MARKET OUTLOOK:
By Joshua Tan, Head of Research

Macro Data

Taiwan's September 2013 consumer price index (CPI) of 104.05 (2011 as base year) increased 1.31% on month and 0.83% on year, while the corresponding wholesale price index (WPI) of 96.37% slipped 0.02% on month but grew 2.69% on year.

---

Regional Market Focus

Singapore

• The benchmark STI closed flat at 3,136.59 (-0.05%). The 4.1bn shares traded were worth S$1.0n in value.
• The FTSE ST Mid Cap Index declined -3.26% while the FTSE ST Small Cap Index declined -3.15%. The top active stocks were Asiaphos, GLP (-1.05%), SingTel (-0.80%), Keppel Corp (+0.67%) and DBS (+0.31%). Asiaphos was listed on Catalist on 7 Oct, closing at $0.395 following an offer price of $0.25.
• The STI is expected to consolidate at current levels with some downward pressure following the weaker performance of the US indices. Investors continue to be concerned over the US government shutdown, and debt ceiling debate.
• 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 lost ground in the afternoon trade on Mon amid concerns over prolonged US budget standoff and debt ceiling. The SET index ended the day down 0.92% on Mon.
• The looming US debt limit still bears close watching. Expectations are that US lawmakers will finally reach a last-minute deal to raise the borrowing limit with some strings attached. The partial US government shutdown also caused the announcement of several key economic data to be delayed. As it stands, there seems to be a lack of fresh trading cues for the market for the meantime.
• The market’s pullback reflected persistent investor nervousness as reflected by a jump in the CBOE Volatility Index (VIX), a measure of investor anxiety to its highest level in around three months.
• In Thai politics, all eyes will be on the protests of the People’s Army against Thaksin Regime in front of the Government House and the Senate vote on the first reading of the Bt2trn infrastructure loan bill today. In our view, broad bearish sentiment may weigh further on the Thai stock market. For short-term trading ideas, we advise investors to buy the dips at 1400-point support level. Cut loss if the SET index breaks below 1400 points.
• Resistance for the SET index is seen at 1420-1440 points and support at 1400-1380 points today.   

Indonesia

• The Jakarta Composite Index (JCI) finished lower on Monday (07/10), amidst negative notes in Asia on concern about the uncertainty in US government shutdown. The JCI slid 14.388 points, or 0.33%, to 4,374.959, with seven of its nine major industry groups ended in red. LQ45, the index measuring Indonesia’s blue-chip shares, dropped 1.521 points, or 0.21%, at 731.386. Property, construction and real estate sector led losses on Monday with 2.72%-fall, followed by trade, services and investment sector with 0.71%-loss, and miscellaneous industry with 0.58%-decline. 151 shares declined, and 83 shares advanced Monday on the Indonesia Stock Exchange, where 3.09 billion shares worth IDR 3.26 trillion traded on the regular board. Foreign investors posted net sale of IDR 134.12 billion, resulting in a total net sale of IDR 652.53 billion this month.
• Indonesian stocks will likely continue scaling down today, amid persistent stalemate in the US over the country’s debt limit. We expect the JCI to decline today, and traded with minor support and resistance at 4,328 and 4,433, respectively.

Sri Lanka

• The first trading day of the week ended on an optimistic note with the bourse further accruing gains and maintaining its stay within the green terrain. The market gained 0.50% as at the closure to settle at 5,867.10, and the S&P SL20 concluded at 3,244.38 gaining almost 13 points (0.39%). The total market capitalization as at the day’s close amounted to LKR 2.44Tn, extending the year to date gain to 12.56%. The market PER and PBV stood at 15.67x and 2.15x respectively. The turnover for the day amounted to LKR 483.78Mn, recording a dip of 22.24% against the previous trading day. Diversified Holdings (DIV) sector topped the list under the sectorial summary providing LKR 245.58Mn and Land & Property (L&P) made a subscription of LKR 54.08Mn. During the day, a total of 26.15Mn shares changed hands indicating a drop of 67.69% against the previous trading day. Foreign participants once again re-entered the bullish territory resulting a net foreign inflow of LKR 227.77Mn. Foreign purchases for the day amounted to LKR 243.14Mn and selling was LKR 15.38Mn, currently the year to date net foreign inflow stands at LKR 20.69Bn. With regard to the local FOREX market, the rupee appreciated further against the US Dollar recording a selling rate below LKR 133/- for the first time after 16th July 2013. The USD is currently selling at LKR 132.90/- and buying at LKR 129.58/-.

Australia

• The Australian share market on Monday closed almost one per cent lower in thin trade, driven down by financial stocks amid uncertainty over the US debt situation. The benchmark S&P/ASX200 index was 46.9 points, or 0.90 per cent, lower at 5,161.1.
• Today (08/10/13), the Australian market looks set to open lower following falls on Wall Street overnight as the US budget stalemate entered its second week with the government partially shut down.
• In economic news on Tuesday, the Australian Bureau of Statistics (ABS) releases figures for August overseas arrivals and departures as well as internet activity data for June quarter 2013. The National Australia Bank's monthly business survey for September is due out. ASX chief executive Elmer Funke Kupper is scheduled to speak at a business function in Melbourne on the topic of Competitive Australia, but, otherwise, no major equities news is expected.

Hong Kong

• HSI dropped 164 points or 0.71% to 22,973. CEI lost 90 points or 0.86% to 10,427. Trading volume was HKD50.335 billion only.
• SHK (16.HK), the largest property developer in HK, dropped 2.6% after introducing residential project with price cut of more than 10%. NWD (17.HK) and Sino Land (83.HK) declined 1.9% and 1.7% respecitvely.
• Network and software related stocks kept outperformed with Sinosoft Tech (1297.HK), Netdragon (777.HK) and Kingdee Int’l (268.HK) climbed 6.1-8%.
• Hutchison (13.HK) broke 52-week high again with 1.9% gain.
• Sport product retailers out-performed with Li Ning (2331.HK) and Anta Sports (2020.HK) gained 9.2% and 6.1% respectively.
• Technically, HSI dropped below 20-MA, we expect a short-term consolidation, which provides a good buy opportunity. The next resistance and support for HSI are 23,126 and 22,800 respectively.

---

Morning Note
Company Highlights

Boustead Singapore Limited announced that its Energy-Related Engineering Division has recently secured approximately S$38 million in contracts from the oil & gas industries globally. The contracts involve the design, process engineering and construction of waste heat recovery units - key environmentally-sustainable technology – and process heater system installation services for upstream and downstream oil & gas developments, primarily in Norway and Russia. (Closing price: S$1.345, -0.370%)

Mapletree Commercial Trust Limited announced that Moody’s Investors Service (Moody’s) has changed its outlook from stable to Positive. (Closing price: S$1.205, +0.417%)

KS Energy Limited announced that it has signed a memorandum of agreement (MOA) with a renowned Mexican conglomerate to set up a joint venture. The joint venture will provide drilling services and heavy capital equipment for the offshore oil and gas exploration market in Mexico. The MOA was entered into between construction and infrastructure operation firm, Empresas ICA, S.A.B. de C.V. (ICA), and KS Drilling, a 80-per-cent owned unit of KS Energy. (Closing price: S$0.525, -14.634%)

Metech International Limited announced that it applied to SGX - ST to extend the Deadline to meet the requirements to be removed from the Watch-list. The Board of Directors wishes to announce that it has submitted an application to SGX-ST to for the Company to be removed from the Watch - list as it has met the requirements under Rule 1314 of the SGX_ST Listing Manual. (Closing price: S$0.021, -4.545%)