STI: +1.81% to 3251.8                           KLCI: +1.21% to 1792.9
JCI: +4.65% to 4670.7                           SET: +3.47% to 1489.1
HSI: +1.67% to 23502                            HSCEI: +1.71% to 10769
Nifty: +3.66% to 6115.6                         ASX200: +1.10% to 5295.6
Nikkei: +1.80% to 14766                        S&P500: -0.18% to 1722.3
      
MARKET OUTLOOK:
By Joshua Tan, Head of Research

In this week’s webinar has been archived at www.uniphillip.com > education programs > Phillip Securities Research Webinar. In it we feature a Trading Buy on Sin Heng Heavy Machineries as well as affirm the view that we believe this equity bull run is not over yet.
 
What a bind the Fed is in – the signaling of QE tapering led to rising bond yields whose impact on the economy in turn led them to postpone tapering. Yet to not taper may build other risks in the economy. Whatever the case is the stock market is in goldilocks – prolonged QE is great for risk assets, the absence of QE, though may provoke short term corrections, is primarily a long stock buy signal for stocks as it means the economy is strong enough without it. Either way, this bull run seems intact.

(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

USA:
Initial jobless claims totaled 309,000 in the week ending September 14, up by 15,000 from the prior week's revised 294,000 reading. This increase was less than expectations of 340,000.
Existing home sales increased 1.7% to an annual rate of 5.48 million units last month, the highest level since February 2007. This was higher than expectations of 5.25 million-unit rate.
The leading economic index rose 0.7% in August after a revised 0.5% gain in July. Economists had forecast a 0.6% increase.

Japan:
Japan's industry activity rose 0.5% in July on a monthly basis, marginally beating expectations of a 0.4% uptick and following a decline in June of 0.6%.
 

Regional Market Focus

Singapore

• The benchmark STI closed higher at 3,251.78 (+1.81%). The 5.5bn shares traded were worth S$2.1n in value.
• The FTSE ST Mid Cap Index gained +2.63% while the FTSE ST Small Cap Index gained +1.24%. The top active stocks were DBS (+0.48%), SingTel (+2.41%), Rowsley (+5.79%), Albedo (+18.75%) and UOB (+0.76%).
• We release our Singapore Equity Strategy report today, adding DBS and SingTel to our Top Pick list, while introducing a new Deep Value Play list.
• Top Picks are DBS (Accumulate, TP: S$17.50), SingTel (Accumulate, TP: S$3.99) and Keppel Corp (Accumulate, TP: S$12.25). Keppel Corp remains our Top pick, as O&M outlook remains robust, dayrates and utilization rates are high, while O&M margins expected to improve y-y. DBS stands to benefit from rising interest rates, China exposure, and cheaper valuations vs local peers. SingTel to benefit from Healthy EBITDA growth in AU and SG, and growth potential from overseas assoc, Digital Life investments.  
• Deep Value Plays are Amara (Buy, TP: S$0.74), Boustead (Buy, TP: S$1.94) and Courts (Buy, TP: S$1.14). Amara Holding trades at a >50% discount to RNAV. Boustead SG competing in niche areas registered record order books of S$491m. Courts Asia is primed to benefit from rising credit demands from its unique in-house credit facilities
• The STI is may experience a slight pullback, after yesterday’s rally on postponement of QE tapering.  
• We peg key near term support at 3,100 levels.

Thailand

• Thai stocks rallied as much as 49.93 points or 3.47% in heavy trading on Thu after the US Federal Reserve decided against scaling back its QE program and net foreign buying of Thai shares accelerated to the tune of up to Bt5,514mn.
• Even though overall bullishness in the market remains intact on renewed heavy fund inflows, investors should also watch out for volatility from now on as uncertainty in US economic recovery, a budget battle that threatens a federal government shutdown and US debt ceiling may be used as an excuse for profit taking faster while the Federal Reserve has emphasized flexibility in QE tapering. In our view, we expect the US central bank to announce a taper of bond purchases within this year.
• In current leg up, the upside target for the SET index, which has earlier been seen at 1480/1500 points may be raised slightly to 1530 +/- but the increasing fragility of the market gives us an excuse to advise investors to book partial profits at around 1500 points or higher. Today we expect a narrower trading range of between 1470-1500 points for the SET index.
• Resistance for the SET index is pegged at 1500-1520 points and support at 1480-1460 points.  

• The Jakarta Composite Index (JCI) rallied on Thursday (19/09), after the US Federal Reserve voted to refrain from tapering its bond purchase rate on a widely-watched FOMC meeting this week. The benchmark index of Indonesian stocks jumped 207.479 points, or 4.65%, to close at 4,670.733. Construction sector led gains that included all 9 major industry groups with 9.18%-surge, followed by finance sector with 6.31%-advance, and basic industry sector with 5.50%-rise. The LQ45 index added 41.593 points, or 5.53%, at 793.794. The Fed’s decision to keep up its bond-buying spree is a green light for global investors, after fears of a change in US monetary policy resulted in volatile months for Asia. Gainers outran decliners 255 to 56 Thursday on the Indonesia Stock Exchange, where 8.33 billion shares worth IDR 11.14 trillion traded on the regular board. Transactions by foreign investors accumulated to a net purchase of over IDR 1.04 trillion.
• The Jakarta Composite Index (JCI) will likely trade sideways with positive bias today, as markets consolidated from rallies a day earlier after the US Federal Reserve maintained its bond purchase size. We expect the JCI to trade higher, with support and resistance at 4,464 and 4,895, respectively.

• Colombo Stock Exchange (CSE) is closed today as it is a public holiday for Sri Lanka.

• The Australian market on Thursday hit a five year high after the US central bank decided to continue its stimulus program. The benchmark S&P/ASX200 index added 57.4 points, or 1.1 per cent.
• Today(20/09/13), the Australian market is set to open lower, the day after hitting new five-year highs due to the surprise decision by the US central bank to maintain its stimulus program. Wall Street, which had also rallied on the decision, fell back overnight.
• In economic news on Friday, business spending bounced in August, according to the latest Commonwealth Bank Business Sales Indicator.
• In equities news, Sydney Airport is expected to release its latest traffic report.

• Hong Kong Stock Exchange (CSE) is closed today as it is a public holiday.

Morning Note

Company Highlights

Singapore Airline and Tata Sons have signed a Memorandum of Understanding and applied for approval to establish a new airline in India that will help further stimulate demand for air travel. Tata Sons will own 51% and Singapore Airlines will own 49%. The transaction is not expected to have a material effect on the net tangible assets or earnings per share of the SIA Group for the financial year ending 31 March 2014. (Closing Price: S$10.470, 0.48%)

Hiap Seng Engineering has been awarded two contracts worth approximately S$57 million for the provision of piping and equipment installation works and the provision of mechanical, equipment erection and structural works in Singapore. Both contracts are expected to commence in September 2013 and scheduled for completion in the financial year ending 31 March 2015. (Closing Price: S$0.270, 8.00%)

Source: PhillipCapital Research - 20 Sep 2013