STI: -0.25% to 3144.8                           KLCI: +0.06% to 1771.4
JCI: +0.71% to 4418.6                           SET: +1.43% to 1429.2
HSI: +1.00% to 23214                            HSCEI: +1.75% to 10514
Nifty: +2.24% to 5909.7                         ASX200: +0.37% to 5234.9
Nikkei: -0.09% to 14157                         S&P500: -0.90% to 1678.7
      
MARKET OUTLOOK:
By Joshua Tan, Head of Research

Macro Data

USA: Institute for Supply Management’s U.S. non-manufacturing index fell to 54.4 in September from 58.6 and below the median economist estimate of 57.
Jobless claims rose by 1,000 to 308,000 in the week ended Sept. 28, from a revised 307,000. The median forecast of 50 economists surveyed by Bloomberg called for a rise to 315,000

China’s official non-manufacturing PMI climbed to 55.4 in September, its highest in six months, from 53.9 in the preceding month. The new orders (from both home and abroad) sub-index rose to 53.4 in September, up 2.5 points from August, while input prices and services charges eased. Upbeat reading on China’s services sector activity reflected strong growth in consumption services represented by retail as it was a holiday season in September and the restructuring policies had boosted demand in the service sector, said Cai Jin, vice chairman of the China Federation of Logistics and Purchasing.

Hong Kong’s retail sales advanced 8.1% by value and 7.2% by volume in August from a year earlier, albeit slower than the previous month in both terms. However, barring from the unsteady external environment which may affect the local economy, the performance of the retail business in the near term is expected to continue to receive support from the still-favourable labour market conditions and further growth of the inbound tourism, said a Government spokesman.

Thailand’s consumer confidence, fell to its lowest in a year in September due to concerns over continued flooding and the country’s economy.  Consumer Confidence Index (CCI) sank for the sixth consecutive month to 77.9 in September as compared to August’s 79.3. Delay in passing the 2014 budget, the recent downward revision of 2013 GDP growth estimate from 4.5% to 3.7% by Finance Ministry, internal political conflicts and fears over another flood crisis weighed down consumers’ confidence, according to a survey by the University of Thai Chamber of Commerce.
 

Regional Market Focus

Singapore

• The benchmark STI closed lower at 3,144.79 (-0.25%). The 3.2bn shares traded were worth S$1.3n in value.
• The FTSE ST Mid Cap Index declined -1.21% while the FTSE ST Small Cap Index declined -0.13%. The top active stocks were PLife REIT (-0.42%), Blumont (-15.48%), UOB (-0.88%), DBS (+0.56%) and Keppel Corp (+0.58%).
• 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. Investors are concerned that the lack of progress on the US government federal budget talks may increase the risk of debt ceiling talks failing, leading to the US government defaulting on its debt. 
• 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 rallied as much as 1.43% on Thu as investors betted that the US Federal Reserve’s QE tapering would be delayed to early next year in the wake of the partial US government shutdown as a result of a budget stalemate in Congress.
• The standoff between Democrats and Republicans to pass an emergency funding bill continued with little sign of progress toward a solution, raising more concerns the crisis could emerge with a more complex fight looming to raise the US borrowing limit before Oct 17 deadline.
• The SET index looks set to follow Wall Street lower today amid negative regional sentiment on growing US debt ceiling worries. In Thailand, the market’s focus will also be on the Constitutional Court’s ruling on whether the fiscal 2014 budget bill violates the constitution and the Bt2trn infrastructure loan bill tabled for debate in the Senate next Mon. Foreign selling spree continued for the ninth day running in the Thai stock market but at a slower pace. 
• Resistance for the SET index is seen at 1440-1450 points and support at 1420-1400 points today. 

• Indonesian stocks gained for the third day this week on Thursday (03/10), as concerns about the partial government shutdown in the US receded, and as markets in Asia turned mostly higher after the release of China’s non-manufacturing data. The Jakarta Composite Index (JCI) advanced 31.039 points, or 0.71%, to close at 4,418.643. LQ45, the index tracking Indonesia’s blue-chip shares, gained 5.539 points, or 0.76%, at 738.493. Seven of the 9 major stock sectors finished in green on Thursday, led by mining sector with 2.48%-rise, miscellaneous industry sector with 1.37%-gain, and trade, services, and investment sector with 0.89%-advance. In Asia, stock indexes closed mostly higher Thursday, casting aside concerns over a partial shutdown of the US government and instead focusing on an encouraging reading on non-manufacturing activity in China. China’s official non-manufacturing Purchasing Managers’ Index rose to a six-month high of 55.4 in September from 53.9 in August, adding to a growing evidence that China’s economy has turned a corner in recent months. 138 shares rose, and 88 shares declined Thursday on the Indonesia Stock Exchange, where 2.67 billion shares worth IDR 2.92 trillion changed hands on the regular board. Foreign investors posted net sale of IDR 9.76 billion.
• The Jakarta Composite Index (JCI) will likely turn lower today, amid negative notes on concerns about possible US federal default as the mid October deadline to raise its debt ceiling approaches. We expect the JCI to trade lower today, with minor support and resistance at 4,385 and 4,439, respectively.

• The bourse was unable to sustain its early market-rally where it reached an intraday peak of 5,822.97 gaining 17.35 points, however as at the closure the indices settled on either side with the benchmark ASPI charting a gain of 9.18 points (0.16%) to close at 5,814.80 and the S&P SL20 ended red closing at 3,220.71 dropping by a minute 2.18 points or 0.07%. With regard to the movement in share prices, price gainers slammed the price losers by 120:65.  As at the daily closure the total market capitalization stood at LKR 2.42Tn extending the year to date gain to 11.55%. The market PER and PBV stood at 15.53x & 2.13x respectively. A series of off-market deals totaling up to LKR 238.73Mn on JKH & COMB collectively made a share of nearly 30% to the daily aggregated turnover which amounted to LKR 840.75Mn; the turnover noted a dip of 36% against the previous trading day. Under the sectorial round-up, Diversified Holdings (DIV) sector stood on top providing LKR 270.47Mn, accounting a share of 32.17% of the day’s total turnover.  Bank Finance & Insurance (BFI) sector secured the second place contributing LKR 189.33Mn. Foreign Investors stretched the streak of inflows for the 11th consecutive trading day, recording net foreign interest worth LKR 79.51Mn; the aggregated inflows for the past 11 days amount to LKR 1.86Bn and the year to date net foreign inflow stands at LKR 20.49Bn. In relation to the local FOREX the rupee gained further against the USD charting a selling rate of LKR 133.11/-, and the buying rate is recorded at LKR 129.71/-.

• The Australian share market on Thursday rose, pushed up by strength in resources and banking stocks despite the the continuing US Congressional stand-off over budget negotiations. The benchmark S&P/ASX200 index added 19.3 points, or 0.37 per cent, to 5,234.9.
• Today (04/10/13), the Australian market looks set to open lower after Wall Street suffered hefty losses as the US partial government shutdown continued and worries climbed that the nation may default.
• No major economic news or equities news is expected on Friday.

• HSI climbed 229 points or 1% to 23,214. CEI surged 180 points or 1.75% to 10,514. Trading volume was HKD53.26 billion.
• Cheung Kong (1.HK) and Hutchison (13.HK) continued to lead HSI up, with 2% and 0.9% up respectively.
• China Unicom (762.HK) and China Telecom (728.HK), 2 of the 3 telecom operators in China, surged 8.4% and 7.6% respectively due to the rumor that the settlement fee to China Mobile would be lower.
• Macau gambling revenue in Sep climbed 21.4% yoy. Galaxy Ent (27.HK) and Sands China Ltd (1928.HK) gained 5.1% and 3.9% respectively.
• Medicine sector outperformed with NT Pharma (1011.HK), CMS (867.HK) and Sino Biopharm (1177.HK) gained 4.2-7.1%.
• IPO Forgame (484.HK) closed at HK$67.6, up 32.4% from the issue price.
• Technically, HSI regained 10-MA of 22,973, sending positive signal. The next resistance and support for HSI are 23,554 and 23,000 respectively

Morning Note
Company Highlights

Hiap Hoe Limited announced that, further to the Announcements and in relation to the 6-22 Pearl River Road Property and 380 Lonsdale Street Property, the Company has on 2 October 2013 entered into a non-binding memorandum of understanding with Probuild Constructions (Aust) Pty Ltd, pursuant to which the Company and Probuild have reached an understanding to explore the possibility of participating in a joint venture for the proposed development of the Properties. Under the terms of the MOU, the Company, either itself or through its Australian subsidiary, is expected to undertake the role of the developer, and Probuild is expected to undertake the role of the head contractor, of the Projects. Probuild is an Australian national company with expertise in project delivery, construction planning and management. The Board believes that the Group will stand to benefit from a joint venture with an established local partner for the Projects, which will help the Group increase its presence in Australia. (Closing Price: S$ - , - %)

Technics Oil & Gas issued a profit warning regarding the financial results of the Company and its subsidiaries for the fourth quarter period and full year ended 30 September 2013. Based on the preliminary financial figures, the Group is expected to report an operating net loss attributable to the equity holders of the Company for Q4 FY2013 and for FY2013. Further details of the Group’s performance will be disclosed when it announces its Q4 FY2013 and FY2013 unaudited financial results. (Closing Price: S$0.825, -1.786%)

CapitaMalls Asia Limited and Sime Darby Property are pleased to mark a key milestone today by commencing construction of their shopping mall located on prime commercial land in the Taman Melawati commercial area. The shopping mall, named Melawati Mall, is set to become a lifestyle city shopping complex north east of Kuala Lumpur when it is completed in end 2016. Under a 50:50 joint venture, CapitaMalls Asia and Sime Darby Property are developing Melawati Mall into an eight-storey shopping mall with a net lettable area of about 620,000 square feet. Positioned as a one-stop retail and lifestyle destination, Melawati Mall aspires to bring the city shopping experience, with its comprehensive and fashionable offerings, to the residents of Melawati township and nearby towns. When it is completed, the mall, fronting the Middle Ring Road 2 (MRR2), will serve an estimated 800,000 people within a 15- minute drive. The total development cost is expected to be about RM670.0 million (S$257.8 million). (Closing Price: S$1.945, -0.256%)

Source: PhillipCapital Research - 4 Oct 2013