STI: -0.91% to 3152.6                             KLCI: +0.07% to 1770
JCI: +0.96% to 4387.6                            SET: +0.06% to 1408.9
HSI: +0.55% to 22984                             HSCEI: +0.17% to 10333
Nifty: +0.78% to 5780.1                          ASX200: +0.17% to 5215.6
Nikkei: -2.17% to 14170.5                      S&P500: -0.07% to 1693.9
      
MARKET OUTLOOK:
By Joshua Tan, Head of Research

Macro Data

USA: The ADP jobs reports estimates that companies added fewer workers than projected in September, indicating the U.S. job market is struggling to gain momentum. The 166,000 increase in employment followed a revised 159,000 rise in August that was smaller than initially estimated. The median forecast of 40 economists surveyed by Bloomberg called for an advance of 180,000.

The government yesterday began a partial shutdown that idled as many as 800,000 federal employees, closed national parks and halted some services after Congress failed to break a partisan deadlock. Republicans and Democrats remain at odds over whether to tie any changes to the 2010 Affordable Care Act to a short-term extension of government funding.

Eurozone: The European Central Bank kept its benchmark interest rate unchanged at a record low as the euro area recovers from its longest-ever recession. The ECB left the main refinancing rate at 0.5 percent for a fifth month after cutting it by a quarter point in May. The decision was predicted by all 52 economists in a Bloomberg survey.

Japan saw September vehicle sales jump the most in 14 months, adding to signs of an improving outlook in the world’s third-largest economy. Deliveries of passenger and commercial vehicles last month rose 17 percent to 522,760 units, according to data from associations released yesterday. That reversed a four-month slide and helped July-to-September sales increase 2.3 percent, the first gain in four quarters.
 

Regional Market Focus

Singapore

• The benchmark STI closed lower at 3,152.58 (-0.93%). The 3.4bn shares traded were worth S$1.4n in value.
• The FTSE ST Mid Cap Index declined -0.19% while the FTSE ST Small Cap Index declined -0.21%. The top active stocks were DBS (-1.77%), Blumont (-2.05%), SingTel (-0.27%), UOB (-1.15%), and Rowsley (+11.94%).
• The STI may continue to consolidate today. Markets continue to watch for progress on US government federal budget talks. Key risk event ahead would be the debate on raising the US debt ceiling.  
• 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 traded in a tight range on Wed. The SET index rose in the morning on hopes that US budget deal would finally be reached but the market succumbed to selling pressure in the afternoon. 
• We see limited downside risk for Thai stocks today as the market remained clouded by a number of uncertainties and there seems to be a lack of fresh trading cues. No end to the US government shutdown was in sight as both sides dug in for what could be a long stalemate after US President Barack Obama refused to negotiate with Republicans until they agreed to re-open the government without conditions. Foreign selling spree also continued in the Thai stock market for an eighth day running to the combined tune of Bt12,332mn, a factor that could add to pressure on the market.
• In Thailand, the market’s focus will turn to the Constitutional Court’s ruling on whether the fiscal 2014 budget bill violates the constitution tomorrow. China’s non-manufacturing PMI will be a key economic data to watch today. For short-term trading ideas, we advise ‘buy on dips and sell on rise’ strategy within support-resistance levels. We expect a trading range of 1390-1420 points for the SET index today.
• Today we peg resistance for the main index at 1420-1440 points and support at 1380-1400 points.

• Most Indonesian stocks finished in positive territory Wednesday (02/10), as investors cheered better-than-estimated latest economic data, and sentiments were buoyed by view that partial shutdown of the US government will be short-lived. The Jakarta Composite Index (JCI) climbed 0.96%, or 41.705 points, to 4,387.604, with eight of its nine major sectors ended in green. Infrastructure sector led gains on Wednesday with 1.76%-advance, followed by finance sector that rose 1.53%, and basic industry sector added 1.03%. The LQ45 index measuring Indonesia’s largest and most liquid shares gained 10.752 points, or 1.49%, at 732.954. A series of economic data released on Tuesday (01/10) included trade surplus of USD 130 million in August, and consumer price index that climbed 8.40% in September, from 8.79% a month earlier. Gainers outpaced decliners 138 to 110 Wednesday on the Indonesia Stock Exchange, where 3.19 billion shares with a total value of IDR 3.27 trillion traded on the regular market. Foreign investors’ trades accumulated to a net purchase of IDR 34.51 billion.
• The Jakarta Composite Index (JCI) will likely trade lower today, with the partial US government shutdown still weighing on market sentiments in Asia. However, positive economic data released in Indonesia earlier could still provide support for the composite index. We expect the JCI to trade lower, with support and resistance at 4,341.27 and 4,449.09, respectively.

• The Market recovered to some extent from its bear run as both indices reversed gear to re-enter the positive terrain for the first time during the week. The market gradually moved up from its early hours to reach an intra-day peak of 5,815.47 gaining 35 points, however as at the daily closure the benchmark ASPI settled at 5,805.62 (gaining 24.79 points or 0.43%). The S&P SL20 too closed positive gaining 12 points or 0.37% to settle the day at 3,222.89.  As at the day’s close, the total market capitalization moved to LKR 2.39Tn, logging a year to date gain of 10.31%. The market PER & PBV stood at 15.35x and 2.10x respectively. During the day, shares totaling up to 74.33Mn changed hands, recording a gain of 1.37% compared with the previous trading day. Off-board interest which aggregated upto LKR 730.19Mn (nearly 60% of the aggregated turnover) clouded the on-board activity of LKR 583.44Mn, hence the aggregated turnover for the day amounting to LKR 1.31Bn indicated a rise of 2.45% as against its previously recorded. Under the sectorial summary, Diversified Holdings (DIV) sector stood out as the prime contributor providing LKR 807.60Mn, while accounting to 61.48% of the total turnover. Telecommunications (TLE) sector added LKR 226.60 to the daily turnover.  Foreign participants were bullish during the day for the 10th consecutive trading day to record a net foreign inflow of LKR 83.24Mn, resulted by foreign buying worth LKR 486.37Mn and selling of LKR 403.13Mn. Further, this increased the year to date net foreign inflow to LKR 20.42Bn. With regard to the local FOREX, the Sri Lankan Rupee (LKR) strengthened against the USD ($) to record a lowest selling rate of LKR 133.13/- post to 16th August 2013; the buying rate stands at LKR 129.79/-.

• In Australia, the market on Wednesday firmed as investors expect the partial US government shutdown to be resolved soon. The benchmark S&P/ASX200 index gained 8.8 points, or 0.17 per cent, to 5,215.6 points.
• Today (03/10/13), the Australian market looks set to open higher despite falls on Wall Street as the reality of the US government shutdown depressed markets along with fears of a American debt default.
• In economic news on Thursday, the Australian Industry Group/Commonwealth Bank Australian Performance of Services Index (PSI) for month just ended is due out.
• No major equities news is expected.

• HSI climbed 124 points or 0.55% to 22,984. CEI gained 17 points or 0.17% to 10,333. Trading volume was HKD55.148 billion.
• The rumor that Hutchison (13.HK) is planning to spin off Watson sent the share price up 3.3% to 52-week high. Cheung Kong (1.HK), having 50% equity interest in Hutchison, surged 3.8% and led HSI outperformed CEI.
• Macau Sep gambling revenue will be released soon, related stocks outperformed. Galaxy Ent (27.HK), the best-performed blue chip in 3Q13, jumped 2.7%. WYNN Macau (1128.HK) and MGM China (2282.HK) gained 5.1% and 3.5% respectively.
• Gold related sector under-performed following gold price slump. Zijin Mining (2899.HK) and Zhaojin Mining (1818.HK) dropped 3.8% and 2.6% respectively.
• Technically, HSI gained 20-MA of 22,973. The next resistance and support for HSI are 23,174 and 22,800 respectively.

Morning Note
Company Highlights

Foreland Fabrictech Holdings Limited issued profit guidance. The Board expects the Group to report a loss and a significant drop in revenue for 3Q 2013 as compared to the corresponding period in the immediately preceding financial year. Generally, the weak economic sentiments as disclosed in the Group’s previous announcement on 14 August 2013 have continued to lead to a deteriorating business environment. In 3Q 2013 both the demand and selling price for the high-grade textile products, including both apparel and umbrella products, have been pressured by the weak business conditions, which in turn impacted the Group’s revenue. (Closing Price: S$0.041, - %)

Cordlife Group Limited announce the proposed issue of an aggregate of up to 26,838,000 Placement Shares, at the Issue Price of S$1.25 per share by way of a private placement comprising (i) placement via the Placement Agent, whereby the Placement Agent agrees, on a best efforts basis, to procure subscriptions for an aggregate of up to 17,800,000 Placement Shares and (ii) placement via direct subscription from investors who have agreed to subscribe for an aggregate of up to 9,038,000 Placement Shares, to raise aggregate gross proceeds of up to S$33,547,500. The net proceeds from the Private Placement, after deducting the placement commission and other estimated fees and expenses (including professional fees and expenses) incurred or to be incurred by the Company in connection with the Private Placement, will amount to approximately S$32.1 million. (Closing Price: S$ - , - %)

Artivision Technologies Ltd announce that the Company had on 28 September 2013 entered into subscription agreements with numerous persons, pursuant to which the Company has agreed to allot and issue an aggregate of 35,700,000 new ordinary shares in the capital of the Company to the Subscribers, and the Subscribers have agreed to subscribe for the Subscription Shares, at S$0.12222 per Subscription Share, for an aggregate amount of S$4,363,254. (Closing Price: S$ - , - %)

RH Petrogas Limited announced that the Company has entered into a placement agreement dated 2 October 2013 with UOB Kay Hian Private Limited as placement agent. Pursuant to the Placement Agreement, the Company has agreed to issue up to 116,000,000 new ordinary shares in the capital of the Company at a placement price of S$0.63 for each Placement Share and the Placement Agent has agreed to procure the subscription and payment for, the Placement Shares at the Placement Price for each Placement Share on a best endeavors basis. A placement commission of 3.5% of the Placement Price for each Placement Share subscribed, is payable by the Company to the Placement Agent pursuant to the Placement Agreement. The Placement is non-underwritten. (Closing Price: S$ - , - %)

Vallianz Holdings Limited announced that: (a) the Company has entered into an option agreement dated 2 October 2013 with Swiber Holdings Limited pursuant to which the Company shall issue to Swiber an aggregate of 500,000,000 non-transferable share, with each Option carrying the right to subscribe for one new ordinary share in the capital of the Company at the exercise price of S$0.055 per Option; and (b) the Company has entered into a subscription agreement dated 2 October 2013 with Rawabi Holding Company Ltd pursuant to which the Company shall issue to Rawabi Holding redeemable convertible capital securities of a principal amount of US$35,200,000, with such Capital Securities convertible into ordinary shares in the capital of the Company. (Closing Price: S$ - , - %)

Source: PhillipCapital Research - 3 Oct 2013