STI: -0.21% to 3138.1                            KLCI: +0.29% to 1776.6
JCI: -0.66% to 4389.4                            SET: -0.10% to 1427.7
HSI: -0.33% to 23138                             HSCEI: +0.03% to 10517
Nifty: -0.04% to 5907.3                          ASX200: -0.51% to 5208
Nikkei: -0.94% to 14024                         S&P500: +0.71% to 1690.5
      
MARKET OUTLOOK:
By Joshua Tan, Head of Research

Macro Data

Japan: Bank of Japan Governor Haruhiko Kuroda on Friday said he is confident about the effects of the aggressive easy policy decided in April and noted that Japan's economy is moving toward the path of achieving the 2% price stability target.
 
Malaysia logged a trade surplus of MYR 7.11 billion in August, more than double of its previous month and its highest point in five months, as exports surged 12.4% y/y. Imports rose 14.1% in August from a year earlier to MYR 55.79 billion, mainly driven by intermediate and capital goods. The improved trade balance eased concerns that Malaysia’s current account could slip into deficit this year.

India: The seasonally-adjusted HSBC India purchasing managers’ index (PMI) for services fell to 44.6 in September from August’s 47.6, its lowest since April 2009. The further contraction indicates that the economy’s biggest sector has not yet bottomed out.
 

Regional Market Focus

Singapore

• The benchmark STI closed lower at 3,138.08 (-0.21%). The 4.6bn shares traded were worth S$1.2n in value.
• The FTSE ST Mid Cap Index declined -4.31% while the FTSE ST Small Cap Index declined -4.11%. The top active stocks were Mapletree Logistics Trust
• (-1.42%), Innopac (-52.90%), UOB (-0.15%), SingTel (unchanged) and CapitaLand (-0.65%).
• 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 to the downside in the morning last Fri amid fears of the looming US debt ceiling deadline but earlier losses were pared late in the session after the Thai Constitutional Court ruled the government’s fiscal 2014 budget bill was constitutional. The composite SET index finished the session down 0.1% last Fri. 
• The US government shutdown and looming debt ceiling would remain the focus of the global stock markets. Even though expectations are that US lawmakers will finally strike a deal to raise the debt limit, the prolonged US government shutdown with no signs of progress in resolving the US budget standoff could reflect uncertainty over the fate of the debt ceiling, a factor that would put a cap on the market’s upside potential with risk to the downside.
• In Thai politics, all eyes will be on the Bt2trn infrastructure loan bill, which is tabled for the first-reading debate in the Senate today. Overall we think political temperature looks set to rise both at home and abroad.
• Wild intraday swings could be in store for Thai stocks amid uncertainties. This week we expect the SET index to trade in a range of 1380-1470 points. Support for the main index today is seen at 1410 points. 
• Today we peg resistance for the SET index at 1440-1450 points and support at 1410-1400 points.  

• The Jakarta Composite Index (JCI) closed lower on Friday (04/10), as stock markets in Asia fell on concern about political uncertainties in the US. The JCI slipped 29.296 points, or 0.66%, to 4,389.347. Seven of the 9 major stock sectors finished in negative territory on Friday, with basic industry sector dropped 1.79%, agriculture sector fell 1.50%, and mining sector trimmed 1.36%. The LQ45 index shed 5.586 points, or 0.76%, at 732.907. In Asia, most stock indexes declined Friday (04/10), weighed by rising political uncertainties in the US as the mid-October deadline to raise its debt ceiling loomed, risking potential US default on its debts. Decliners outran gainers 161 to 81 Friday on the Indonesia Stock Exchange, where regular market volume stood at 2.71 billion shares worth IDR 3.33 trillion. Foreign investors posted net sale of IDR 285.91 billion.
• Indonesian stocks will likely move moderately higher today, following positive closes on US markets on Friday, although concerns about US debt ceiling still weighed on sentiments. We expect the Jakarta Composite Index (JCI) to move moderately higher today, with support and resistance at 4,352 and 4,431, respectively

• The Colombo bourse ended the trading day on an upbeat sentiment, resulting in the indices to close within the positive terrain. The benchmark ASPI settled at 5,837.95 gaining 23.15 points or 0.40%, this was the highest value recorded after 27th August 2013 (5,923.34); during the past three trading days the bourse gained nearly 1%.  The S&P SL20 too closed on the positive side gaining 11.08 points or 0.34% to close the day at 3,231.79. The total market capitalization leaped to LKR 2.43Tn, while extending the year to date gain to 12.00%. The total turnover for the day amounted to record LKR 622.17Mn, indicating a dip of 26.0% as against its previously recorded. Under the sectorial round-up, Investment Trusts (INV) sector dominated the list providing LKR 109.28Mn. Bank Finance & Insurance (BFI) sector stood next in line providing LKR 92.97Mn. Shares totaling up to 80.93Mn changed hands during the day, resulting in a drop of 27.79% compared to the previous trading day. Foreign investors were unable to maintain their bullish stance for the 12th consecutive trading day, resulting in a net foreign outflow of LKR 27.51Mn. Foreign selling for the day amounted to LKR 113.76Mn and buying amounted to LKR 86.25Mn.

• The Australian share market on Friday closed lower as investors become increasingly concerned that the budget impasse in the United States may lead to the US defaulting on its debts. The benchmark S&P/ASX200 index dropped 26.9 points, or 0.51 per cent, to 5,208 points.
• Today (07/10/2013), the Australian market looks set to open higher following gains on Wall Street despite the US government's partial shutdown that has prevented the releaseof economic data.
• In economic news on Monday, the Australian Industry Group/Housing Industry Association performance of construction index (PCI) for September is due out, as is the ANZ job advertisements series for the same month.
• No major equities news is expected.

• HSI lost 75 points or 0.33% to 23,138. CEI gained 2 points to 10,517. Trading volume had not much change with HKD54.56 billion.
• HK market was weak following the third day shutdown of U.S. government and weak U.S. market. For last week, HSI dropped 68 points.
• China Mobile (941.HK) slumped 2.9% and led HSI down due to the rumor that the settlement fee from other two telecom operators would be reduced.
• Macau gambling sector under-performed after surge in previous day. Galaxy Ent (27.HK) and SJM Holdings (880.HK) lost 3.1% and 2% respectively.
• CITIC Pacific (267.HK) surged 9.2% after announced 2 production lines of a iron ore mine project in Australia are running well.
• Technically, HSI failed retain at 10-MA level. We stay biased for an eventual break above 10-MA and retest 23,554 high.  The next resistance and support for HSI are 23,554 and 23,000 respectively.

Morning Note
Company Highlights

Keppel Corporation Limited announced that Keppel Offshore & Marine (Keppel O&M) has strengthened its foothold in the offshore and marine industry in Mexico with the signing of an MOU (Memorandum of Understanding) with PEMEX Exploraciony Produccion (PEP) and PMI Norteam Arica , SA de CV (PMI), both subsidiaries of Mexico’s national oil company, Petroleos Mexicanos (PEMEX). The MOU is to jointly develop, own and operate a yard facility in Mexico, the first phase of which is to support the construction of six KFELS B class jackup drilling rigs for PEP. (Closing price: S$10.50, +0.671%)

Singapore Technologies Engineering Limited announced that Singapore Technologies Aerospace Ltd (ST Aerospace), through its wholly owned subsidiary ST Aerospace Engines Pte Ltd (STA Engines), has agreed to inject its pro rata share of an additional US$2.81m (S$3.58m) into the capital of its 50 per cent -jointly controlled company, Total Engines Asset Management Pte Ltd (TEAM). This capitalisation exercise is performed in two stages with the first phase amounting to US$1.40 m (S$1.78m) injected immediately and the second injection of US$1.41m (S$1.80m) on 16 October 2013. This exercise will bring STA Engines’ total share capital contribution in TEAM to US$11.02 m (S$14.05m). The additional funding will support the expansion of the engine leasing business to include the International Aero Engines (IAE) V2500 engine into its portfolio. (Closing price:S$4.15, -%)

Ezra Holdings Limited announced that it has a new subsidiary company, Emas Offshore (Thailand) Ltd (EOTL), incorporated in Thailand with a registered capital of THB3,000,000, comprising of 300,000 ordinary shares with value of THB10 per share. Ezra acquired 299,997 ordinary shares in EOTL for THB2,999,970, comprising 99.999 per cent of the issued and paid up share capital of EOTL. (Closing price: S$1.15, -0.862%)

Blumont Group, whose shares have been suspended from trading by the Singapore Exchange (SGX) on Friday, said it has scrapped a deal to buy Australia listed Cokal Ltd. The Singapore company was planning to buy the Aussie coal miner for S$146 million. It had planned to pay via the issue of 72.2 million new Blumont shares at S$2.02 each. "The company's share trading prices this morning have materially and adversely affected the commercial terms discussed with Cokal. In light thereof, the company and Cokal have agreed not to proceed with the transactions for the time being,'' Blumont said. Early Friday, the SGX queried Blumont and suspended trading in its shares "to safeguard the interests of the market as there could be circumstances that would result in the market not being fully informed''. (Closing price: S$0.88,
-56.436%)

Singapore-listed gold miner LionGold Corp Ltd, whose shares are suspended by the Singapore Exchange, said it is at an advanced stage of negotiations to acquire a stake in a company listed on three foreign stock exchanges. But the unnamed target firm, which has a producing gold mine as well as gold mines under development, is considering if the acquisition should continue in view of the suspension, LionGold said in a stock exchange filing. The target company was introduced to LionGold by Jennings Capital Inc, a Canada-based investment dealer, LionGold said. The Singapore Exchange Ltd suspended trading in three stocks on Friday, warning the market may not be fully informed after a plunge in their share prices, with one falling more than 60 per cent. (Closing price: S$0.875, -42.053%)

Yamada Green Resources Limited announced that its wholly-owned subsidiary, Fuzhou Wangcheng Foods Development Co Ltd. (Wangcheng) has entered into a multiple credit facility agreement with the China Everbright Bank dated 19 August 2013 in relation to a credit facility of up to an aggregate principal amount of RMB40 million to be extended by the Bank commencing from 22 August 2013 to 21 August 2014 (Facility Agreement). Pursuant to Facility Agreement, Wangcheng had on 2 September 2013 drewdown an amount of RMB20 million granted by the Bank for the purposes of working capital. (Closing price: S$0.20, -2.439%)

Source: PhillipCapital Research - 7 Oct 2013