Ministry of Commerce has acknowledged that Thailand’s exports continue to be affected by slow global growth and that Commerce Minister Niwatthumrong Boonsongpaisan will hold a meeting with Thai trade representatives early next month to discuss measures against the falling trade. "Although many agencies predict lower-than-target export growth this year, the ministry has not yet lowered its target of 7-7.5 per cent in order to encourage all involved sectors to keep trying hard," Ministry Permanent Secretary Vatchari Vimooktayon said at media briefing. She said the ministry would encourage exporters to emphasise emerging markets and Asean.
 
US Durable goods orders dropped 7.3 percent, from an increase of 3.9 percent in June, as demand for goods ranging from aircraft to computers and defense equipment fell. That was the biggest decline since last August and snapped three consecutive months of gains. Economists expected durable goods orders to fall 4.0 percent.
 

Regional Market Focus

Singapore

The Straits Times Index (STI) ended 4.44 points lower or -0.14% to 3,084.41, taking the year-to-date performance to -2.61%.
The FTSE ST Mid Cap Index gained +0.23% while the FTSE ST Small Cap Index declined -1.34%. The top active stocks were Golden Agri-Resources (+7.62%), Mirach Energy (+10.20%), Wilmar (+3.61%), Albedo (+23.08%) and SingTel (-0.28%).
STI is held at support of 3050 and the next major support is at 2930 which is our in-house probable downside target if the selloff continues. Caution is advised till the market weakness has run it’s course.
Top picks for the year to consider after the market has absorbed the shorter term cycle sell off are Pan United (Accumulate, TP: S$1.27), SGX (Buy, TP: S$8.30) & Keppel Corp (Accumulate, TP: S$12.25).

Thailand

Thai stocks succumbed to foreign selling pressure in late trading, leading the SET index to finish the session down for an eighth consecutive day on Mon, after data showed Thailand’s exports shrank in Jul 2013. Foreign investors turned net sellers of Thai equities worth Bt1,689mn on Mon.
Wall Stree ended lower on Mon after the US signaled possible military action against Syria over the alleged use of chemical weapons and data showed US durable goods orders dropped more than expected, casting a shadow over economic recovery and Federal Reserve’s QE policy. 
US Secretary of State John Kerry called Syria's use of chemical weapons ‘undeniable,’ signaling the US was edging closer to a possible military response. Like the United Nations, China also resolutely opposed the use of chemical weapons but did not mention about any military action. Syria jitters undermined investor confidence. 
In Thailand, the market’s attention will remain on when the controversial Bt2trn infrastructure loan bill will be tabled for parliamentary debate.
In view of uncertainties over both global and Thai economic and political outlook, we believe more downside could be on the cards for Thai stocks with initial support seen at 1320 points. Set a cut loss at 1300 points.
Today we peg resistance for the SET index at 1353-1380 and support at 1320-1300.  

Indonesia

The Jakarta Composite Index (JCI) ended in negative territory on Monday (26/08), as the Rupiah remained weak and amidst views that Indonesia’s central bank will raise its benchmark rate in the next meeting. The JCI shed 49.158 points, or 1.18%, to end at 4,120.669. LQ45, the index tracking Indonesia’s blue-chip shares, slid 11.367 points, or 1.65%, at 677.889. With the Rupiah remained above 10,500 last week, and the government’s plan to revive financial stability has not succeeded in regaining confidence in the midst of widening current account deficit, Indonesia’s capital markets can be expected to remain volatile this week. Some domestic pension funds, however, saw opportunities of undervalued stocks and purchased large amount of blue-chip stocks last week. A row of economic data is expected to be released on Sep 2, including Consumer Price Index (CPI) for August, and trade balance for July. On Monday, seven of the 9 major industry sectors closed in red, with miscellaneous industry sector declined 2.60%, basic industry sector slid 2.44%, and consumer goods sector lost 2.41%. Decliners outran gainers 163 to 108 Monday on the Indonesia Stock Exchange, where 3.47 billion shares worth IDR 3.73 trillion changed hands on the regular board. Foreign investors posted net sale of IDR 227 billion.
With lower closes on Wall Street overnight and negative start in Asia this morning, the JCI would likely to trim points today. We expect the JCI to move lower, and move with minor support and resistance at 4,069 and 4,222, respectively.

Sri Lanka

The bourse continued with its losing streak on the commencement of the last week of August, erasing the capital gains recorded on a lot of heavy weighted counters. The market observed a downturn from the early hours itself, triggering the ASPI to fall to an intraday low of 5,895.65 losing 56.18 points or 0.94% as at the market closure. Following the similar pattern the S&P SL20 also closed within the negative territory at 3,327.63, losing 15.33 points or 0.46%. The total market capitalization stood at LKR 2.42Tn, reducing the year to date gain to 12.03%. The market PER and PBV were 16.70x and 2.24x respectively. The turnover for the day was LKR 365.98Mn, indicating a drop of 62.59% against the previous trading day. Under the sectorial round-up, Bank Finance & Insurance (BFI) sector topped the list providing LKR 137.66Mn, accounting nearly 38% of the day’s total turnover and LKR 126.33Mn subscription was derived from Diversified Holdings (DIV) sector. Most importantly, both of BFI and DIV collectively made 72.13% to the aggregated turnover. During the day, a total of 13.29Mn shares changed hands, which was a decrease of 35.27% against the previous trading day. In terms of share price movements, 152 companies lost while 48 companies gained within the trading day. Foreign participants were bearish for the 3rd consecutive trading day to record a net foreign outflow of LKR 99.02Mn, resulted by foreign selling of LKR 196.82Mn and buying of LKR 97.80Mn; this reduced the year to date net foreign inflow to LKR 18.25Bn. With regard to the local FOREX the Sri Lankan Rupee (LKR) surpassed the LKR 134/- level, depreciating further against the U.S Dollar (USD) whilst touching a lowest level since mid-September 2012; currently, the selling rate stands at LKR 134.07/- and the buying rate is at LKR 130.86/-.

Australia

The benchmark S&P/ASX200 index was up 12.04 points, or 0.24 per cent to 5,135.4 points.
Today (27/08/13), the Australian share market looks set to open slightly lower despite gains on Wall Street.

Hong Kong

HSI climbed 141 points or 0.65% to 22,005. CEI gained 142 points or 1.44% to 10,075. Trading volume decreased to HKD47.354 billion
National Bureau of Statistics of China stated that China can meet its 7.5% GDP growth target and local government debt problem is under control, led SHCOMP to close at day high of 2,096, up 1.9%. 
CCB (939.HK) reported interim results with net profit up 12.6% yoy, better than market expectation but the share price only rose 0.69% due to worse asset quality. Goldwind (2208.HK)’s 1H13 net profit increased by 28.6% yoy and expected to earn 3.5-4 times for the first 3 quarters, the share price surged 22.7%.
Technically, the next resistance and support will be at 22,200 and 21,891 respectively.
 

Morning Note

Company Highlights

Japan Foods Holding Ltd. announced that the Company has today subscribed for an additional 100,000 new ordinary shares in the capital of its wholly-owned subsidiary, Bachmann Japanese Restaurant Pte Ltd (“BJR”), for a total consideration of S$100,000 (“Subscription”). The Subscription increased the paid-up share capital of BJR from S$500,000 to S$600,000. The Subscription is funded through internal resources and is not expected to have any material financial impact on the consolidated net tangible assets per share and consolidated earnings per share of the Company and its subsidiaries for the current financial year ending 31 March 2014. (Closing price: S$ 0.790, +1.282%)

Jaya Holdings announced it has signed a contract to charter its new build DP2 Platform Supply Vessel (PSV) “Jaya Vigilant” for a long term operation in the Indian Ocean, offshore Mozambique. The two year contract, which includes charterer’s options has a value of more than US$20 million. Jaya Vigilant, designed as a large PSV, is now being upgraded with additional equipment required for the charter’s work scope prior to delivery from Jaya’s own yard in Batam, Indonesia at the end of September 2013. (Closing price: S$ 0.610, -%)

Miyoshi Precision Limited announced that its 53.16% owned subsidiary, Giken Sakata (S) Limited (“Giken”), had today announced a proposed placement of up to 55,234,000 new ordinary shares in the capital of Giken (“New Giken Shares”) pursuant to a placement agreement with DMG & Partners Securities Pte Ltd (“Proposed Placement”) and 76,275,000 New Giken Shares pursuant to a subscription agreement with Roots Capital Asia Limited (“Proposed Subscription”) dated 23 August 2013.  (Closing price: S$ 0.056, -3.448%)

Source: Macquarie Research - 27 Aug 2013