STI: +0.41% to 3217.9                         KLCI: +0.27% to 1818.9
JCI: +1.06% to 4594.8                         SET: +0.61% to 1466.3
HSI: -0.71% to 22835                          HSCEI: -1.29% to 10322.1
Nifty: -0.23% to 6164.4                        ASX200: +0.31% to 5372.9
Nikkei: +0.42% to 14486                    S&P500: +0.33% to 1752.1
      
MARKET OUTLOOK:
By Joshua Tan, Head of Research

Macro Data

China: The October's Market/HSBC Purchasing Managers Index (PMI) jumped to 50.9 from September's final reading of 50.2, marking a seven-month high in a preliminary survey. The higher reading was mainly driven by strong new orders, which rose to 51.6, the highest in seven months as well.

Hong Kong's trade deficit worsens to a seasonally adjusted HKD42.0 billion in September from a short of HKD39.6 billion in the preceding month, while both exports and import trade grew. Hong Kong Census and Statistics Department said that, on year-over-year basis, export increase 1.5% (vs previous -1.3%) while imports expanded 0.4% (vs previous -0.2%).

U.S. trade deficit widened slightly in August as exports slipped, suggesting trade will probably not be much of a boost to growth in the third quarter. The Commerce Department said on Thursday the trade gap nudged up 0.4 percent to $38.8 billion. July's shortfall on the trade balance was revised to $38.6 billion from the previously reported $39.15 billion.
The number of Americans filing new claims for unemployment benefits fell less than expected last week, but a lingering backlog of applications in California makes it difficult to get a good read of labor market conditions. Initial claims for state unemployment benefits fell 12,000 to a seasonally adjusted 350,000, the Labor Department said.

Eurozone: The composite PMI for the region fell from September's 27-month high of 52.2 to 51.5, but remained above the 50 level for a fourth successive month. A level above 50 signals expansion. Analysts had expected a reading of 52.4.
 

Regional Market Focus

Singapore

• The Straits Times Index (STI) ended 13.15 points higher or +0.41% to 3,217.95. The 1.8bn shares traded were worth S$911 mil in value.
• The FTSE ST Mid Cap Index gained +0.28% while the FTSE ST Small Cap Index gained +0.24%. The top active stocks were DBS (unchanged), Keppel Corp (+0.92%), SingTel (+1.34%), Genting SP (+0.99%) and UOB (+0.10%).
• 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 traded to the downside early in the session on Thu before the market reversed course to finish the day up 0.61% in light volume on late bargain buying.
• US equities gained on Thu as earnings offered some upbeat news and market received a boost from China’s strong manufacturing PMI data. Shrugging off a lead from Wall Street, Asian stocks opened in negative territory on Fri on liquidity worries in China.
• In our view, the direction of the Thai stock market will likely continue to be dictated by domestic political factor and third-quarter earnings season. More sideways action could also be in store for Thai stocks. Trading volume was relatively light amid small amount of net foreign buying. To play a sideways market, the strategy is to sell the rallies and buy the dips within support and resistance levels. We also advise investors to look at the cream of the crop especially with earnings plays. Domestic political factor also still bears close watching. Initial support is pegged at 1445 points.
• Resistance for the SET index is seen at 1475-1485 points and support at 1450-1440 points today.

• The Jakarta Composite Index (JCI) rose Thursday (24/10), despite mostly lower stocks indexes in Asia, as investors turned their attention to domestic earnings season. The JCI advanced 48.346 points, or 1.06%, to finish at 4,594.845. The gains on Thursday included seven of the 9 major industry sectors, led by miscellaneous industry sector with 2.81%-rise, followed by property, construction and real estate sector with 2.07%-gain and finance sector with 1.97%-climb. Earnings announced Thursday included those from state lender Bank Rakyat Indonesia (Persero) (BBRI) whom reported 17% year-on-year increase in net profit to IDR 15.45 trillion in the first nine months of 2013. Shares of Bank Rakyat (BBRI) gained 2.45% to IDR 8,350 on Thursday. The LQ45 index rose 10.549 points or 1.38%, to 774.665, with 25 of its 45 blue-chip components finished in green. Gainers outran decliners 134 to 93 Thursday on the Indonesia Stock Exchange, where 4.36 billion shares with a total value of IDR 5.54 trillion traded on the regular board. Foreign investors’ transactions accumulated to a net purchase of IDR 154.91 billion.
• The Jakarta Composite Index (JCI) will likely trade between gains and losses today, with mixed domestic earnings results driving the index, and strong Japanese Yen that may weigh on sentiments in Asia. We expect the JCI to move with high volatility today, and trade between 4,512 - 4,636 range.

• The Market recovered to some extent from its bear run as the indices reversed gear to re-enter the positive terrain for the first time during the week, having witnessed a loss of 1.27% or 75.61 points. The market trended upwards from its early hours to reach an intra-day peak of 5,952.57 gaining 52 points, however as at the daily closure the benchmark ASPI settled at 5,936.40 (gaining 35.50 points or 0.60%). The S&P SL20 too closed positive for the first time during the week gaining 4.58 points or 0.14% to settle the day at 3,263.76. As at the day’s close, the total market capitalization moved up to LKR 2.47Tn, charting a year to date gain of 13.89%. The market PER & PBV stood at 16.03x and 2.16x respectively. The aggregated turnover for the day amounted to LKR 516.81Mn, indicating an increase of 7.41% against the previous trading day. Under the sectorial summary, Bank Finance & Insurance (BFI) sector stood out as the prime contributor providing LKR 205.55Mn, while accounting to nearly 40.00% of the total turnover. Diversified Holdings (DIV) sector added LKR 139.27 to the daily turnover. During the day, shares totaling up to 40.65Mn shares changed hands, recording a gain of 52.90% compared with the previous trading day. Price gainers outstripped the price losers by 129:54. Foreign participants were bullish during the day, recording a net foreign inflow of LKR 21.90Mn, resulted by foreign buying worth LKR 110.25Mn and selling of LKR 88.35Mn. This added further to the year to date net foreign inflow of LKR 22.81Bn. With regard to the local FOREX, the USD is selling at LKR 132.37/- and the buying rate stands at LKR 129.11/-.

• The Australian share market on Thursday finished higher, driven by strong gains among the big banks.   The nation's biggest bank, Commonwealth, surged to a record high as the bank reporting season approaches. The benchmark S&P/ASX200 index was up 16.8 points, or 0.31 per cent, higher at 5,372.9.
• Today (25/1013) the Australian market looks set to open flat despite gains on international markets overnight.
• No major economic news is expected on Friday.
• In equities news, AMP is expected to release its third quarter trading update and Whitehaven Coal its quarterly production report, while PaperlinX, Carsales.com, Transfield Services and Austal all have annual general meetings scheduled.

• HSI dropped 164 points or 0.71% to 22,835. CEI declined 135 points or 1.29% to 10,322. Trading volume was HKD65.246 billion.
• On the macro economic front, HSBC manufacturing PMI in Oct (flash) came in at 50.9, better than expected and the highest in 7 months. But the reading didn’t drive market sentiment, instead, HSI almost touched 50-MA.
• China banking sector kept under-performed with CCB (939.HK) and Minsheng Bank (1988.HK) dropped 1.9% and 2.6% respectively.
• Greatwall Motor (2333.HK) declined 4.5% before 3Q13 results. China Unicom (762.HK) rebounded 1.7% before 3Q13 results and following 4.8% drop in previous day.
• Technically, HSI failed to retain at 10-MA and 20-MA level, and may test the 50-MA support at 22,753. The next resistance and support for HSI are 23,000 and 22,753 respectively.

Source: PhillipCapital Research - 25 Oct 2013