KLCI: +0.05% to 1818.4
JCI: +0.21% to 4590.5                          SET: -0.36% to 1449.6
HSI: +0.48% to 22806                           HSCEI: +0.79% to 10258
Nifty: -0.71% to 6101.1                        ASX200: -0.10% to 5435.9
Nikkei: +2.19% to 14396                      S&P500: +0.13% to 1762.1
      
MARKET OUTLOOK:
By Joshua Tan, Head of Research

Macro Data

USA: The index of pending home sales slumped 5.6 percent, exceeding all estimates in a Bloomberg survey of economists and the biggest drop in more than three years, after a 1.6 percent decrease in August. The index fell to the lowest level this year.

Thailand’s industrial production contracted at 2.9% on-year in September, its sixth straight month in which output has fallen, after 3.1% drop in the preceding month, said the Office of Industrial Economics. The weaker output was driven down by slower car production, frozen canned seafood, beer and electrical appliances. Earlier, the ministry expected output to expand 0.5-1.0% this year, however, it fell 1.87% on the first nine months from a year ago, adding to concern about how quickly the export-dependent country can exit recession.

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Regional Market Focus

Singapore

• The Straits Times Index (STI) ended 2.61 points higher or +0.08% to 3,207.85, taking the year-to-date performance to +1.29%.
• The FTSE ST Mid Cap Index declined -0.27% while the FTSE ST Small Cap Index declined -0.86%. The top active stocks were SingTel (+0.27%), Golden Agri-Resources (+1.80%), OCBC Bk (unchanged), UOB (-0.19%) and Sky One (-80.43%).
• The outperforming sectors today were represented by the FTSE ST Telecommunications Index (+0.27%). The two biggest stocks of the FTSE ST Telecommunications Index are SingTel (+0.27%) and Starhub (+0.22%). The underperforming sector was the FTSE ST Technology Index, which declined -3.28% with LionGold’s share price declining -16.00% and STATS ChipPAC’s share price declining -2.90%. The FTSE ST Consumer Goods Index gained +0.11%.
• We peg near term support at 3,000 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 in the green early in the session on Mon before gains were pared by late profit taking with the SET index finishing the day down 5.26 points at 1,449.62 points in light turnover of Bt22,150mn.
• Today we believe Thai stocks may return to sideways trading pattern with bias tilted towards a lower open on bearish regional sentiment in today’s early trade amid third-quarter corporate earnings season and ahead of the US FOMC’s two-day policy meeting which starts today. Even though market participants expect the Federal Reserve will maintain QE at least until the end of this year, we think the room for further upside appears limited as much of the expectations have already been discounted into the market. 
• The Bank of Thailand cut its 2013 GDP growth forecast for the country to 3.7% from 4.2% due to a sharper than expected slowdown in private consumption and a sluggish recovery in exports. Domestic political factor, which still bears close watching, may also add pressure on market sentiment. To play a sideways market, the short-term strategy is to sell into rallies and buy on dips with focus on earnings plays. Today we expect a trading range of 1430-1470 points for the SET index.
• Resistance for the main index is seen at 1460-1470 points and support at 1440-1430 points today.

Indonesia

• The Jakarta Composite Index (JCI) rose on Monday (28/10), along with broad recovery in Asia after a series of declines last week. The JCI climbed 9.692 points, or 0.21%, to close at 4,590.538. Supporting gains on Monday were infrastructure sector that gained 2.11%, property, construction and real estate sector advanced 1.52%, and consumer goods sector added 0.52%. The LQ45 index rose 1.046 points, or 0.14%, to close at 772.819. Gainers outpaced decliners 136 to 100 Monday on the Indonesia Stock Exchange, where 3.4 billion shares worth IDR 4.22 trillion traded on the regular board. Foreign investors posted net purchase of IDR 51.8 billion.
• Indonesian stocks will likely edge lower today, as markets in Asia started in negative tones after US stock indexes traded lower following mixed economic data. We expect the Jakarta Composite Index (JCI) to trade moderately lower today, within 4,553 – 4,630 range.

Sri Lanka

• The Colombo bourse re-entered the red terrain mainly due to the poor buying sentiment and the lackluster participation of the investors, triggering the benchmark ASPI to fall by 19.78 points (-0.33%) and to settle the day at 5,928.97. The S&P SL20 ended the day at 3,261.76, losing 18.72 points or 0.57%. Foreign Investors commenced the last trading week of October on a bearish note, resulting in a net foreign outflow of LKR 91.67Mn; this was having recorded inflows for the past 5 trading days (LKR 674.66Mn). Foreign selling for the day amounted to LKR 114.26Mn and buying amounted to LKR 22.58Mn. This dragged the year to date net foreign inflow to LKR 22.73Bn. The aggregate turnover for the day amounted to LKR 372.54Mn, indicating a drop of 74.84% against the previous trading day. Under the sectorial round-up, Manufacturing (MFG) sector provided LKR 118.39Mn (31.78% of the aggregated turnover), dominating the list and Bank Finance & Insurance (BFI) sector made a contribution of LKR 96.57Mn. The daily traded volume amounted to 38.53Mn shares, indicating a decrease of 46.37% against the previous trading day. Price losers smashed the price gainers by 103:92. As at the daily closure the total market capitalization stood at LKR 2.47Tn, while reducing the year to date gain to 13.75%. With regard to the local FOREX, the USD currently selling at LKR 132.22/- and buying at LKR 128.96/-.

Australia

• The Australian share market on Monday closed at a five-year high as the major banks lifted ahead of the release of NAB and ANZ results. The benchmark S&P/ASX200 index was 55.1 points, or 1.02 per cent, higher at5,441.4.
• Today (29/10/13), the Australian market looks set to open flat as investors wait for the outcome of the Federal Reserve's meeting that will decide whether the central will start tapering its stimulus measures.
• In economic news on Tuesday, Reserve Bank of Australia Governor Glenn Stevens is slated to speak at Citi's 5th Annual Australian & New Zealand Investment Conference in Sydney. The HIA trades report for the June quarter is due out.
• In equities news, ANZ is expected to post full year results while Beach Energy, Drillsearch and PanAust are slated to release quarterly reports, UGL Group, Stockland, NIB Holdings, Domino's Pizza and Dexus Property all have annual
• general meetings. Meanwhile, Wesfarmers CEO Richard Goyder is scheduled to speak at an AMCHAM event in Sydney.

Hong Kong

• HSI climbed 108 points or 0.48% to 22,806. CEI gained 80 points or 0.79% to 10,258. Trading volume declined to HKD48.102 billion.
• China financial sector led CEI up with China Life (2628.HK) and Ping An (2318.HK) gained 1.8% and 1.7% respectively. CCB (939.HK), the second largest bank in China, posted 3Q13 results, which missed analysts’ estimates, but share price rebounded 1%.
• Chong Hing Bank (1111.HK) slumped 8% after announced an acquisition offer by Yuexiu with the offer price much lower than market expectation. Liu Chong Hing (194.HK) and Dahsing Banking (2356.HK) dropped 14% and 8.5% respectively.
• Macau gambling sector under-performed with Sand China Ltd (1928.HK) and Galaxy Ent (27.HK) declined 3% and 2.8% respectively.
• Zoomlion (1157.HK) rebounded 4.8% after Chinese daily apologized for publishing unverified stories questioning the finances.
• Technically, the next resistance and support for HSI are 23,000 and 22,500 respectively.

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Morning Note
Company Highlights

Rex International Holding has signed a shareholders’ agreement to regulate the affairs of Rexonic AG, a new joint venture company that is in the process of being incorporated in Switzerland, with Swiss firm Ogsonic AG. Rex International Holding and Ogsonic will respectively hold 66.7 per cent and 33.3 per cent stake in Rexonic. Rex International Holding will pay for its 66.7 per cent stake in Rexonic with USD 10 million in cash and S$12.4 million by way of the issuance of 15,756,035 new ordinary shares in the capital of Rex International Holding to Ogsonic at an issue price of $0.787 per New Share, which is pending regulatory approval (Closing Price: S$0.780, -8.235%)

Ezion Holdings pleased to announce that it has received a letter of intent with a contract value of up to approximately USD 65 million over a 3 year period to provide a Service Rig to be used by an oil major to support its oil & gas activities in South East Asia. (Closing Price: S$2.220, -0.448%)

Triyards Holdings, an offshore vessel fabrication and engineering solutions provider to the oil and gas (O&G) industry, has secured two contracts worth an additional US$59 million, including its 10th Self-Elevating Unit (SEU) order, consolidating its position as a leading fabricator of SEUs in Asia. These additional orders will increase the visibility of the order book for TRIYARDS for the upcoming financial year. The Group’s net orderbook stood at US$217 million as at 31 August 2013. (Closing Price: S$0.680, +0.741%)

ARA Asset Management is pleased to announce that the Group has established a strategic alliance with Straits Trading.  One of the key initiatives involve the establishment of a new co-investment vehicle by Straits Trading and the CEO Mr. John Lim. Straits Real Estate will be established with a capital commitment of S$950 million and its business will include seed/sponsor capital commitments as may be required by ARA in connection with new fund product launches by ARA Private Funds. This is expected to support up to approximately S$10 billion in in new private funds over time. (Closing Price: S$1.810, 0%)

Tritech Group has entered into four contracts in relation to the sale of marble and marble related products to four unrelated property development companies in the People’s Republic of China, for a total contract amount of up to RMB 88,542,000. The Marble Sales Contracts represent the first significant confirmed sales for the Group’s marble resource business and is a significant milestone for the Group in this area. The Marble Sales Contracts also shows the Group’s progress in ramping up sales and marketing efforts to develop a customer base for its marble products. (Closing Price: S$0.365, -24.742%)

King Wan Corporation today announced it has secured five new mechanical and electrical (M&E) contracts in Singapore worth a total of S$26 million during the period from August to October 2013. Group’s order book to date stands at S$168.9 million, with M&E contracts which will keep us busy to 2016. (Closing Price: S$0.295, 0%)