KLCI: +0.10% to 1817.4
JCI: +0.27% to 4574.9                           SET: +0.43% to 1455.9
HSI: +2.00% to 23304                            HSCEI: +2.41% to 10640
Nifty: +0.50% to 6251.7                         ASX200: -0.25% to 5417.5
Nikkei: +1.23% to 14502                        S&P500: -0.49% to 1763.3
      
MARKET OUTLOOK:
By Joshua Tan, Head of Research

Macro Data

USA

The consumer price index increased 0.2 percent, matching the median forecast of 86 economists surveyed by Bloomberg, after rising 0.1 percent the prior month. Stripping out volatile food and fuel, the so-called core measure climbed 0.1 percent for a second month, less than projected.

Companies added fewer workers than projected in October, indicating the U.S. job market lost momentum amid budget strife in Washington, a private report based on payrolls showed today. The 130,000 increase in employment was the smallest in six months and followed a revised 145,000 gain in September that was weaker than initially estimated.

Eurozone
The European Central Bank said in a quarterly survey that banks expect to relax standards on corporate lending this quarter. That’s the first such response since the fourth quarter of 2009 and, if it occurs, would mark the first easing of conditions since the second quarter of 2007. Lenders also plan to ease access to consumer loans and mortgages, and predicted a rise in loan demand across all categories.

Economic confidence in the euro-area rose more than economists forecast in October, adding to signs the single-currency bloc’s recovery is gaining momentum. An index of executive and consumer sentiment increased for a sixth month to 97.8 from 96.9 in September, the European Commission in Brussels said today. That exceeded the median estimate of 97.2 in a Bloomberg News survey of 31 economists.

German unemployment rose for a third month in October, adding to signs of a slowdown in Europe’s largest economy. The number of people out of work climbed a seasonally-adjusted 2,000 to 2.97 million, after gaining by a revised 24,000 in September,

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Regional Market Focus

Singapore

• The benchmark STI closed higher at 3.230.44 (+0.67%). The 3.2bn shares traded were worth S$1.2bn in value.
• The FTSE ST Mid Cap Index gained +0.16% while the FTSE ST Small Cap Index declined -0.39%. The top active stocks were ValueMax, SingTel (+1.86%), UOB (+1.25%), DBS (+0.84%) and Golden Agri-Resources (+2.66%). ValueMax listed on SGX Mainboard today, closing at $0.53 following an offer price of $0.51.
• The Fed maintained its S$85 bil monthly bond purchases, but market’s interpretation that it is more optimistic on the economy may put downward pressure on stocks today.  
• 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 fell as much as 1.7% on domestic political pressure on Wed, bucking regional gains on speculation that the US Federal Reserve would leave QE in place. 
• The US Federal Reserve held the size of its QE program unchanged until the US economy was strong enough in line with market expectations after the end of the FOMC’s two-day policy meeting. In our view, the Fed’s decision would be positive for Thai stocks on expectations of foreign fund inflows over the next couple of months but domestic political chaos may be a major drag on sentiment in the near term and could be a key factor that would keep the market choppy to the downside.
• Today choppy downside bias is likely to continue for Thai stocks despite yesterday’s sharp losses. The controversial blanket amnesty bill is scheduled for a second reading in parliament today while the opposition Democrat Party plans a mass rally against the bill at Samsen railway station. Growing political tensions may put a damper on market sentiment throughout the week, in our view. A close watch should also be kept on domestic political developments.
• Resistance for the SET index is seen at 1440-1450 points and support at 1430-1415 points today. 

Indonesia

• Indonesian stocks finished in positive zone Wednesday (30/10), amidst stronger sentiments in Asia, as investors’ optimism on the continuation of the US Federal Reserve’s easing program boosted stock indexes. The Jakarta Composite Index (JCI) gained 0.27%, or 12.108 points, to close at 4,574.878. The advance on Wednesday included seven of the 9 major industry groups, led by basic industry sector with 1.47%-gain, followed by miscellaneous industry with 0.99%-rise, and property, construction and real estate sector with 0.69%-increase. The LQ45 index climbed 2.993 points, or 0.39%, at 769.081. Gainers outpaced decliners 154 to 107 Wednesday on the Indonesia Stock Exchange, where regular market volume reached 3.02 billion shares worth IDR 4.13 trillion. Foreign investors posted net sale of IDR 171.18 billion.
• The Jakarta Composite Index will likely trade lower today, following lower closes on US markets overnight, as investors reassess the US Federal Reserve’s statement. We expect the JCI to move lower today, with support and resistance at 4,526 and 4,603, respectively.

Sri Lanka

• The Market took a break from its bear run, to witness its first positive closure for the week while assisting both indices to re-enter the positive terrain. The market trended upwards from its early hours to reach its intra-day peak at 5,940.16 (gaining 34 points), however as at the daily closure the benchmark ASPI settled slightly lower at 5,934.41 gaining 27.88 points or 0.47%. The S&P SL20 too closed positive for the first time during the week gaining 5.20 points or 0.16% to settle the day at 3,265.82. As at the day’s close, the total market capitalization moved up to LKR 2.47Tn, charting a year to date gain of 13.85%. The market PER & PBV stood at 15.70x and 2.07x respectively. The aggregated turnover for the day amounted to LKR 942.66Mn, indicating an increase of 78.29% against the previous trading day. Under the sectorial summary, Telecommunications (TLE) sector stood out as the prime contributor providing LKR 513.09Mn while accounting to 54.43% of the total turnover, and the Bank Finance & Insurance (BFI) sector added LKR 232.48 to the daily turnover. Moreover, the two sectors TLE & BFI collectively made account to nearly 80.00% of the daily aggregated turnover. Price losers outstripped the price gainers by 93:75. During the day, shares totaling up to 126.81Mn shares changed hands, recording a momentous gain of 165.12% compared with the previous trading day. Foreign participants changed their bearish stance seen during the past two trading days, to record a net foreign inflow of LKR 450.46Mn for the first time during the week; this was resulted by foreign buying worth LKR 464.5Mn and selling which amounted to LKR 14.05Mn.Further on this pushed the year to date net foreign inflow (LKR 22.98Bn) to near the LKR 23Bn mark. With regard to the local FOREX, Sri Lankan Rupee (LKR) depreciated further against the US Dollar falling to a lowest level since 11th October 2013. Currently, the USD is selling at LKR 132.72/- and the buying rate stands at LKR 129.46/-.

Australia

• At the close on Wednesday, the benchmark S&P/ASX200 index was 15.4 points, or 0.28 per cent, higher at 5,430.9, while the broader All Ordinaries index was up 14.7 points, or 0.27 per cent, at 5,425.4. National turnover was 1.8 billion securities worth $4.3 billion.
• Australian shares have edged higher as investors expect the US Federal Reserve to maintain its economic stimulus measures.
• Australia's biggest listed gold producer, Newcrest Mining, shed 23 cents, or 2.1 per cent, to $10.67. The resource giants made small gains, with BHP Billiton finding eights cents to $37.67 as Rio Tinto added three cents to $63.44.
• In the financial sector, National Australia Bank slipped while its three major rivals were up.

Hong Kong

• HSI surged 457 points or 2% to 23,304. CEI gained 250 points or 2.41% to 10,640. Trading volume increased to HKD60.84 billion.
• Led by firmer China market, HSI opened high at 22,966 (+120 points) and broke 10-MA and 20-MA afterwards.
• China financial sector led CEI up with ICBC (1398.HK), CCB (939.HK) and BOC (3988.HK) up 2.3-2.4%. Ping An (2318.HK) and China Life (2628.HK) gained 3.8% and 3% respectively.
• Shale gas related stock out-performed due to the policy about industry development. Anton Oilfield (3337.HK), Honghua Group (196.HK) and SPT Energy (1251.HK) were up 9.4%, 11.8% and 11.1% respectively.
• Esprit Holdings (330.HK) climbed 5.5% and broke 52-week high after 3Q results showing improving same-store-sales-growth.
• Technically, HSI gained 10-MA and 20-MA again, sending positive signal. The next resistance and support for HSI are 23,554 and 23,000 respectively.

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Morning Note
Company Highlights

Ezra Holdings, a leading global offshore contractor and provider of integrated offshore solutions to the oil and gas industry, today announced that its Subsea Services (EMAS AMC) and Offshore Support Services (EMAS Marine) divisions have been awarded projects worth US$110 million. These projects will be executed in the Gulf of Mexico and the Asia-Pacific region. Ezra has approximately US$8 billion worth of projects being tendered, and its orderbook stands in excess of US$2 billion. (Closing Price: S$1.330, +3.502%)

Food Empire Holdings is pleased to announce today that proprietary brand MacCoffee has been valued at US$139.7 million. Together with its other brands, Food Empire’s key brands have been assigned a total value of US$174.8 million, based on the October 2013 results of a brand evaluation study conducted by international brand valuation consultants, Brand Finance Consultancy (Singapore) Private Limited (“Brand Finance”). As part of an internal strategic review, Food Empire appointed Brand Finance to undertake a valuation of the Group’s key brands for an internal review of the business. Brand Finance previously conducted a valuation of the Kracks, MacCoffee, and Petrovskaya Sloboda brands in June 2007 and they were valued at US$119.0 million. In comparison, the value of these three brands increased to US$156.4 million, based on the October 2013 results. (Closing Price: S$0.650, +0.775%)

Source: PhillipCapital Research - 31 Oct 2013