STI: +0.02% to 3120.3                            KLCI: -0.09% to 1770.8
JCI: +0.43% to 4375.5                           SET: +0.23% to 1401.1
HSI: -0.17% to 22915                             HSCEI: -0.93% to 10538
Nikkei: +0.12% to 14404                       ASX200: -0.44% to 5219.6
Nifty: -0.00% to 5850.6                          S&P500: +0.27% to 1687.9
      
MARKET OUTLOOK:
By Joshua Tan, Head of Research

In this week’s webinar we have a Trading Buy on Sin Heng Heavy Machineries. On the macro side we are still reiterating that we believe an equities bull market is still on. In particular we like the particular macro trades of long China (ETF 83188.HK), long Commodities (ETF GSG.US), short Gold (via Shares Borrowing and Lending), short US Treasuries (ETF TBT.US)

(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

Singapore’s unemployment remains low in Singapore with seasonally adjusted overall unemployment rate increase slightly to 2.1% in 2Q 2013 as compared to 1.9% in the preceding quarter, according to the Ministry of Manpower’s “Labour Market, Second Quarter 2013” report. Singapore’s labour market is expected to remain tight for the rest of the year, the Manpower Ministry added in a statement.

Meanwhile, Singapore’s retail sales decreased further in July, but at a slower rate than in the previous month, Statistics Singapore said. Overall retail sales fell 5.3% on a monthly basis as compared to 6.9% decline in June. However, retails sales shed 7.8% from a year earlier after a revised 4.1% drop in June. Excluding motor vehicles, June retail sales went down by 2.6%.
 

Regional Market Focus

Singapore

• The benchmark STI closed flat at 3,120.3 (-0.02%). The 5.9bn shares traded were worth S$1.4bn in value.
• The FTSE ST Mid Cap Index declined -0.24% while the FTSE ST Small Cap Index declined -0.37%. The top active stocks were Ezra (+18.87%), DBS (-0.06%), SingTel (+0.28%), Noble Group (-5.24%) and UOB (+1.02%).
• The STI is expected to end higher today after Lawrence Summers withdrew from being considered for the post of Federal Reserve chairman. The other potential candidate, Janet Yellen, has been viewed as one favoring a relatively slower QE tapering.
• We peg key near term support at 3,100 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 traded in a tight range in a volatile trading session last Fri ahead of a possible QE decision at the US FOMC’s policy meeting this week. The SET index managed to hold above a key psychological level of 1400 points and ended the week at 1,401.08 points.
• Further gains could be in store for the SET index today after (i) foreign fund flows returned to Asia including Thailand, (ii) Syria accepted a proposal from the US and Russia to put its chemical weapons under international control, (iii) comments from the World Bank chief that China is likely to achieve its economic growth target of 7.5% this year also raised optimism that the global economy would improve in the second half of the year, (iv) concerns over QE eased after the market priced in that the US Federal Reserve would announce a tapering of its monthly bond purchases at the upcoming policy meeting on Sep 17-18, (v) Former Treasury Secretary Larry Summers’s decision to withdraw his name from consideration as the next chairman of the Federal Reserve also further helped lift sentiment as he would embark on a more hawkish course regarding the removal of Fed stimulus than the other candidates believed to be in contention. In Thailand, the market’s focus will be on the controversial Bt2trn borrowing bill for infrastructure development tabled for parliamentary debate in the second and third readings of the bill this week. 
• Today we peg resistance for the SET index at 1413-1420 points and support at 1390-1375 points.

 
Indonesia

• The Jakarta Composite Index (JCI) finished with modest gain on Friday (13/09), amidst moderate tones in Asia that saw mostly lower closes on major stock indexes in the region. The JCI added 18.934 points, or 0.43%, to close at 4,375.539. The gain on Friday included seven of the 9 major industry groups, led by basic industry sector with 1.72%-climb, followed by consumer goods sector with 1.08%-gain, and miscellaneous industry sector with 0.74%-rise. The LQ45 index rose 2.125 points, or 0.29%, to 736.709. In Asia, regional markets were mostly lower on Friday ahead of next week’s key Federal Reserve policy meeting. Stocks across Asia posted healthy returns since last Friday, as further signs of an economic recovery in China combined with lower expectations of US military intervention in Syria supported regional risk sentiments. 179 shares climbed and 124 shares declined Friday on the Indonesia Stock Exchange, where 3.87 billion shares worth IDR 4.77 trillion traded on the regular board. Foreign investors posted net sale of IDR 287.14 billion.
• The Jakarta Composite Index (JCI) will likely climb today, following positive closes on Wall Street on Friday. We expect the JCI to advance, with support and resistance at 4,299 and 4,414, respectively.

• The bourse was unable to sustain its early market-rally where it reached an intraday peak of 5,769.85 gaining 25 points, however as at the closure the indices settled on either side with the benchmark ASPI charting a modest gain of 4.96 points (0.09%) to close the week at 5,749.46 and the S&P SL20 ended at 3,176.74 dropping by 8.16 points or 0.26%. With regard to the movement in share prices, price gainers slammed the price losers by 96:77.  A series of off-market deals totaling up to LKR 589.33Mn limited the on-board activity to LKR 390.44Mn, whilst accounting a share of 60.15% of the daily aggregated turnover which amounted to LKR 979.77Mn; the turnover noted a momentous gain of 153.38% against the previous trading day. Moreover, the three prime contributors for the day accounted to more than 3/4th of the daily aggregated turnover. During the day a total of 51.33Mn shares changed hands resulting in a notable gain of 120.21% against its previously recorded. Under the sectorial round-up, Diversified Holdings (DIV) sector stood on top providing LKR 694.47Mn accounting a share of 71% of the day’s total turnover.  Diversified Holdings (DIV) sector secured the second place contributing LKR 120.54Mn. Foreign participants appeared to be bullish during the day for the third consecutive trading day, recording a net foreign inflow of LKR 262.16Mn.

• The Australian share market on Friday closed lower on Friday after a seven-day run of gains that had pushed share prices to five-year highs. The benchmark S&P/ASX200 index was down 22.9 points, or 0.44 per cent to 5,219.6.
• Today (16/09/13), the Australian market looks set to open higher after Wall Street made modest gains despite a mediocre retail sales report and a disappointing read on consumer sentiment.
• No major economic or equities news is expected on Monday.

• HSI failed to retain at 23,000 level and closed at 22,915 (-38) on last Friday. CEI declined 98 points or 0.93% to 10,538. Trading volume dropped to HKD57.396 billion.
• SHK (16.HK) posted lower-than-expected FY13 core earnings and set next year sales target of HKD28 billion only, disappointed investors. Share price lost 1.4%.
• Coal sector underperformed with China Shenhua (1088.HK), Yanzhou Coal (1171.HK) and China Coal (1898.HK) declined 3.1-4.4% due to China strives to reduce pollutants and control coal spending.
• Shipping stocks slumped, China Ship Dev (1138.HK), China Cosco (1919.HK) and CSCL (2866.HK) lost 6.5%, 3.9% and 4.8% respectively.
• Technically, RSI and MACD showed overbought signal and HSI failed to retain at 23,000, we expect a short-term correction. The next resistance and support are 23,100 and 22,500 respectively.

Morning Note

Company Highlights

OKP Holdings entered into a joint venture agreement to regulate their relationship, inter se , as shareholders of Lakehomes in the conduct of the business and affairs of Lakehomes in the spirit of mutual confidence and cooperation.(Closing Price: S$0.385, 0%)

Federal International (2000) through its wholly-owned subsidiary, PT Federal International (“Purchaser”) entered into a conditional sale and purchase agreement (“Agreement”) with PT Geo Link Nusantara (“ Vendor ) to acquire a 1,000 HP Brewster N-85 land drilling rig (“Rig” ) for a purchase consideration of US $10,369,031 (which amounts to approximately S$12,961,289 based on USD:SGD exchange rate of 1.25. (Closing Price: S$0.025, 0%)

CSC Holdings awarded two foundation contracts: one for the upcoming Terminal 4 at Changi Airport, and the other for the redevelopment of two buildings along Robinson Road. The contract for Terminal 4 will see the company construct the foundations for the airport terminal, ancillary buildings and infrastructure. The contract for the redevelopment of Robinson Towers and the adjacent International Factors Buildings along Robinson Road calls for the construction of diaphragm walls and bored piles for the foundation of a new office tower and retail podium. The value of this contract is about $20 million. The latest contracts clinched brings the total value of foundation contracts secured by the company in Singapore and the region to $200 million since its latest financial year beginning April 1. (Closing Price: S$0.105, -0.943%)

Source: PhillipCapital Research - 16 Sep 2013