KLCI: +0.58% to 1814.1
JCI: +0.75% to 4546.5                           SET: +0.61% to 1457.4
HSI: -1.36% to 22999                            HSCEI: -1.84% to 10457
Nifty: -0.39% to 6178.4                         ASX200: +0.08% to 5360.5
Nikkei: -1.95% to 14426                        S&P500: -0.47% to 1746.4
      
MARKET OUTLOOK:
By Joshua Tan, Head of Research

Macro Data

Singapore’s annual inflation rate eased to 1.6% in September, snapping its upward trend for four straight months and returning to the same as in May’s. On annual term, inflation rate was 2.0% in August, 1.9% in July and 1.8% in June. The lower than expected inflation rate was largely due to the decline in private road transport cost (fell 2.0%) and accommodation cost (fell 3.9%). Meanwhile, Monetary Authority of Singapore (MAS) core inflation rate, which excludes the costs of accommodation and private road transport, clocked at 1.7% in September, slightly lower than August’s 1.8%.

Eurozone: Spain's gross domestic product expanded 0.1 percent from the second quarter, when it shrank 0.1 percent, and fell 1.2 percent from a year ago. The data, which are preliminary, matched the median estimate of 37 economists in a Bloomberg News monthly survey.

Australia’s consumer prices gained more than economists forecast last quarter, sending the local currency higher as money markets pared bets the central bank will extend its two-year easing of monetary policy this year. The trimmed mean gauge of core prices rose 0.7 percent from the previous quarter, compared with expectations of a 0.6 percent gain. The consumer price index gained 1.2 percent from the previous three months, compared with economists forecast for a 0.8 percent increase.

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Regional Market Focus

Singapore

• The benchmark STI closed lower at 3,204.80 (-0.17%). The 2.5bn shares traded were worth S$1.3bn in value.
• The FTSE ST Mid Cap Index gained +0.07% while the FTSE ST Small Cap Index gained +0.16%. The top active stocks were Noble Group (unchanged), SingTel (-0.80%), OCBC Bk (+0.39%), DBS (+0.12%) and Keppel Corp (-0.18%).
• The STI may consolidate, while the HSBC Flash manufacturing PMI may have an impact on trading direction today.
• In Singapore, inflation remains in check, easing to 1.6% in September after four consecutive months of gains.
• 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$12.07). Deep Value Plays are Amara (Buy, TP: S$0.74), Boustead (Buy, TP: S$1.94) and Courts (Buy, TP: S$1.03).

Thailand

• Thai stocks opened sharply lower on Tue amid domestic political worries about the controversial amnesty bill but losses were later reversed on bargain buying before the SET index finished the session up 0.61%.    The Thai stock market was closed on Wed for King Chulalongkorn Memorial Day while most overseas stock markets fell amid fears of bad bank debt and tight liquidity in China, new bank stress tests imposed by the ECB and disappointing earnings results in US. Key economic data to watch today will be China’s manufacturing PMI data due out this morning. The market may react negatively if data misses the mark with market forecast for 50.4.
• In our view, the Thai stock market will pay more attention to internal factors for the meantime especially controversial political issue on the amnesty bill and third-quarter earnings reporting season, which will last until the middle of next month. The short-term strategy is to be selective in stocks with focus on earnings plays. KCE, RS and JAS seem to be good candidates for earnings plays. Today initial support is seen at 1445 point. 
• Today we peg resistance for the SET index at 1465-1480 points and support at 1445-1435 points.

Indonesia

• The Jakarta Composite Index (JCI) regained moderate strength on Wednesday (23/10), following higher closes on US markets overnight after the release of US employment data. The JCI climbed 33.756 points, or 0.75%, to close at 4,546.499 with seven of its 9 major stock sectors finished in green. Property, construction and real estate sector led gains with 2.53%-advance, followed by consumer goods sector with 1.49%-gain, and basic industry sector with 1.45%-rise. Agriculture sector and infrastructure sector became the laggards on Wednesday with 1.56% and 0.31%-decline, respectively. The LQ45 index measuring Indonesia’s blue-chip shares added 5.689 points, or 0.75%, at 764.116. Gainers outran decliners 169 to 80 Wednesday on the Indonesia Stock Exchange, where 4.1 billion worth IDR 5.85 trillion traded on the regular board. Foreign investors posted net purchase of IDR 972.29 billion.
• Indonesian stocks will likely trader lower today, with global sentiments hit by expectations of weak third quarter earnings from corporations. We expect the Jakarta Composite Index (JCI) to move lower today, with support and resistance at 4,483 and 4,641, respectively.

Sri Lanka

• The trading day initiated on an adverse sentiment, leading the indices to drown further and extended its losses for the third consecutive trading day. The market trended downwards from its early hours to close the day at its intraday low of 5,900.90, experiencing a loss of 24.32 points or 0.41% while falling to a lowest level post on 08th October 2013 (5,897.05).  With regard to the movement in share prices, price losers slammed the price gainers by 109:46. The turnover for the day amounted to LKR 481.18Mn, charting a drop of 51.05% compared to the previous trading day. Under the sectorial round-up, Diversified Holdings (DIV) sector stood on top providing LKR 212.62Mn and Bank Finance & Insurance (BFI) sector emerged second contributing LKR 111.49Mn. Notably, the two sectors DIV & BFI collectively accounted to nearly 70% of the daily aggregated turnover. Foreign participants were bullish during the day for the third consecutive trading day, resulting in a net foreign inflow of LKR 32.59Mn, adding further to the year to date net foreign inflow which amounts to LKR 22.79Bn. With regard to the local FOREX, the USD currently stands at LKR 132.52/- selling and LKR 129.26/- buying.

Australia

• The Australian share market on Wednesday fell for the first time in seven trading sessions following a jump in China's money market rate. The benchmark S&P/ASX200 index was down 14.4 points, or 0.27 per cent, at 5,356.8 points.
• Today, the Australian market looks set to open flat following falls on international markets overnight.
• In economic news on Thursday, Reserve Bank of Australia is due to release its annual report to parliament, while RBA deputy governor Philip Lowe is slated to speak at the CFA Melbourne Institute's Annual Investment Conference in Melbourne.
• In equities news, Wesfarmers is expected to release its first quarter sales results, while BHP Billiton,   Newcrest Mining, Pacific Brands, Suncorp Group, Toll Holdings, Amcor, Warrnambool Cheese and Butter, Skilled Group, APA Group and Slater and Gordon all have annual general meetings scheduled.

Hong Kong

• HSI lost 316 points or 1.36% to 22,999. CEI dropped 196 points or 1.84% to 10,457. Trading volume increased to HKD71.944 billion.
• HSI opened high at 23,455 (+139 points) yesterday on firmer US market, but led by weak China market, HSI turned to loss.
• China Telecom sector under-performed. China Mobile (941.HK) dropped 2.4% and led HSI slump after weaker-than-expected 3Q results. China Unicom (762.HK) and China Telecom (728.HK) dropped 4.8% and 3.1% respectively.
• China banks led CEI down due to money-market rates surged. ICBC (1398.HK) and CCB (939.HK) both declined more than 2.2%. 
• Zoomlion (1157.HK) dropped 5.9% due to a reporter questioning its finances.
• Technically, HSI dropped below 10-MA and 20-MA and can’t retain at 23,000 levels, sending a negative signal. The next resistance and support for HSI are 23,554 and 22,800 respectively.

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Morning Note
Company Highlights

Travelite Holdings Ltd. deems it appropriate to issue a profit warning with respect to its unaudited financial results for the half year ended 30 September 2013. Following a preliminary assessment of the Group’s financial results, the Directors would like to advise shareholders that the Group expects to register a net loss in 1H FY2014. The profitability of the Group in 1H FY2014 was mainly affected by lower demand for the Group’s apparels. (Closing Price: S$ - , - %)

Digiland International Limited announced a proposed placement of up to 5,800,000,000 new ordinary shares at an issue price of S$0.001. The Issue Price represents the volume weighted average price of S$0.001 for trades done on the company’s shares on the SGX-ST for the full market day on 22 October 2013. (Closing Price: S$ 0.002, 100%)

Transcu Group Limited announced that pursuant to ongoing reviews of the Company’s business operations and in connection with a refocusing of the Group’s business, the Company is looking to dispose of some or all of its interests in shares and/or assets/businesses in the transdermal pharmaceutical devices and cosmetics businesses. Currently, the Group’s core business comprises three main business segments, namely transdermal pharmaceutical devices, cosmetics and green technology. In view of the persistent liquidity issues faced by the Company due to the capital-intensive (and hence heavily reliant on funding) research and development activities undertaken by its business activities, the Company is looking to concentrate the application of funds and effort in the green technology business and tap into the growing global need for environmental conservation and reduction of fuel consumption. The directors are of the opinion that the Proposed Disposal will yield proceeds necessary to satisfy the Company’s general corporate and working capital purposes so as to alleviate the cash-flow situation of the Company, allowing the Group to rationalize and re-organise its business activities and reposition itself. (Closing Price: S$ 0.006, - %)

Wee Hur Holdings Ltd announced that it is venturing into workers’ dormitory business through a joint venture company, Active System Engineering Pte Ltd. The Group’s recently-established wholly-owned subsidiary Wee Hur Dormitory Pte Ltd will hold a 60% stake in Active System. The remaining 40% stake will be held by TS Management Services Pte Ltd (20%), WM Dormitory Pte Ltd (10%) and Lucrum Dormitory Pte Ltd (10%). Active System has recently been awarded by JTC Corporation to build and operate a 16,800-bed workers’ dormitory at Tuas South Avenue 1 to cater to foreign workers in the marine, manufacturing and process industries. JTC has granted an initial three years’ lease of the land at Tuas South Avenue 1 for the building and operating of a dormitory at a monthly rental of approximately S$1.16 million. The lease is renewable for a further 3 years’ period pending future approval by JTC. Construction of the dormitory will commence soon and is expected to complete in the second half of 2014. (Closing Price: S$ 0.335, 1.515%)

ISDN Holdings announced that it made new strides in its foray  in the energy sector with the inking of a Memorandum of Understanding with Japanese corporation, Industrial Decisions, Inc (IDI). The MOU spells out a joint venture in the development of a 4 x 135 megawatt (MW) coal-fired power plant in Myanmar. The development is planned for in two stages, the first phase will install twin turbines of 135 MW each to power the plant with an initial installed base capacity of 270 MW. The second phase will be equipped similarly. When fully completed, the coal-fuelled power plant will have a total electricity generating capacity of 540 MW. (Closing Price: S$0.75, +0.01%)

Source: PhillipCapital Research - 24 Oct 2013