KLCI: +0.04% to 1777.50
JCI: +1.32% to 4432.51                              SET: +1.37% to 1414.6
HSI: +0.89% to 23178.85                            HSCEI: +1.03% to 10534.94
Nifty: -0.20% to 5917.95                             ASX200: -0.23% to 5149.45
Nikkei: +0.30% to 13894.85                         S&P500: -1.23% to 1655.45
      
MARKET OUTLOOK:
By Joshua Tan, Head of Research


Macro Data

Eurozone: German factory orders fell unexpectedly in August, declining for the second consecutive month. In a report, Deutsche Bundesbank said factory orders dropped by a seasonally adjusted 0.3% in August, defying expectations for a gain of 1.2%. Factory orders fell by 1.9% in July, whose figure was revised up from a previously reported decline of 2.7%.

Japan: The surplus fell 64 percent from a year earlier to 161.5 billion yen ($1.7 billion), as overseas income dropped for the first time in nine months and imports exceeded exports, a Ministry of Finance report showed in Tokyo. The median forecast in a Bloomberg News survey of 27 economists was for a 520 billion yen surplus.

China: Growth slowed in services sector while business outlook weakens in September, according to the Markit/HSBC PMI reading, contradicting China’s official services PMI which showed the sector expanded at the fastest pace in six months in September. The Markit/HSBC services PMI slipped to 52.4 in September as compared to August’s 52.8. Business expectations sub-index in September eased to 58.7 from 62.0. "The degree of confidence eased from August's five-month high and was the second-weakest in the near eight-year series history," HSBC said in a statement.

Indonesia: Bank Indonesia holds policy rate at 7.25% as the nation record a trade surplus in September, inflation eased, and rupiah steadies.

---

Regional Market Focus

Singapore

• The benchmark STI closed marginally higher at 3,146.50 (+0.32%). The 3.6bn shares traded were worth S$1.1bn in value.
• The FTSE ST Mid Cap Index gained +0.25% while the FTSE ST Small Cap Index gained +0.91%. The top active stocks were UOB (+0.59%), DBS (+0.18%), SingTel (+0.27%), AsiaPhos (-15.19%) and GLP (+2.12%).
• 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 advanced as much as 1.37% on Tue as concerned eased after US President Barack Obama might consider some executive action to sidestep Congress to raise the debt ceiling.
• Foreign investors turned small net buyers of Thai shares worth Bt20mn on Tue after an 11-day streak of net selling.
• US and European shares fell on Tue as there were no signs in sight that the US federal government would reopen. Dow Jones futures rebounded on Wed on news that US President Barack Obama will nominate Federal Reserve Vice Chairwomen Janet Yellen, seen as a proponent of dovish policy as the next head of the US central bank after Ben Bernanke’s term ends in Jan 2014.
• In our view, the nomination of Yellen as the next Fed chief and the US government shutdown and looming debt limit deadline may refuel speculation on QE. In the near term, we however stick to our view that the Thai stock market would be confined to range-bound sideways trading as political factor would continue to weigh on market sentiment. Support for the SET index is seen at 1420 points. For short-term trading ideas, any rise towards 1450 points +/- would create an opportunity to take profits.
• Today we peg resistance for the main index at 1440-1450 points and support at 1420-1410 points.

Indonesia

• Most Indonesian stocks rose Tuesday (08/10), on upbeat expectation on third-quarter current account, and after Bank Indonesia’s decision to hold its benchmark rate. The Jakarta Composite Index (JCI) climbed 57.548 points, or 1.32%, to close at 4,432.507. The gain on Tuesday included eight of the nine major industry sectors, led by agriculture sector with 3.31%-advance, followed by finance sector with 2.24%-gain, and miscellaneous industry with 2.23%-rise. The LQ45 index added 11.861 points, or 1.62%, at 743.247. On economic front, Indonesia’s current account deficit is likely to be 3.4% of gross domestic product this year, the central bank governor said. Current account deficit hit 4.4% of GDP in the second quarter. Bank Indonesia held its benchmark interest rate at 7.25% on Tuesday (08/10), unchanged for the first time since May, on encouraging data and external developments that have eased pressure on the Rupiah. Gainers outpaced decliners 181 to 66 Tuesday on the Indonesia Stock Exchange, where 3.64 billion shares worth IDR 4.53 trillion changed hands on the regular market. Foreign investors’ transactions accumulated to a total net sale of IDR 93.01 billion.
• With equity markets continued trading in negative notes, we expect the Jakarta Composite Index (JCI) to pare previous-day gains. Our estimation for the JCI is bearish today, with support and resistance for the composite index at 4,328 and 4,492, respectively.

Sri Lanka

• The Colombo bourse ended the trading day on a positive note, adding further to the gains recorded on the previous trading day. The ASPI extended gained for the fifth consecutive trading and settled the day just 3 points below the 5,900 mark even though it reached a highest level of 5,908.30 within the trading day. Nevertheless benchmark index has gathered 116.22 points or 2.00% during these five trading days. The S&P SL20 saw its third consecutive positive closure gaining 12.96 points or 0.40% to settle at 3,257.34. Looking at the local FOREX markets, the strengthening of the rupee continued against the USD while nearing a lowest selling price in 3 months, currently the USD is selling at 132.78/-. The daily aggregated turnover which amounted to record 490.34Mn. Under the sectorial round-up, Diversified Holdings (DIV) sector topped the list providing LKR 207.37Mn and Beverage Food & Tobacco (BFT) sector stood next in line providing LKR 78.74Mn to the daily aggregate turnover. A total of 35.86Mn shares changed hands during the day resulting in a gain of 37.12% compared to the previous trading day. The total market capitalization as at the day’s closure moved up to LKR 2.45Tn, charting a year to date gain of 13.13%. The market PER and PBV were 15.75x & 2.16x respectively. Price gainers surpassed the price losers by 98:82. Foreign participants appeared to be bullish during the day for the 2nd consecutive trading day resulting in a net foreign inflow of LKR 48.06Mn; this was resulted by foreign buying of LKR 232.05Mn and selling of LKR 183.99Mn. The year to date net foreign inflow amounts to LKR 20.74Bn.

Australia

• The Australian share market on Tuesday closed lower as the political impasse in the United States over the budget and debt ceiling continues to spook investors. The benchmark S&P/ASX200 index was down 11.7 points, or 0.23 per cent, to 5,149.4 points.
• Today (09/10/13), the Australian market looks set to open lower following falls on international markets  as the US budget standoff enters its eighth day with no end in sight, stoking worries of a catastrophic default.
• In economic news on Wednesday, the Australian Bureau of Statistics releases international merchandise imports data for September while the Westpac/Melbourne Institute Survey of Consumer Sentiment is also due out.
• In equities news, WorleyParsons is due to hold its annual general meeting and Jetstar takes delivery of its first Dreamliner plane in Melbourne.

Hong Kong

• HSI gained 204 points or 0.89% to 23,178. CEI climbed 107 points or 1% to 10,534. Trading volume improved a bit to HKD56.709 billion.
• HSI was firmer led by China market which re-opened after holiday, SHCOMP rose 1.08% and SZSE Component index gained 1.96%.
• PBOC continued reverse purchase to increase market liquidity, China banking sector led CEI up, Minsheng Bank (1988.HK), CITIC Bank (998.HK) and CQRC Bank (3618.HK) climbed 2.9%, 3.2% and 4% respectively.
• China property sector out-performed due to significant increase in transactions of property in October, Country Garden (2007.HK), Sunac (1918.HK) and R&F Properties (2777.HK) were up 8%, 8.7% and 9.1% respectively.
• Technically, the next resistance and support for HSI are 23,554 and 23,000 respectively.

---

Morning Note
Company Highlights

Sembcorp Industries Limited announced that its joint venture in Oman, Sembcorp Salalah Power & Water Company (Sembcorp Salalah), has commenced trading of its ordinary shares on the Muscat Securities Market. The listing follows Sembcorp Salalah’s successful initial public offering in September, which was 8.3 time s oversubscribed and raised OMR 53 million (approximately S$173 million), making it the largest in Oman this year as well as one of the largest in the region. (Closing price: S$5.26, -%)

Roxy-Pacific Holdings Limited announced that Company’s wholly -owned subsidiary, Roxy Homes Pte Ltd (Roxy Homes), has subscribed for an additional 849,998 ordinary shares by way of capitalization of loan in RH Tampines Pte. Ltd. (RH Tampines), a subsidiary of Roxy Homes, at a total consideration of S$849,998 (Subscription). The Subscription is to provide additional working capital to RH Tampines, which principal activities are property investment and property development. As a result of the Subscription, Roxy Homes holds 850,000 ordinary shares in RH Tampines, representing 85 per cent of the total issued shares of RH Tampines. (Closing price: S$0.63, +3.279%)

Swissco Holdings Limited announced that it has secured charter contracts worth an aggregate of US$7.17 million for its vessels. The Group secured 2 years charter contracts each for its two anchor handling tugs (AHTs), ‘Swissco Superior’ and ‘Swissco Singapore’ and the two AHTs are to be deployed in West Africa. One of the AHT has already reached West Africa; while the other is due to depart for the location by the end of the week. Both contracts are given to Swissco by a UAE oil and gas company operating in West Africa and the contracts come with 3 x 1 year extension options. Besides securing the above contracts, Swissco also secured immediate short term contracts for two of its newly delivered vessels, ‘Swissco Ruby’ and ‘Swissco Neptune’. Both the vessels are mobilised to go straight to the work sites currently. (Closing price: S$0.25, +8.696%)

BLUMONT Group said that it was not aware of any manipulation of its share price, calling it the job of the Singapore Exchange (SGX) to find out and not that of the management. "The company has provided its disclosure; it continues its business plan. The trading is up to someone else," Blumont's chairman-designate, Alexander Molyneux, said at a briefing. He assumed the position on Monday night. "That's for the exchange to look into, that's not for the company to look into. We don't have the resources or authority," he said. Until the SGX suspended it’s trading last Friday, Blumont had strong run-ups in its stock price this year. The regulator said it believed that the market might not have been fully informed of the company's circumstances after Blumont shares plummeted in Friday trading. (Closing price: S$0.130, -%)

Viking Offshore and Marine said that it was in talks with another party on a possible investment in a private company in relation to the construction of a marine offshore asset. The discussions are preliminary and non-binding. There is no assurance that any definitive or binding agreements or any transaction will result from them, it added. Shareholders' approval will be sought if the transaction proceeds, it said. (Closing price: S$0.087, -3.333%)

Unionmet (Singapore) Limited announced that the Group’s total revenue increased by approximately US$1.4 million to approximately US$8.3 million for the third quarter ended 31 Aug 2013 (3Q2013) compared to 3Q2012. This was due mainly to higher sales of  indium ingots. The Group recorded a slightly higher gross margin of 3.1 per cent in 3Q2013, compared to a gross margin of 2.4 per cent in 3Q2012. However, the Group recorded a loss after tax of approximately US$0.4 million in 3Q2013, compared to a loss after tax of US$0.2 million in 3Q2012.This was attributed to lower other income and higher expenses. (Closing price: S$0.067, +17.544%)

Federal International (2000) Limited announced that Federal Environmental Engineering Pte Ltd and Alton International (S) Pte Ltd (AIS), being subsidiaries of the Company, have secured orders in relation to the supply of flowline control and other oil and gas related equipment totaling S$38 million for deliveries in 2014. The orders to AIS include the supply of equipment to a US major oil and gas company under the terms of a Strategic Supply Agreement. (Closing price: S$0.025, -%)