STI: -0.98% to 3004.2                                      KLCI: -0.89% to 11686.2
JCI: +1.48% to 4026.5                                     SET: -1.41% to 1275.8
HSI: -1.60% to 21524                                      HSCEI: -2.23% to 9765
Nikkei: -1.51% to 13338                                  ASX200: -1.05% to 5087.
Nifty: -0.05% to 5285                                       S&P500: +0.27% to 1634.9    

 
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.)
         

Macro Data

Thailand’s Manufacturing Production Index shrinks 4.5% y/y in July for the fourth consecutive month. The contraction is due to a slower output in several key industries, namely the production of hard disk drives, canned foods, autos, processed chicken and electrical appliances, said the Office of Industrial Economics in an email statement on Wednesday.

U.S. mortgage applications fell last week to the lowest level since February 2011 as a jump in interest rates led to another drop in home financing. The MBA index decreased 2.5% in the period ended Aug 23.

Eurozone M3 Money Supply increased 2.2% yoy in the period ending July. This exceeded expectations of 2.0%.

 

Regional Market Focus

Singapore

The Straits Times Index (STI) ended 29.84 points lower or -0.98% to 3,004.18, taking the year-to-date performance to -5.14%.
The FTSE ST Mid Cap Index declined -0.68% while the FTSE ST Small Cap Index declined -0.92%. The top active stocks were Mirach Energy (-8.33%), DBS (-0.94%), SingTel (-0.57%), Capitaland (-2.33%) and UOB (-0.05%).
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. We are in the midst of confirmation if the support can hold. Though a rebound in the Jakarta markets is encouraging. Caution is still advised till market weakness has fully 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 whipsawed between positive and negative territory within a trading range of 34 points on Wed before the SET index finished the session down 18.21 points at 1,275.76 points. Only energy counters gained on soaring oil prices amid Syria jitters. 
Wall Street rebounded slightly after two consecutive sessions of losses but thin trading volume below 30-day average reflected concerns about Syria after the US and UK might possibly take military action against Syria without a UN mandate amid opposition from Russia and China.
Thai stocks also came under pressure from foreign capital outflows, which put a cap on the market’s upside after foreign selling spree continued unabated in the Thai stock market. Eyes will also remain on key US economic data, especially GDP, which may provide more clues on the US Federal Reserve’s QE tapering plan.
Following ten straight sessions of losses, which took the SET index into oversold territory, we believe Thai stocks may be poised for a rebound but the upside would continue to be limited in the face of ongoing risks. We expect a trading range of 1260-1290 points for the SET index today.
Resistance for the SET index is pegged at 1280-1300 points and support at 1260-1250 points today.    

Indonesia

The Jakarta Composite Index (JCI) rebounded on Wednesday (28/08), supported by domestic investors’ purchases and as shares buyback plans announced by a number of constituents lifted stock prices. The JCI advanced 58.633 points, or 1.48%, to 4,026.475. The gain on Wednesday included eight of the nine major industry groups, led by miscellaneous industry sector that surged 4.40%, followed by property, construction and real estate sector with 2.74%-advance, and finance sector with 1.53%-rise. Blue-chip stocks rose on Wednesday, with the LQ45 index gained 13.109 points, or 2.01%, to end at 664.981. A number of shares buyback plans were announced by listed-companies in Jakarta on Wednesday, among others MNC Group, an Indonesian media conglomerate, that said the group is ready to buy-back shares of Media Nusantara Citra (MNCN) and Global Mediacom (BMTR), two of its subsidiaries listed on the Jakarta Stock Exchange. Similar interests in shares buybacks came from a number of listed state-own enterprises, according to the Financial Services Authority (“OJK”), citing strong fundamentals of these companies, without giving further details. Gainers outpaced decliners 153 to 126 Wednesday on the Indonesia Stock Exchange, where 4.98 billion shares worth IDR 6.39 trillion traded on the regular board. Foreign investors’ transactions accumulated to a total net sale of IDR 1.19 trillion.
The Jakarta Composite Index (JCI) looked set for another gain today, following a rebound yesterday and higher close on Wall Street overnight. Stock purchases by domestic investors and share buyback plans by a number of constituents may help lift sentiments in Indonesia's market today. We expect the benchmark index to advance, with support and resistance at 3,769 and 4,162, respectively.

Sri Lanka

The Colombo Bourse depicted an unexpected plunge during the day, dragging the indices further into the risky negative territory. The market trended downwards from its early hours falling to an intraday low of 5,753.20 losing a gigantic 170.14 points or 2.87%, suffering the worst loss post to 14th February 2012 (loss of 190 points). Following a similar trading pattern the S&P SL20 lost a substantial 109.40 points or 3.30%, to close the day at 3,209.35 just 9 points above the 3,200 mark. With regard to the movement in share prices, price losers slammed the price gainers by 187:30. The turnover for the day amounted to LKR 694.31Mn, indicating a gain of 37.95% compared to the previous trading day. A total of 25.83Mn shares changed hands during the day resulting in a gain of 26.61% against the previous trading day. Under the sectorial round-up, Motors (MTR) sector stood on top providing LKR 231.71Mn and Diversified Holdings (DIV) sector emerged second contributing LKR 174.30Mn. As at the daily closure the total market capitalization dropped to LKR 2.37Tn, reducing the year to date gain to 9.32%. The market PER and PBV stood at 16.36x and 2.19x respectively. Foreign participants appeared to be bullish for the first time during the week, recording a net foreign inflow of LKR 202.59Mn, adding further to the year to date net foreign inflow of LKR 18.36Bn.With regard to the local FOREX market, the Rupee (LKR) depreciated further against the U.S. Dollar (USD), falling to a lowest level in 13 months; currently the selling rate is at LKR 134.66/- and buying rate stands at LKR 131.44/-.

Australia

The Australian share market on Wednesday suffered its steepest one-day fall in three weeks as speculation about a US military strike on Syria hits the big miners. The benchmark S&P/ASX200 index was down 54 points, or 1.05 per cent to 5,087.2 points.
Today (29/08/13), the Australian market looks set to open flat after Wall Street made modest gains but European bourses fell amid nervousness over possible action against Syria.
In economic news on Thursday, the Australian Bureau of Statistics releases private new capital expenditure and expected expenditure data for the June quarter while the HIA posts new home sales figures for July.
In equities news, Qantas Airways, Ramsay Health Care, Paladin Energy and Perpetual are expected to release full year results, while Westfield Group posts first half results and David Jones announces its fourth quarter sales figures. Meanwhile, Tabcorp chief executive David Attenborough is slated  to give a speech to an AMCHAM lunch. 

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

JOYAS INTERNATIONAL HOLDINGS LIMITED announced that the Singapore Exchange Securities Trading Limited (the “SGX-ST”) has today granted its in-principle approval (the “AIP”) for the listing and quotation of the Placement Shares on the Official List of the SGX-ST for placement within seven (7) market days. (Closing price: S$ 0.056, -12.500%)

CEFC INTERNATIONAL LIMITED announced that BNP Paribas, Singapore Branch (the “Bank”) has agreed to revise the existing credit facilities granted to the Company’s wholly owned subsidiary, Singapore CEFC Petrochemical & Energy Pte. Ltd. (“Singapore CEFC”) so as to make available uncommitted trade facilities of up to US$130,000,000.00 (the “Facilities”) to Singapore CEFC, subject to the terms and conditions as set out in the Bank’s letter of offer dated 13 August 2013 (“Letter of Offer”). (Closing price: S$ 0.051, -1.923%)

United Envirotech Ltd. announced that on 28 August 2013, the Company is awarded a RMB 90 million (SGD 19 million) Engineering Procurement and Construction (EPC) project to upgrade a 100,000 m3/day industrial wastewater treatment plant in Nantong City, Jiangsu Province, China. The wastewater treatment plant serves industries located in the Nantong Economic Development Zone and about 70% of the wastewater is from textile industry. Upgrading of the plant is required to meet the more stringent Grade 1A discharge standard imposed by the local government. (Closing price: S$ 0.840, -1.754%)

A subsidiary of Q & M Dental Group (Singapore) Ltd (全民牙医集团新加坡有限公司) (“Q & M”), Q & M Dental Holdings (China) Pte Ltd, has signed a non-binding Memorandum of Understanding with Dr Sun Zhizong to acquire a 60% equity stake in a management company that will own and operate 2 dental hospitals located in Donggang City and Dandong City in Liaoning Province, PRC, in a transaction valued at RMB 30 million (approximately S$6 million). (Closing price: S$ 0.300, -1.639%)

Source: Macquarie Research - 29 Aug 2013