STI: +0.50% to 3210.2                           KLCI: +0.11% to 1776.2
JCI: +0.40% to 4423.7                           SET: -0.51% to 1417.5
HSI: +0.35% to 23207                            HSCEI: -0.44% to 10494
Nifty: -0.83% to 5833.2                          ASX200: +0.24% to 5307.1
Nikkei: -0.26% to 14760                        S&P500: +0.41% to 1691.8
      
MARKET OUTLOOK:
By Joshua Tan, Head of Research

Macro Data

USA: Consumers’ spending on goods and services rose 0.3% in August. That’s up from a 0.2% gain in July. Income also rose 0.4% in August, this is the best gain since February and up from a 0.2% July increase.
On the other hand, consumer confidence fell for the second consecutive month in September to a five-month low to 77.5 this month from 82.1 in August. The median estimate was for a drop to 78, after a preliminary reading of 76.8.

Eurozone’s economic sentiment indicator rose 1.6 points to 96.9 in the 17-nation eurozone and by 2.4 points to 100.4 in the full 28-member European Union. The sharp increase in the EU brought the indicator above the long-term average of 100 for the first time since July 2011.

Japan’s inflation accelerated to the fastest pace since 2008 in August on higher energy costs. Consumer prices ex fresh food increased 0.8% from a year earlier, which was above expectations of 0.7%.

Thailand’s Industrial production contracted for the fifth consecutive month, logging a 3.1% drop from a year earlier, as compared to a shortfall of 4.5% in June, led by weakness in cars and electrical appliances.
 

Regional Market Focus

Singapore

• The benchmark STI closed higher at 3,210.18 (+0.50%). The 4.4bn shares traded were worth S$1.2n in value.
• The FTSE ST Mid Cap Index gained +0.65% while the FTSE ST Small Cap Index declined -0.01%. The top active stocks were LionGold (-4.86%), Yangzijiang (+4.02%), Rowsley (+4.03%), Blumont (+8.00%), and Keppel Corp (-0.66%).
• The STI is may continue to experience downside pressure from concerns over US government spending cuts threatening to slow growth. Deadline for the raising of debt ceiling would be tomorrow, Oct 1.
• We peg key near term support at 3,100 levels.
• Top Picks are DBS (Accumulate, TP: S$17.50), SingTel (Accumulate, TP: S$3.99) and Keppel Corp (Accumulate, TP: S$12.25). Deep Value Plays are Amara (Buy, TP: S$0.74), Boustead (Buy, TP: S$1.94) and Courts (Buy, TP: S$1.14).

Thailand

• Thai stocks fell 7.27 points to 1,417.49 points last Fri, dragged down by sell-offs in BANK and ICT counters while foreign selling spree in the Thai stock market continued for a fifth straight session.
• The composite SET index looks poised for further losses today, taking cues from negative regional stocks on external worries as US government shutdown loomed likely if a last-minute budget deal could be reached today. The forecast by Moody’s Investors Service assumed that the shutdown of the US government for 3-4 weeks and 2 weeks would shave fourth-quarter GDP by as much as 1.4% and 0.3% respectively depending on its length as government workers are furloughed. China’s PMI data is also on tap at the start of this week.
• In Thailand, domestic political factor still needs to be closely watched. For trading idea, the support levels of 1390+/- could be used as a buy-in point with focus on recently underperforming but fundamentally strong counters including the likes of HEALTH. Today we expect a trading range of 1390-1430 points for the SET index.
• Today we peg support for the SET index at 1380-1400 points and resistance at 1420-1440 points. 

Indonesia

• The Jakarta Composite Index (JCI) climbed with modest pace on Friday (27/09), as stock markets in Asia rose on diminishing concerns over debt-ceiling discord in the US. The JCI advanced 17.826 points, or 0.40%, at 4,423.719. The gain on Friday snapped the four consecutive-day losses this week, settling the JCI with 3.49% weekly decline. Six of the 9 major industry groups finished in green, led by miscellaneous industry sector with 1.19%-gain, followed by consumer goods sector with 0.94%-rise, and infrastructure sector with 0.87%-advance. The LQ45 index added 3.465 points, or 0.47%, at 738.968, with 16 of its 45 blue-chip components closed higher. Asian stock markets were mildly higher Friday after Wall Street snapped a long losing streak. Signs of economic stabilization in China also supported sentiments in Asia. 128 shares rose and 109 shares fell Friday on the Indonesia Stock Exchange. Volume on the regular board Friday was the lowest this week, at 2.66 billion shares worth IDR 3.28 trillion. Foreign investors posted net sale of IDR 181.99 billion.
• Indonesian stocks will likely decline today, amidst negative tones as investors fret possible US goverment shutdown on a budget stalemate. We expect the JCI to turn lower today, with minor support and resistance at 4,389 and 4,470, respectively.

• The Colombo bourse concluded the day on a mixed note resulting in the indices to settle on either side. The market was unable to sustain its early rally where it reached an intraday peak of 5,822.43 gaining 36 points, as at the closure the benchmark ASPI settled at just 9 points above the 5,800 mark. However, the S&P SL20 closed on the negative side at 3,210.30, losing 8.79 points or 0.27%. With regard to the movement in share prices, price gainers slammed the price losers by 134:49. As at the daily closure the total market capitalization stood at LKR 2.39Tn, recording an YTD gain of 10.37%. The aggregate turnover for the day amounted to record LKR 409.14Mn, indicating a drop of 55.54% against its previously recorded. During the day a total of 72.08Mn shares changed hands resulting in a drop of 17.29% against it’s the previous trading day. Under the sectorial round-up, Bank Finance & Insurance (BFI) sector stood on top providing LKR 124.80Mn accounting a share of 31% of the day’s total turnover and the Diversified Holdings (DIV) sector made a contribution of LKR 114.23Mn. Foreign participants appeared to be bullish during the day for the 7th consecutive trading day, to record a net foreign inflow of LKR 91.48Mn. Foreign buying for the day amounted to LKR 110Mn and selling was recorded as LKR 18.53Mn.
• The Colombo bourse witnessed slight ups and downs during the week amidst the speculative nature of the investors and ended the week on mixed note. The benchmark ASPI and S&P SL20 lost 5.48 points (0.1%) and 7.30 points (0.2%) over the week entering into the red terrain at 5,808.62 and 3,210.30 respectively. The week recorded a turnover of LKR 3.2Bn supported by 17 off-board deals. A total of 340.44Mn shares changed hands during the week; this was a gain of 157.27% compared to the previous week. With regard to the foreign participation, foreign purchases amounting to LKR 1,307.68Mn outpaced the foreign sales of LKR 619.85Mn during the week, resulting in a net foreign inflow of LKR 687.84Mn, marking the Year to date net foreign inflow to LKR 19.81Bn. The market PER(X) and PBV(X) stood at 16.52 and 2.21 respectively. The local FOREX market closed the week with the USD selling at LKR 133.64/- and buying at LKR 130.29/-.

• The Australian share market on Friday hit another fresh five year high as previously underperforming stocks helped push the market to its seventh consecutive week of gains. The benchmark S&P/ASX200 index moved 12.6 points, or 0.24 per cent higher, to 5,307.1.
• Today (30/09/13), the Australian market looks set to open lower following falls on Wall Street with traders nervous amid relentless partisan squabbling over a US budget bill to avert a partial US government shutdown.
• In economic news on Monday, the Reserve Bank of Australia is due to release financial aggregates for July while the TD Securities-Melbourne Institute inflation gauge for September is due out.
• In equities news, NAB is expected to release online retail sales index for August while Funtastic is slated to post full year results.

• HSI swung between gain and lose last Friday, and closed at 23,207 (+82 points) and CEI dropped 46 points or 0.44% to 10,494. Trading volume was HKD54.339 billion.
• For the whole week, HSI lost 295 points or 1.26% due to uncertainties from U.S. fiscal cliff problem.
• Mainland property sector outperformed market with Shimao Property (813.HK), Country Garden (2007.HK) and Sunac (1918.HK) lost 2.9%, 4.8% and 2.5% respectively.
• New World Dev (17.HK) dropped 0.3% after posted FY13 annual results but Hang Lung PPT (101.HK), SHK PPT (16.HK) and CK (1.HK) outperformed with 0.8-1.7%.
• ND Paper (2689.HK), one of the largest paper manufacturers in China, dropped 5.9% after annual results showed surge in gearing ratio.
• Technically, HSI gained support at 10-MA level of 23,206. The next resistance and support for HSI are 23,500 and 23,000 respectively.

Morning Note
Company Highlights

Consciencefood Holding Limited and Baltic Group Capital Limited jointly announce that Baltic Group Capital Limited has presented to the Board a formal proposal to seek the voluntary delisting of Consciencefood Holding Limited from the Official List of the Singapore Exchange Securities Trading Limited pursuant to Rules 1307 and 1309 of the Listing Manual of the SGX-ST. Under the Delisting Proposal,  Baltic Group Capital Limited will make an exit offer to acquire all the Shares, other than those already owned, controlled or agreed to be acquired by the Offeror and the Concert Parties, as at the date of the Exit Offer at S$0.184 in cash for each Offer Share. (Closing Price: S$0.149, +1.361)

Hafary Holdings announced that following differences between the unaudited results announced on 22 August 2013 and the audited accounts to be included in the Annual Report. All differences to the Group’s consolidated statement of profit or loss and other comprehensive income arise from adjustments to the carrying value of investment in associate, Hunan Cappuccino Construction Materials Co., Limited. Subsequent to the FY2013 results announcement on 22 August 2013, HCCM has remained loss-making and the management made a re-assessment of the value-in-use of this investment in associate together with our auditors. In view of the net current liability position, continuing losses and absence of financial support commitment from major shareholders of HCCM and/ or other financing sources, there is significant doubt on HCCM’s ability to continue as a going concern. Accordingly, the carrying value of the investment in HCCM as at 30 June 2013 in the Company’s consolidated statement of financial position was impaired in full. This resulted in a reduction of profit after tax of S$3,076,000 from S$25,958,000 to S$22,882,000. (Closing Price: S$0.225, +2.273)

Source: PhillipCapital Research - 30 Sep 2013