STI: +0.88% to 3055.7                                        KLCI: -0.58% to 1717.6
JCI: -2.24% to 4101.2                                         SET: +2.27% to 1323.7
HSI: +2.04% to 22175                                        HSCEI: +2.34% to 10055
Nikkei: +1.37% to 13572                                    ASX200: +1.04% to 5188.3
Nifty: +1.44% to 5550                                         S&P500: -0.32% to 1632.9
 
MARKET OUTLOOK:

This week’s market call has been archived at www.uniphillip.com.sg > education programs > Phillip Securities Research Webinar.

Apart from giving the market strategy, this week’s webinar also gives an update on the Property 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

China’s final HSBC Manufacturing PMI leaped to 50.1 in August from 47.7, landing in the expansion territory first time in four months as domestic demand rebounded. “This implies that growth in China’s manufacturing sector has started to stabilize on the back of a modest rebound of new orders and output. This was mainly driven by the initial filtering-through of recent stimulus measures and companies’ restocking activities. We expect some upside surprises to China’s growth in the coming months”, said Hongbin Qu, HSBC’s chief economist for China and co-head of Asian economic research. The government has cut taxes for small firms and accelerated investment in infrastructure and railways in order to revive the lackluster economy.

Hong Kong's retail sales by value grew 9.5% in July from a year earlier, lower than June’s 14.7%, weighed by the weaker sales in furniture and fixtures, said the Census and Statistics Department. Retail sales by volume rose 8.9% in July from a year earlier.

Indonesian Manufacturing PMI slumped to 48.5 in August from the previous 50.7, marking a 15-month low, as output, new orders and export orders reduced.

The rate of inflation eased to 1.12% this month from 3.29% on a monthly basis, according to the Statistics Indonesia (BPS). However, annual inflation rate rose to 8.79%, the highest since January 2009, pushed up by higher food and gold prices as well as imported inflation from the depreciating rupiah. Bank Indonesia has estimated that at year-end, inflation will be 9.0% - 9.8%.

Trade deficit widened a large-than-expected USD2.31 billion from a revised USD880 million last month. BPS chairman Suryamin said that the deficit was particularly caused by the country's oil & gas deficit (USD7.6 billion), while the non-oil & gas sector posted a surplus of USD1.9 billion). Indonesia's central bank expects the current account deficit to ease to 3.4% of the country's GDP in Q3 2013. Exports fell 6.1% from a year earlier while imports increased 6.5%.

Thailand’s annual consumer price inflation eased to 1.59% in August compared to 2.0% last month, data from the Ministry of Commerce showed. On a monthly basis, consumer prices were down 0.01% compared to a 0.1% rise in July. Core inflation excluding costs of raw food and energy, ticked lower at 0.75% from 0.85% a month ago. Core inflation was seen at 0.78%.

Eurozone PMI manufacturing increased to 57.2 from a revised 54.8 in July. This is its highest level in 2 years and beat expectations of 55.

Japan’s capital spending improved to a flat growth rate in 2Q from -3.9% prior and beat expectations of -2.1%.

Australia’s building permits rose 10.8% mom in the July compared to -6.9% prior. This beat expectations of 4%.

South Korea’s CPI rose 0.3% mom, slightly beneath expectations of 0.4%.

Regional Market Focus

Singapore

• The benchmark STI closed lower at 3,055.72 (+0.88%). The 3.9bn shares traded were worth S$1.2bn in value.
• The FTSE ST Mid Cap Index gained +0.84% while the FTSE ST Small Cap Index gained +2.09%. The top active stocks were China Minzhong (+112.26%), DBS (+2.41%), SingTel (unchanged), Rowsley (+22.22%) and UOB (+2.06%).
• The STI may continue its upward trend today due to positive surprise of the HSBC China manufacturing PMI data increasing from 47.7 to 50.1 m-m.
• However, downside pressure continues to persist due to the concerns over Syria.
• We expect the STI to consolidate at current levels, with key near term support at 3,000 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

• The composite SET index broke through a key resistance level of 1,300 points to finish the session at 1,323.7 points on Mon after data showed China’s official manufacturing PMI hit a 16-month high but trading volume was light at only Bt34,212mn.
• Thai stocks look set to build on their gains today but gains may be unsustainable after trading volume was light on Mon. Yesterday’s gains were largely driven by better-than-expected manufacturing data out of major economies in China, UK and euro zone, raising hopes that the global economy would be on a gradual recovery path and diminishing concerns about the potential QE tapering in the US. Economic optimism could provide a further short-term boost to Thai stocks today. Eyes will also remain on China’s non-manufacturing PMI data due to be released this morning.  
• The Thai stock market however appears to remain under pressure from foreign capital outflows back to recovering economies like the US, Japan and euro zone. Foreign investors resumed net selling of Thai equities to the tune of over Bt1.4bn on Mon. For this reason, further upside room for the SET index is seen limited, in our view.
• Resistance for the SET index is seen at 1340-1370 points and support at 1300-1285 points today.  

• Indonesian stocks plummeted Monday (02/09), after data showed wider-than-expected trade deficit and higher inflation. The Jakarta Composite Index (JCI) dropped 93.856 points, or 2.24%, to end at 4,101.233. The steep decline on Monday included all but two of the major industry groups, with index of shares in basic industry sector lost 4.13%, finance sector fell 3.25%, and consumer goods sector shed 2.97%. Commodity sectors, however, supported the benchmark index on Monday, after China’s manufacturing Purchasing Managers’ Index data for August rose to 51.0, from 50.3 in July, prompting for positive prospects for commodities. The LQ45 index representing Indonesia’s blue-chip stocks slid 22.248 points, or 3.17%, to 678.818. In economic news, Statistics Indonesia (“BPS”) on Monday reported inflation quickened to 8.79% in August, from 8.61% in July. The increase in consumer prices last month was the fastest since January 2009. Separate report from the same agency showed trade deficit widened to USD 2.3 billion in July, as imports of oil and gas products climbed 17.17% to USD 4.14 billion - a large portion of the total imports of USD 17.42 billion in July. The central bank (Bank Indonesia) raised its benchmark interest rate by 50 basis points at an unscheduled meeting last week, to support the Rupiah and stem inflation, while the government moved to allow easier mineral exports this year and removed taxes on some consumer electronics to spur domestic consumptions. From the corporate front, Indofood Sukses Makmur (INDF), a Jakarta-listed food manufacturer and distributor, offered to purchase the remaining China Minzhong Food Corp.’s stock it doesn’t already owned for SGD 1.12 per share, in a statement released on Monday (02/09). 187 shares fell and 74 shares ended higher Monday on the Indonesia Stock Exchange, where volume on the regular market totaled at 3.57 billion shares worth IDR 4.53 trillion. Foreign investors posted net sale of IDR 231.9 billion.
• The Jakarta Composite Index (JCI) may recover some of the losses today, with some of the Asian markets started in positive tones this morning. We expect the JCI to climb, with support and resistance at 3,977 and 4,269, respectively.

• The first trading day of September concluded on an adverse note, with the bourse re-entering the negative terrain and resulting in the indices to conclude within the red space; this was mainly resulted by the slothful participation of the investors and the selling pressure which was prevalent on most occasions. Further on this resulted in the benchmark ASPI to settle the day at its intraday low of 5,782.72, dipping by 51.32 points or 0.88%. Following a similar pattern the S&P SL20 too closed within the negative territory at 3,229.09, losing nearly 1% (32.24 points). The total market capitalization stood at LKR 2.38Tn, reducing the year to date gain to 9.88%. The market PER and PBV were 16.45x and 2.20x respectively. The turnover for the day was recorded as LKR 277.21Mn, indicating a dip of 21.42% against the previous trading day. Under the sectorial round-up Diversified Holdings (DIV) sector topped the list providing LKR 134.99Mn while accounting to nearly 50% of the day’s total turnover. Bank Finance & Insurance (BFI) made a sectorial contribution of LKR 49.65Mn to the aggregate turnover. During the day, a total of 25.62Mn shares changed hands resulting in a drop of 69.14% against the previous trading day. In terms of share price movement, 121 companies lost while 41 companies gained within the trading day. Foreign participants maintained their bullish stance for the 4th consecutive trading day, to record a net foreign inflow of LKR 10.64Mn; this was resulted by foreign buying of LKR 140.70Mn and selling worth 130.05Mn. The year to date net foreign inflow currently stands at LKR 18.55Bn.  As at the day’s closure, the USD stood at LKR 134.78/- selling and LKR 131.46/- buying.

• Australian shares started the month with their steepest rise in three weeks, with cyclical sectors performing strongly as investors saw less risk of international intervention in Syria's conflict, as well as improved economic prospects for China.
• Gains followed U.S. President Barack Obama's decision to seek congressional authorization for any use of military force in Syria, and strong Purchasing Managers' Index data in China, Australia's biggest trading partner.
• Stocks tied to the domestic economy were particularly strong, with Crown, Tabcorp, Fairfax and Seven West Media Flight Centre rising between 2.5% and 4.7%.
• The energy sector outperformed, with Origin Energy rising 4.5% and Woodside rising 0.9%.
• In the financial sector Commonwealth Bank of Australia, Westpac, ANZ and National Australia Bank rose between 0.9% and 1.4%, and Macquarie Group rose 2.1%. (Source: WSJ)

• Hong Kong shares closed at a two-week high on Monday, thanks to an upbeat China factory activity survey that raised hopes that a sharp economic slowdown in the world's second-largest economy has been halted.
• The final Markit/HSBC Purchasing Managers' Index (PMI) climbed to 50.1 in August, up sharply from July's 47.7 and in line with last week's flash preliminary reading.
• The Hang Seng Index closed up 2 per cent at 22,175.34 points in its best day since Aug 12. The China Enterprises Index of the top Chinese listings in Hong Kong rose 2.3 per cent to its best close in one week. (Source: Reuters)

Morning Note

Company Highlights

The Board of Directors of TEE Land Limited (the “Company”, and together with its subsidiaries, the “Group”), is pleased to announce that its associated company, Chewathai Limited (“Chewathai”), has entered into a Sale and Purchase Agreement to acquire 100% of the issued and paid up capital of ROJTAJ DEVELOPMENT Co.,Ltd. (“Rojtaj”) for a purchase consideration of THB 200.0 million (approximately S$8.3 million) (the “Proposed Acquisition”). Rojtaj will be a subsidiary of Chewathai consequent to the Proposed Acquisition.Rojtaj owns a freehold property with an estimated land area of 30,677 square feet, at 416/10-11 Pracharat Sai 2 Road, Bangsue, Bangkok, Thailand. The property, which is presently zoned for residential use will be redeveloped into a 26-storey residential development. It is well situated within the densely populated area of Bangsue, and is easily accessible (being located near the Taopoon MRT Interchange Station, which is currently under construction and expected to operate in 3 years’ time). It is also close to local amenities like supermarkets, schools, a hospital and offices.(Closing Price: 0.345, -)