STI: -0.72% to 3214.3                            KLCI: +0.30% to 1796.4
JCI: -0.46% to 4562.9                            SET: -3.37% to 1436.7
HSI: -0.56% to 23371                            HSCEI: -0.48% to 10717
Nifty: -2.04% to 5889.8                          ASX200: -0.46% to 5252.5
Nikkei: -0.16% to 14742                         S&P500: -0.47% to 1701.8
      
MARKET OUTLOOK:
By Joshua Tan, Head of Research

Macro Data

Eurozone: Market’s Flash Composite PMI jumped to 52.1 from last month’s 51.5, its highest since June 2011 and beating expectations for 51.9. This is at their fastest pace in over two years, adding to signs that the economy is healing.

Taiwan’s unemployment rate increased to 4.19% in Aug. from 4.18% in July, slightly under expectations of 4.2%.

China: HSBC China Manufacturing Purchasing Managers’ Index shows an extended gain in September with a preliminary reading of 51.2. The climb from 50.1 in the preceding month reinforced expectations that the economy is continuing to gain strength after a two-quarter slowdown.

Hong Kong’s consumer price inflation eased to a 4.5% y-o-y in August as compared to a 6.9% gain in July. The low base of comparison arising from the government's payment of public housing rentals in July 2012 was the main attributor to the larger increase in July, which is also absent in August, according to the Census and Statistics Department. Meanwhile, the core inflation rate (excluding the impacts of government's one-off measures), edged up to 4.3% year-on-year from 4.2% in July, on the back of rising private housing rentals, higher prices of salt-water fish and package tours, said the statistical agency.

Singapore’s headline inflation rate rose to 2.0% year-on-year in August, marking a four straight month uptrend, from 1.9% in July. The Monetary Authority of Singapore (MAS) said the higher inflation was due to higher costs of accommodation (4.2% vs 2.6%), services (2.7% vs 2.5%) and food (2.4% vs 2.1%), which was partially offset by the smaller gain in private road transport cost (0.1% vs 2.0%).

Malaysia’s unemployment rate moved up to 3% in July from 2.8% in June, with 421,200 Malaysians unemployed in July compared to 392,700 in June, based on data released by Department of Statistics. However, the nation’s labour force participation rate rose 0.3% m-o-m to 68.1% in July this year.
 

Regional Market Focus

Singapore

• The Straits Times Index (STI) ended 23.28 points lower or -0.72% to 3,214.25, taking the year-to-date performance to +1.49%.
• The FTSE ST Mid Cap Index declined -0.06% while the FTSE ST Small Cap Index gained +0.17%. The top active stocks were SingTel (-1.05%), Ezra (+8.85%), Rowsley (+3.88%), YHM (+14.00%), and HanKore (+6.49%).
• The outperforming sectors today were represented by the FTSE ST Technology Index (+2.47%). The two biggest stocks of the FTSE ST Technology Index are Liongold Corp (+5.02%) and STATS ChipPAC (unchanged). The underperforming sector was the FTSE ST Telecommunications Index, which declined -1.15% with SingTel’s and Starhub‘s share prices declining -1.05% and -1.86% respectively. The FTSE ST Industrials Index declined -1.07%, while the FTSE Health Care Index declined -0.14%.
• The STI is consolidating and has had its first bounce off resistance at 3275. A breakout from that implies further upside. We biased towards the upside on a longer term basis due to improving global macro conditions, but are also prepared for a short term pullback due to overextension.
• We peg near term support at 3100 level.
• Top picks are DBS (Accumulate, TP:$17.50), Singtel (Accumulate, TP: $3.99) and Keppel Corp (Accumulate, TP: $12.25). Deep Value Plays are Amara (Buy, TP: $0.74), Boustead (Buy, TP: $1.94) and Courts (Buy, TP: $1.03).

Thailand

• The composite SET index much underperformed its regional peers on Mon, down as much as 50.08 points on internal concerns about export outlook for 2H13 and the government’s first-year performance address to parliament today.
• Institutions and proprietary accounts took profits on Mon after a sharp rally of more than 15% in the SET index over the last three weeks, outperforming gains of only 9% and 6% in Indonesian and Philippine stock markets respectively due partly to risk aversion from internal worries in those markets.
• US equities were dragged down by selling in financial shares amid uncertainty about the US Federal Reserve’s policy stance. Stock markets in Asia edged slightly lower this morning on Tue led by energy stocks after oil prices lost ground after the Middle East crisis eased. The Thai baht weakened to 31.26 to the US dollar this morning on Tue.
• Under this circumstance, we expect the SET index to trade in a volatile range of 1415-1450 points today. For investment strategy, support levels could be used as a buy-in point for trading with focus on seasonal plays including the likes of export and/or tourism related shares i.e. NOK.
• Resistance for the SET index is seen at 1440-1460 points and support at 1420-1400 points today.  

• The Jakarta Composite Index (JCI) declined Monday (23/09), as most stock markets in Southeast Asia headed lower after the significant rallies following last week’s US Federal Reserve decision to leave its stimulus unchanged. The JCI ended with 20.971 points or 0.46%-decline, at 4,562.857. The LQ45 index measuring Indonesia’s blue-chip shares shed 3.941 points, or 0.51%, at 769.993. Eight of the nine major sectors finished in red Monday, with construction sector plunged 2.03%, infrastructure sector fell 0.83%, and miscellaneous industry sector slid 0.58%. Elsewhere in Asia, stock markets mostly fell on Monday, retreating from last week’s rallies after the US Federal Reserve decided to leave its bond purchase rate unchanged at September’s FOMC meeting. But looming US budget and debt ceiling issues started weighing on stock markets. Decliners outran gainers 157 to 86 Monday on the Indonesia Stock Exchange, where 3.48 billion shares worth IDR 3.78 trillion changed hands on the regular market. Foreign investors posted net purchase of IDR 15.78 billion.
• The Jakarta Composite Index (JCI) will likely to extend its decline today, as concerns about US debt ceiling loom. We estimate the JCI to trade lower today, with support and resistance at 4,495 and 4,597, respectively.

• Having posted a strongest gain 0f 113 points (nearly 2%) on Friday the Colombo bourse experienced a setback on the first trading day of the final week being unable to sustain the bullish run. The benchmark ASPI settled at 5,782.85 shedding 31.25 points or 0.54%, and the S&P SL20 index closed within the negative territory at 3,206.23, losing 11.37 points or 0.35%. As at the daily closure 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 amounted to LKR 485.83Mn, indicating a drop of 42.82% against the previous trading day. Under the sectorial round-up Bank Finance & Insurance (BFI) sector topped the list providing LKR 190.49Mn accounting nearly 40% of the day’s total turnover. Manufacturing (MFG) made a sectorial contribution of LKR 100.97Mn to the aggregate turnover and emerged as the largest subscriber under the sectorial performance. During the day, a total of 22.74Mn shares changed hands resulting in a drop of 43% against the previous trading day. In terms of share price movement, 140 companies lost while 71 companies gained within the trading day. Foreign participants appeared to be bullish during the day, to record a net foreign inflow of LKR 9.59Mn, resulted by foreign buying of LKR 199.36Mn and selling worth 189.78Mn. Furthermore, this assisted the year to date net foreign inflow to reach LKR 19.14Bn. The local FOREX market for the day closed with, the USD selling at LKR 133.75/- and buying at LKR 130.40/-.

• The Australian share market on Monday finished lower, but stemmed some of their losses on the back of strong Chinese economic data.   Banking giant HSBC said its preliminary purchasing managers' index for the manufacturing sector in China hit 51.2 in September, the highest since March when the index stood at 51.6.  It's a further sign that a rebound in the world's second-largest economy is gaining momentum on improving demand. In Australia, the benchmark S&P/ASX200 index was 24.2 points, or 0.46 per cent, lower to 5,252.5.
• Today (24/08/13), the Australian market looks set to open lower following falls on international markets despite better-than-expected Chinese manufacturing data.
• No major economic news is expected on Tuesday. 
• In equities news, Kathmandu is expected to post full year results. 

• HK market was open for afternoon session only yesterday due to Typhoon Usagi. HSI dropped 130 points or 0.56% to 23,371. CEI lost 51 points or 0.48% to 10,717. Trading volume was HKD44.011 billion.
• HK market was weak, tracking weak U.S. trading last Friday. HSI opened low at 23,414 (-87 points). On the macro economic front, China Sep HSBC flash PMI came in at 51.2, beat market estimate of 50.9.
• HSBC (5.HK) dropped 1.9%, led HSI down. HK property sector underperformed due to market concern of Fed’s tapering soon. New World Dev (17.HK), Sino Land (83.HK) and CK (1.HK) declined 2.9%, 2.2% and 1.5% respectively.
• Mengniu Dairy (2319.HK) surged 5% after gaining Chinese government support call.
• Technically, the next resistance and support for HSI are 23,500 and 23,000 respectively.

Morning Note

Company Highlights

Boustead Singapore Limited announced that 13,208,089 New Shares have been allotted and issued at an issue price of S$1.26 per New Share to eligible Shareholders who have elected to participate in the Scrip Dividend Scheme (“Participating Shareholders”), in respect of the Dividend. The payment of the Dividend was approved at the Annual General Meeting of the Company held on 26 July 2013. (Closing Price: S$1.37, +0.3%)

Oceanus Group Limited refers to the latest news coverage on Typhoon Usagi that passes through the Luzon strait separating the Philippines and Taiwan, moving on a path towards Hong Kong at the foot of the delta. As Typhoon Usagi hit Guangdong, coastal Zhejiang and Fujian provinces in China where the majority of abalone production is sited, the Board was informed by the China production team that industry-wide damages were caused to abalone farmers and manufactures in these affected areas. Some of the facilities in the Group’s abalone farms that are located in Guangdong and Fujian provinces were damaged. The Hui Lai Farm, the Gu Lei Farm, the Fo Tan Farm and some abalone farming and production facilities (and to a lesser extent biological assets) were affected to some extent. (Closing Price: S$0.025, -)

Interra Resources Limited announced that its jointly controlled entity, Goldpetrol Joint Operating Company Inc.(“Goldpetrol”), has completed infill development well YNG 3257 in the Yenangyaung oil field in Myanmar as an oil producer. YNG 3257 was drilled to a total depth of 5,352 feet in the producing Nyaung Do fault block located in southern Yenangyaung field. The primary objective of YNG 3257 was to establish oil production in this area of the fault block from reservoirs as determined from electric logs analysis in offset YNG 3142, which was drilled in December 1979 but was shut-in before production was established. (Closing Price: S$0.485, -1.0%)

LionGold Corp has signed an ore processing agreement with Australian-listed A1 Consolidated Gold Limited in Victoria which may boost revenues over a three year period. Up to 150,000 tonnes per year of ore from the A1 Gold Mine would be processed at the nearby Ballarat gold plant, wholly-owned by LionGold subsidiary, Castlemaine Goldfields. (Closing Price: S$1.570, +5.2%)

Global Logistic Properties Limited has signed an agreement with Vipshop (vipshop.com), one of China’s leading e-commerce companies, to develop 130,000 sqm (1.4 millionsq ft) of new built-to-suit facilities at GLP Park Dianshanhu IIin Kunshan, Eastern China. The park will be developed in two phases. The first phase comprising 60,000 sqm (646,000 sq ft) commenced construction in August 2013. The second phase of the project will add a further 70,000 sqm (753,000 sq ft). (Closing Price: S$2.880, -0.7%)

Source: Macquarie Research - 24 Sep 2013