STI: +0.80% to 3039.5                                      KLCI: +0.25% to 1720.9
JCI: -0.55% to 4050.9                                       SET: +0.79% to 1313.5
HSI: +1.22% to 22597                                       HSCEI: +1.03% to 10338.9
Nikkei: +0.08% to 14064                                   ASX200: -0.37% to 5142.5
Nifty: +2.66% to 5592.9                                    S&P500: +0.12% to 1655.1 
 
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This week’s market call has been archived at www.uniphillip.com.sg 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 or the Global Macro report below. PhillipUT Wrap Account offers tactical asset allocation of unit trusts without front loading sales charge.)

Macro Data

U.S. jobless claims declined by 9,000 to 323,000 in the week ended 31 Aug, less than the estimates of economists. This was just a tick above a five year low. But the unofficial ADP employment report beat expectations (172k jobs added) and tonight’s non-Farm Payrolls is expected to be a robust 190k jobs added.

US factory orders dropped 2.4% in July compared with June, when orders rose 1.6%. Orders for durable goods declined 7.4%. It was the biggest decline since a 12.9% drop in August 2012.

Eurozone: The ECB left its key interest rate unchanged at 0.5% as expected.

German factory orders fell 2.7% from June, when they rose a revised 5% that was larger than originally stated. This was under expectations of -1.0%.

Taiwan CPI fell to an adjusted annual rate of -0.79% from 0.08% in the preceding quarter, this was under expectations of -0.30%.

South Korea’s GDP rose an adjusted 1.1% last month, from 1.1% in the preceding month. This was in line with expectations.

Australia’s July deficit was $765 million, following a surplus of $243m in June. This was under expectations of a surplus of $100m in July.

Philippine’s annual inflation eased more-than-expected to 2.1% in Aug as compared to last month’s 2.5%, marking a four-year low. A lower inflation and strong growth has given the nation an edge to be able to hold rates steady at a record low to support its economic growth and ample headroom to manoeuvre policy.

Thailand’s consumer confidence declined for the fifth straight month and into a nine-month low at 79.3 in Aug, due to global economic concerns as well as political uncertainties in the country.

Malaysia’s Central bank retained its policy interest rate at 3% for nearly two-and-a-half years, but acknowledged that “the overall growth prospects could be affected by risks in the global economy and international financial markets”.
 

Regional Market Focus

Singapore

• The benchmark STI closed higher at 3,039.45 (+0.80%). The 3.6bn shares traded were worth S$1.2bn in value.
• The FTSE ST Mid Cap Index gained +0.09% while the FTSE ST Small Cap Index gained +0.20%. The top active stocks were SingTel (+1.74%), Mirach Energy (+14.61%), Rex International (+22.54%), Thai Beverage (+7.53%) and Rowsley (-1.75%).
• The STI may trade sideways today, while awaiting the release of the monthly American jobs report. This report is expected to significantly influence US Fed’s decision on the start date of QE tapering.
• We peg 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 Corp (Accumulate, TP: S$12.25).

Thailand

• Thai stocks tracked overseas markets higher on Thu after economic data out of major economies pointed to a pickup in a recovery but light trading volume reflected a lack of conviction among investors.
• The SET index looks set for a pullback today as data showing growth in the US services sector accelerated in Aug to its fastest pace in almost eight years and new jobless claims last week fell to a near five-year low bolstered views that US Federal Reserve could start unwinding its QE program anytime soon. Stimulus tapering fears could put further pressure on the Thai stock market as a result of foreign fund outflows. 
• Many world leaders at the G20 summit on Thu decided against launching military strikes against Syria. The focus has now shifted to a vote on the US Congress over whether to launch US attacks against Syria. In Thailand, market-moving factors remain weak in terms of macroeconomic data and ongoing rubber protests. Today rubber protesters in Prachuap Khiri Khan Province plan to block Phetkasem Road after the National Rubber Policy Committee turned down the rubber farmers’ proposal for a guaranteed price of Bt100/kg for rubber sheet.
• Resistance for the SET index is seen at 1320-1340 points and support at 1300-1285 points today.   

• The Jakarta Composite Index (JCI) declined Thursday (05/09), despite mostly higher closes in Asia, after the government scrapped import quotas for food commodities to restrain inflation. The JCI shed 22.591 points, or 0.55%, to close at 4,050.864, with five of its 9 major industry sectors ended in red. Property, construction, and real estate sector fared worst with 2.79%-drop, followed by infrastructure sector with 2.39%-decline, and miscellaneous industry sector with 1.97%-fall. The LQ45 index reflecting the 45 blue-chip stocks slid 4.029 points, or 0.60%, to 669.579. Indonesian government announced that it removes the quotas for imports of some food stuffs, including beef, chili, and shallots, to stem rising consumer prices – a move that is feared to weigh on the already widening trade gap. Trade deficit surged to USD 2.3 billion as imports rose 6.5% and exports fell for a 16th month, according to the data from Statistics Indonesia (“BPS”) earlier this week. Inflation quickened to 8.79% in August, separate data showed this week. Decliners outpaced gainers 163 to 85 Thursday on the Indonesia Stock Exchange, where 3.88 billion shares worth IDR 4.61 trillion traded on the regular board. Foreign investors accumulated a net sale of IDR 122.55 billion.
• Indonesian stocks will likely move in sideways band today, with negative bias, ahead of the closely watched US employment report due to be released later today. We expect the JCI to be traded flat today, with support and resistance at 3,955 and 4,172, respectively.

• The trading day initiated on an adverse sentiment, leading the indices to drown further and extended its losses for the fourth consecutive trading day. The market trended downwards from its early hours to close the day at its intraday low of 5,686.99 experiencing a loss of 57.90 points or 1.01%, while falling to a lowest level post to 13th March 2013 (5,685.82). The S&P SL20 index closed the day 22 points below the 3,200 mark to settle at 3,178.12 (-1.02%), touching its lowest level in nearly 7 months.  The turnover for the day amounted to LKR 485.71Mn, charting a gain of 12.52% compared to the previous trading day; nearly 70% of the aggregated turnover was accounted by the three prime contributors for the day. During the day a total of 21.96Mn shares changed hands resulting in a drop of 32.23% against the previous day. Under the sectorial round-up, Diversified Holdings (DIV) sector stood on top providing LKR 285.55Mn and Bank Finance & Insurance (BFI) sector emerged second contributing LKR 75.22Mn. Notably, the two sectors DIV & BFI collectively accounted to nearly 75% of the daily aggregated turnover. Foreign participants were bearish during the day for the second consecutive trading day, resulting in a net foreign outflow of LKR 67.38Mn; this reduced the year to date net foreign inflow to record LKR 18.51Bn. With regard to the local FOREX, the USD currently stands at LKR 134.80/- selling and LKR 131.40/- buying.

• Australian shares fell 0.4 per cent on Thursday, as investors locked-in profits in banks and miners ahead of Saturday's national elections, while surprisingly large trade deficit further dampened sentiment.
• Australia posted a trade deficit of A$765 million in July, compared with an expected balanced position. Investors were cautious ahead of the US nonfarm payrolls on Friday, which could provide an important clue on whether the Federal Reserve will start to reduce its stimulus this month.
• The S&P/ASX 200 index lost 19.1 points to 5,142.5. The benchmark fell 0.7 per cent on Wednesday. (Source: Reuters)

• HSI remained strong yesterday with 271 points or 1.2% gain to close at 22,597, the 3-month high. CEI climbed 105 points or 1% to 10,338. Trading volume also showed support with HK$65.121 billion.
• Local financial sector led HSI up with HSBC (5.HK) and SCB (2888.HK) climbing 2% and 2.3% respectively.
• U.S. 10-year treasury yield jumping to 2.9% gave pressure on REITs, Link REIT (823.HK) and Fortune REIT (778.HK) under-performed market with 0.4% and 0.6% drop respectively. But HK property developers were still firm, K.wah Int’l (173.HK) and NWD (17.HK) gained 3.3% and 2.3% respectively.
• Shipping stocks outperformed with CSCL (2866.HK), China COSCO (1919.HK) and Pacific Basin (2343.HK) gaining 4.3-9.5% following Baltic Dry Index (BDI) surged 4%.
• Technically, the next resistance and support will be at 22,696 and 22,200 respectively.

Morning Note

Company Highlights

Hiap Hoe Limited announced its third strategic overseas acquisition with the purchase of 206 Bourke Street, a trophy quality mixed use retail and office asset centrally located in the Central Business District of Melbourne, Australia. With a total lettable area of 11,922 sqm, the development comprises 9,582 sqm of retail lettable area and 2,340 sqm of office lettable area. Mr Teo Ho Beng, Hiap Hoe’s Executive Chairman and Chief Executive Officer, said, “We are pleased to add 206 Bourke Street to our portfolio of quality investment assets as the high profile retail, entertainment and office complex sits in the heart of Melbourne’s vibrant CBD and is well placed to benefit from the increase in retail activity and population growth in the wider Melbourne catchment area. (Closing price: S$0.695, +0.73%)

Otto Marine Limited, a leading offshore marine company which specializes in building complex offshore support vessels, ship chartering and offers specialized offshore services, is pleased to announce that the Group has signed a Memorandum of Understanding (“MOU”) for the newbuilding of 5 cement carriers. The 5 cement carriers have capacities in the range of 7,500 deadweight tonnes (“DWT”) to 15,000 DWT. Conversion works will be carried out in Otto Marine’s shipyard in Batam. Apart from the firm orders, there is also potential for the Group to secure contracts for the conversion of 2 additional bulk carriers into cement carriers, and a further order for a 3,500bhp Ocean Towing Tug from the same Indonesian customer. (Closing price: 0.048, +4.35%)

Bukit Timah Green Development Pte Ltd, a company jointly owned by -TA Corporation Ltd (“TA Corporation”), Hock Lian Seng Holdings Limited (“Hock Lian Seng”), King Wan Corporation Limited (“King Wan Corporation”) and Far East Distillers Pte Ltd (“Far East Distillers”) (collectively, the “JV Partners”), is pleased to unveil The Skywoods, which is set to be launched at Dairy Farm Road over this weekend (September 7 – 8, 2013). The 99-year leasehold, 420-unit luxury condominium development is inspired by a contemporary interpretation of floating lodges suspended amidst lush greeneries. With six 15-storey towers strategically placed within expansive grounds, the development features six wonderful lifestyle zones – The Wellness, Forest Thrill, Aqua Sky, Sensory, Verandah and The Club – that are equipped with a wide-range of facilities that will appeal to residents of all lifestyles and age groups. The Skywoods is an ideal home for families with school-going children as it is located near reputable schools such as CHIJ Our Lady Queen of Peace, Bukit Panjang Primary School, St Francis Methodist School and Chestnut Drive Secondary School. Residents will be able to enjoy leisure walks or engage in various outdoor recreation activities at the nearby Dairy Farm Nature Park, Bukit Timah Nature Reserve and Bukit Batok Nature Park. The area boasts a host of shopping, dining and entertainment options with quality malls such as Bukit Panjang Plaza, The Rail Mall, The Firestation, Junction 10, Bukit Timah Shopping Centre and Bukit Timah Plaza. (Closing price: S$0.250, - )

AIMS AMP Capital Industrial REIT today announced it will commence development of Phase 2 Extension (2E) and Phase Three of 20 Gul Way, following the satisfaction of all conditions precedent under the Second Development Agreement dated 6 June 2013. With the conditions satisfied, AA REIT and Indeco Engineers (Pte) Ltd signed the Design and Construct Contract to develop Phase 2 Extension (2E) and Phase Three of 20 Gul Way. The development will add 496,949 square feet of gross floor area (GFA) to 20 Gul Way, bringing the total FA to approximately 1,656,485 square feet. Construction will commence immediately and is expected to take approximately 17 months. AA REIT and CWT Limited (CWT) also signed an Agreement for Lease and related documentation in respect of the lease by AA REIT to CWT of the additional GFA and the license of the hardstand area and marshalling yard at the property. The Agreement for Lease provides that upon completion of the construction of the additional GFA, CWT will lease the entire warehouse at Phase 2E and Phase Three over a period of five years and two months on the ground floor, and 32 months for levels two to five, with an annual rent escalation of two percent. (Closing price: S$1.445, - )