STI: -1.63% to 3034                                     KLCI: -1.23% to 1701.2
JCI: -3.71% to 3967.8                                  SET: -2.65% to 1293.9
HSI: -0.59% to 21874                                   HSCEI: -0.86% to 9988
Nikkei: -0.69% to 13542                              ASX200: +0.11% to 5141.2
Nifty: -3.45% to 5287.5                                S&P500: -1.59% to 1630.5     

 
MARKET OUTLOOK:
By Joshua Tan, Head of Research

For the market outlook for the week, please go to www.uniphillip.com > education programs > Phillip Securities Research webinar.

Apart from giving the market strategy, 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.).5
         

Macro Data

US consumer confidence increased to 81.5 in August from 81 the prior month. This exceeded expectations of 79.

Eurozone: German business confidence rose to the highest level in 16 months in August. The business climate index climbed to 107.5 from 106.2 in July, beating expectations of 107.

In China, industrial profits rose by 11.1% y-y in the seven months period through July, the same pace as it achieved in the first 6 months, adding to sings that the nation's economy is stabilizing after a 2 quarter slowdown and an inter bank lending squeeze in June.

In Hong Kong, exports rose by 10.6% y-y in July, compared to the market expected 3.5% y-y gain and the 0.2% y-y drop in June. Exports to China grew by a significant 14.4% y-y pace in July, compared tot he 0.2% y-y drop in June. Exports to US rose by 2.9% y-y, compared to the 3.0% y-y drop in June.
 

Regional Market Focus

Singapore

The Straits Times Index (STI) ended 50.39 points lower or -1.63% to 3,034.02, taking the year-to-date performance to -4.20%. This occurred after fears of military intervention in Syria added to concerns over when the US Federal Reser e would taper a massive stimulus programme.
The FTSE ST Mid Cap Index declined (-1.03%), as with the FTSE ST Small Cap Index (-1.42%). The top active stocks were UOB (-2.62%), SingTel (-1.40%), OCBC Bank (-0.80%), DBS (-1.42%) and Golden Agri-Resources (-0.89%).
The support zone of 3050 has it’s first sign of breakage. If price confirms and stays under, then 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

The SET index sharply tumbled on Tue as stocks remained under pressure from foreign selloff and investors were more cautious in trading. The main index finished the session down 35.21 points at 1293.97 points on Tue.
US equities slumped on Tue due largely to growing concerns about Syria after US Defense Secretary Chuck Hagel said US military forces in the region are ready to go should President Barack Obama order action against Syria. In UK, British PM David Cameron is recalling parliament from summer break tomorrow to discuss how best to respond to a suspected chemical attack in Syria.
G-20 leaders will meet in St Petersburg next week. The Syria issue is also likely to be on the agenda including the potential QE cutbacks in the US. China however urges the US to weigh the impact on the global economy of its exit from QE.
The market remained clouded by negative news, which undermined investor confidence. To play safe, we advise investors to take a wait-and-see approach after sharp market losses of more than 160 points or 11% but a short-term rebound is likely at the 1280-point support level. 
Today we peg resistance for the SET index at 1300-1320 points and support at 1280-1250 points.   
Indonesia
Most Indonesian stocks fell Tuesday (27/08), amid worries about emerging markets, and as the US held a firm stance against Syria. The Jakarta Composite Index (JCI) plunged 152.827 points, or 3.71%, to close at 3,967.842, with all of its nine major industry groups ended in red. Property, construction and real estate sector performed worst with 7.02%-drop, followed by miscellaneous industry sector with 5.40%-loss, and basic industry sector with 4.94%-fall. Most of the blue-chip shares also declined, as the LQ45 index slid 26.017 points, or 3.84%, to 651.872. The Rupiah was traded at IDR 10,845 against the US dollar at 10:00 GMT on Tuesday. Speculations that the US Federal Reserve may reduce its bond purchase program as soon as September hampered emerging markets, as the rise in US dollar would pressure currencies of emerging market countries. Investors also fretted the escalating tension between the US and Syria, with the later allegedly used chemical weapons against civilians. If war does eventuate in Syria, higher fuel prices are seen to hit emerging economies. 278 shares finished in red and 33 shares closed higher Tuesday on the Indonesia Stock Exchange, where 4.16 billion shares worth IDR 4.93 trillion traded on the regular board. Foreign investors’ trades accumulated to a total net sale of IDR 245.55 billion.
The Jakarta Composite Index (JCI) will likely to extend decline today, with global markets are still in negative zone as concerns about the possible war in Syria hampered global markets. We expect the JCI to decline, and traded today with minor support and resistance at 3,861 and 4,154.

Sri Lanka

Ending its 5 day losing streak the bourse managed to eke out a modest gain, resulting the benchmark index to re-enter in to green territory. The market witnessed a notable decline during the first half of the trading causing the benchmark ASPI to fall to 5,836.91 (having lost 1% or 59 points), however, the index settled at 5,923.34 gathering 27.69 points (0.47%) mainly derived through the gains on certain blue chip counters; during the past 5 trading days the ASPI lost 338 points or 5.52%. The S&P closed negative for the 5th consecutive trading day at 3,319.33, losing 8.30 points or 0.25%. As at the daily closure, the total market capitalization was recorded at LKR 2.44Tn, with a year to date gain of 12.55%. The market PER and PBV were 16.78x and 2.25x respectively. The day witnessed an aggregated turnover of 503.31Mn, indicating a gain of 37.53% against the previous trading day. Diversified Holdings (DIV) sector dominated the list under the sectorial summary providing LKR 197.49Mn and accounting to nearly 40% of the day’s aggregate turnover. Bank Finance & Insurance (BFI) sector added LKR 124.97Mn. Within the day, a total of 20.40Mn shares changed hands resulting in an increase of 53.49% against the previous trading day. Price losers surpassed the price gainers by 150:57. Foreign participants were bearish during the day, resulting in a net foreign outflow of LKR 96.31Mn; this reduced the year to date net foreign inflow to LKR 18.16Bn. As at the day’s closure, the USD stood at LKR 134.21/- selling and LKR 131/- buying.

Australia

The Australian share market on Tuesday closed slightly higher despite concerns about a possible military response to Syria's unrest. The benchmark S&P/ASX200 index was up 5.8 points, or 0.11 per cent, to 5,141.2 points.
Today (28/08/13), the Australian market looks set to open lower following a plunge on Wall Street as the US investors eye possible military intervention in Syria.
In economic news on Wednesday, the Australian Bureau of Statistics is due to release construction work done figures for the June quarter, while Reserve Bank of Australia head of Payments Policy Department, Tony Richards, is speaking at IQPC's The Future of Digital Payments Conference.
In equities news, Woolworths, AGL Energy, Transfield Services, Charter Hall Group, Abacus Property Group and Wotif.com Holdings are expected to post full year results. Metcash is slated to hold its annual general meeting. 

Hong Kong

HSI lost 130 points or 0.59% to 21,874 and CEI dropped 86 points or 0.86% to 9,988. Trading volume was HKD47.972 billion.
Dragged down by emerging markets, especially Indonesia market, HSI dropped sharply in afternoon, day low was 21,771 (-234).
PICC P&C (2328.HK) gained 6.8% yesterday as sell-side report said its earnings would be driven by rural insurance business. Comtec Solar (712.HK) reported interim results with loss narrowed to RMB12.12 million but its share price dropped 18.1%. Want Want China (151.HK)’s 1H13 net profit climbed 33.2% due to significant gross margin improvement.
Technically, HSI dropped below both 100-MA and 250-MA yesterday, sending a negative signal. The next resistance and support will be at 22,000 and 21,423 respectively
 

Morning Note

Company Highlights

Fraser and Neave, Limited announced a proposal to list its property arm, Frasers Centrepoint Limited (“FCL”) by undertaking a dividend in-specie distribution of FCL shares to F&N shareholders. FCL is expected to be listed by way of introduction on the Main Board of the Singapore Exchange Securities Trading Limited (“SGX-ST”). Upon obtaining the relevant approvals, F&N shareholders will receive, at no cost,two FCL shares for every one F&N share owned. F&N and FCL will be traded separately on the SGX-ST. The listing of FCL shares is expected in November or December 2013. Following the completion of the proposed transaction, F&N will no longer have an interest in FCL. (Closing price: S$ 1.780, +0.565%)

Kingsmen Creatives Ltd. provided an update on the legal proceedings in Singapore involving the Company’s wholly owned subsidiary, Kingsmen Exhibits Pte Ltd (“KE”) against Premier Exhibitions, Inc. (“Premier”) relating to the Titanic themed exhibition in Macau. As previously announced by the Company on 5 July 2013, KE had commenced proceedings in Singapore to assert that they were not in breach of any alleged intellectual property rights of Premier. In response Premier had sought to stay the proceedings in Singapore and had commenced proceedings against the Company and KE (collectively, the “Group”) in the United States District Court in Florida (Middle District, Jacksonville Division). On 7 August 2013, the District Court in Florida gave judgment and found that the position taken by the Group was correct and that Premier has no right or basis to pursue their alleged claims in Florida. In a judgment delivered yesterday, 26 August 2013, the High Court found against Premier’s application to stay the proceedings in Singapore and ordered that Premier file their defence in response to KE’s claims made in Singapore. The judgment of the High Court of Singapore is largely consistent with the decision of the District Court in Florida in that both Courts found that Singapore is an appropriate forum in which the dispute should be resolved and Florida is not. (Closing price: S$ 0.885, -%)

Swee Hong Limited announced that the BCA has accepted the Company’s tender for the Project which the Company had submitted pursuant to an open tender held by BCA. Pursuant to BCA’s acceptance of the Company’s tender, the Company had on 22 August 2013 entered into a sub-tenancy agreement with the BCA (the “Sub-Tenancy Agreement”) for the lease of the Property pursuant to the Project. The sub-tenancy will commence on 1 September 2013. (Closing price: S$ 0.290, -%)

Singapore Technologies Engineering Ltd (ST Engineering) announced that its electronics arm, Singapore Technologies Electronics Limited (ST Electronics), has placed PMB Project Management Business Sdn Bhd (PMB Malaysia) under members’ voluntary liquidation. PMB Malaysia is an indirect wholly owned subsidiary of ST Electronics. The liquidation of PMB Malaysia is a result of ongoing business review to streamline capabilities and optimise resources within the electronics sector and is not expected to have any material impact on the consolidated net tangible assets per share and earnings per share of ST Engineering for the current financial year. (Closing price: S$ 3.850, -0.517%)

Source: PhillipCapital Research - 28 Aug 2013