KLCI: -0.47% to 1769.12
JCI: +0.56% to 4,457.44                              SET: +0.04% to 1434.66
HSI: -0.63% to 23033.97                             HSCEI: +0.28% to 10505.51
Nifty: +1.33% to 6007.45                             ASX200: +0.07% to 5152.99
Nikkei: +1.03% to 14037.84                       S&P500: -0.06% to 1656.40
      
MARKET OUTLOOK:
By Joshua Tan, Head of Research

Macro Data

USA: The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, rose 1.3 percent in the week ended October 4.

That follows a dip of 0.4 percent in the week ended September 27.

The figures come as a U.S. federal government shutdown has cast a spotlight on fiscal policy, with some economists worrying that the stalemate in Congress could drag on the economy.

Eurozone: German industrial production surged 1.4 percent in August after falling by a revised 1.1 percent in July, latest data released by the German Economics Ministry on Wednesday showed. The increase beat the expectations of analysts, who had forecast a rise of just 1 percent in a poll by Reuters news agency.

India: Trade deficit narrowed to $6.7 billion, a thirty-month low, in September, easing concerns about the nation’s current account balance and strengthening the outlook for the battered Rupee. India’s trade deficit swelled to $10.9 billion in August 2013 from $3.8 billion in March 2011. The narrowed trade gap in September was mainly due to (1) the expanded merchandise exports, which clocked at $27.68 billion, up 11.15% y-o-y; and (2) fall in gold and silver imports, which clocked at $0.80 billion, a 82.6% y-o-y drop.

Australia: Australia's Westpac October consumer confidence decreased -2.1% m/m (vs. prior was +4.7% to 110.6).

---

Regional Market Focus

Singapore

• The benchmark STI closed marginally higher at 3,154.84 (+0.27%). The 3.5bn shares traded were worth S$1.0bn in value.
• The FTSE ST Mid Cap Index gained +0.23% while the FTSE ST Small Cap Index declined -0.01%. The top active stocks were SingTel (unchanged), Noble Group (unchanged), UOB (+0.49%), Keppel Corp (+0.56%) and Yangzijiang (+2.69%).
• 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

• The composite SET index finished the session up 0.04% in light, tight-range trading on Wed as US debt ceiling concerns were eclipsed by news that US President Barack Obama planned to nominate Janet Yellen to take the helm at the US Federal Reserve.  
• Progress in US debt ceiling talks still needs to be closely watched. In the latest Washington developments, Democrats and Republicans floated the possibility of a short-term increase in the debt limit to allow time for broader negotiations on the budget in a sign of a possible break in the impasse.
• In Thailand, political temperature is heating up after the government imposed the Internal Security Act (ISA) from Oct 9-18, 2013 in three districts of Bangkok to contain anti-government protests in front of the Government House. In our view, political noise is going to rise after the parliament is back in session but we believe the impact on the market would continue to be limited as long as no violence occurs.  
• Mixed fund flows with alternate bouts of foreign buying and selling suggests more sideways action for Thai stocks ahead. For trading ideas, the 1410-1450 points could be a good level to accumulate selective names to play earnings season. The strategy is to buy the dips at support levels. 
• Today we peg resistance for the SET index at 1440-1450 points and support at 1425-1410 points.

Indonesia

• The Jakarta Composite Index (JCI) advanced Wednesday (09/10), continuing its previous-day gains, following Bank Indonesia’s decision to keep its benchmark rate unchanged as inflation softened in September. The benchmark index of Indonesian stocks climbed 24.931 points, or 0.56%, to 4,457.438. Six of the 9 major stock sectors rose Wednesday, led by mining sector with 2.77%-gain, followed by basic industry sector with 1.60%-advance, and agriculture sector with 1.27%-rise. The LQ45 index added 5.465 points, or 0.74%, to end at 748.712. Bank Indonesia on Tuesday (08/10) held its benchmark interest rate unchanged at 7.25%, as upbeat data from Indonesia helped eased pressure on the nation’s currency. 156 stocks closed higher, and 94 stocks ended lower Wednesday on the Indonesia Stock Exchange, where 4 billion shares with a total value of IDR 4.33 trillion changed hands on the regular board. Foreign investors posted net purchase of IDR 134.04 billion.
• The Jakarta Composite Index (JCI) will likely move sideways today, with positive bias, with investors may be taking cautious optimism about the end of US government shutdown. We expect the JCI to edge higher today, with support and resistance at 4,385 and 4,505, respectively.

Sri Lanka

• The Colombo bourse concluded the day on a mixed note resulting in the indices to settle on either side. The market was unable to sustain its early rally where it reached its peak of 5,932.46 gaining 35 points, as at the closure the benchmark ASPI closed nearly 10 points above the 5,900 level. However, ending its three day rally the S&P SL20 closed on the negative side at 3,254.99, losing a minute 2.35 points or 0.07%. With regard to the movement in share prices, 117 companied gained whereas 83 companies witnessed drops in shares price. As at the daily closure the total market capitalization stood at LKR 2.46Tn, recording an YTD gain of 13.38%. The market PER and PBV were 15.78x and 2.16x respectively. The aggregate turnover for the day amounted to record LKR 722.98Mn, indicating a gain of 47.44% against its previously recorded. Under the sectorial round-up, Motors (MTR) sector stood on top providing LKR 241.02Mn accounting a share of 1/3rd of the day’s total turnover and the Land & Property (L&P) sector made a contribution of LKR 117.49Mn. Foreign participants appeared to be bullish during the day to record a net foreign inflow of LKR 329.56Mn, assisting the year to date foreign inflow to surpass the LKR 21Bn mark for the 1st time during the year. Foreign buying for the day amounted to LKR 349.86Mn and selling was recorded as LKR 20.30Mn. The local FOREX markets for the day closed with the USD selling at LKR 132.77/- and buying at LKR 129.51/-.

Australia

• On Wednesday, the Australian share market edged higher, with the benchmark S&P/ASX200 index adding 3.6 points to 5,153
• Today (10/10/13), the Australian market is set to open lower ahead of the release of official jobs figures. The Australian Bureau of Statistics releases September labour force data at 1130 AEDT on Thursday, with economists expecting the unemployment rate to remain at 5.8 per cent. 
• In other economic news, NAB releases its September quarter Australian residential property survey.
• In company news, Bank of Queensland issues its full year results, and NAB chief executive Cameron Clyne is scheduled to deliver a speech at a Trans-Tasman Business Circle event in Melbourne. Toll road owner Transurban Group holds its annual general meeting, also in Melbourne.

Hong Kong

• HSI dropped 144 points or 0.63% to 23,033. CEI declined 29 points or 0.28% to 10,505. Trading volume was HK$54.763 billion.
• HSI declined yesterday, led by weaker U.S. market with debt ceiling concern. HSI opened low to 23,002 (-176 points).
• Software and network stocks under-performed with Tencent (700.HK), Forgame (484.HK) and Netdragon (777.HK) lost 2.9-4.2% following Facebook lost 6% in U.S. market.
• Geely Auto (175.HK) and Trigiant (1300.HK) slumped 3.4% and 5.9% after announced share placement with discount.
• Mainland property sector kept out-performing with the better-than-expected sales in long National day holiday. Shui On Land (272.HK) and Agile Property (3383.HK) gained 3.5% and 3.4%.
• Technically, the next resistance and support for HSI are 23,554 and 22,800 respectively.

---

Morning Note
Company Highlights

Singapore Technologies Engineering Limited announced that its electronics arm, Singapore Technologies Electronics Limited (ST Electronics) has secured about S$416m worth of contracts for rail electronics, satellite communications (satcoms) and communications projects in the third quarter of 2013. ST Electronics further strengthened its position as a leader in providing advanced electronics and Information Communications Technologies (ICT) and integrated rail electronics solutions in 3Q2013. This was evidenced by contracts of about S$238m awarded in the quarter for communications and electronics systems, advanced information Technologies (IT) and rail electronics solutions. (Closing price: S$4.13, +0.487%)

SingTel's Optus Business has signed a new A$60 million (S$70.5 million) agreement with airline Virgin Australia to deliver domestic and international telecommunication services as well as managed services over five years. Optus said it would deliver the services over its managed data network which has "the resilience and scalability required to meet Virgin Australia's critical quality assurance standards". Virgin Australia's appointment of Optus was based on a wide range of criteria including partnering approach and regional delivery capability, it added. "This win is a further proof point of our recent restructure to bring together all our people, assets and capabilities into one organisation," said Optus Business' managing director John Paitaridis. Last month, Optus also inked a A$530 million deal with ANZ that will see the telco provide the banking group with telecommunications and managed services for another five years, following the close of a previous 2009 deal that had been worth A$500 million. (Closing price: S$3.75, -%)

Construction group Koh Brothers announced that its building materials unit, G & W Group, has kick-started operations at its first precast plant in Senai, within Iskandar, Malaysia. The plant, sitting on a 47,000 sqm of freehold plot which G & W Group paid S$13 million for, is expected to be fully operational in the last quarter of 2013. Its annual production capacity of 75,000m will likely boost G & W Group's total precast concrete capacity to 150,000m a year. Francis Koh, managing director and group CEO of Koh Brothers, said: "The establishment of our new plant in Malaysia is timely, in view of Singapore's government's intention to ramp up housing supply." (Closing price: S$0.295, -%)

Frencken Group Limited announced that its wholly-owned subsidiary, Frencken Europe B V (FEBV) has on 8 October 2013 entered into a Share Purchase Agreement (SPA) to acquire 100 per cent equity interests in All Mepp Holding B V (All Mepp) for a cash consideration of EUR51,000. (Closing price: S$0.255, +8.511%)

CNA Group Limited announced it has in conjunction with Master System Integrator inked a Letter of Award (LOA) with WP Estate Co Limited (WP Estate), appointing CNA as the Engineering, Procurement, and Construction (EPC) contractor (Project) for a 38,316 square metres (23 rai) site situated at Sriracha, a city south of Bangkok, Thailand (Sriracha Development). The approximately S$18 million project includes master planning and base design; infrastructure works including road and drainage works; building of commercial buildings with a built-up area of 2,400 square metres, low rise residential buildings with a built-up area of 8,000 square metres, and one unit of sales office; and project management services. (Closing price: S$0.148, +3.497%)