KLCI: -0.16% to 1807.5
JCI: -0.21% to 4423.3                          SET: +1.95% to 1415.4
HSI: -0.65% to 23038                           HSCEI: -0.46% to 10637
Nifty: -1.02% to 6253.2                        ASX200: +0.73% to 5430.5
Nikkei: +0.17% to 14225                     S&P500: -0.28% to 1762.9
      
MARKET OUTLOOK:
By Joshua Tan, Head of Research

Macro Data

China:

China’s services industry picked up in October with HSBC/Markit Services PMI edged up to 52.6 from September’s 52.4, adding to indications that the economy has stabilized ahead of Communist Party's third plenary session. New business growth hit seven-month high and employment rose for the second straight month.

India:
India’s services sector activity witnessed a moderate improvement in October, albeit indicating a fourth month consecutive contraction, as HSBC/Market Services PMI inched up to 47.1 in October from a four-and-a-half-year low of 44.6 in September.

Australia:
Australia’s central bank left its benchmark interest rate unchanged at a record low and said a weaker currency will be needed to achieve balanced growth. Governor Glenn Stevens and his board kept the overnight cash-rate target at 2.5 percent, the Reserve Bank of Australia said in a statement today in Sydney, as predicted by all 31 economists surveyed by Bloomberg News. The Australian dollar dropped as Stevens said it remained “uncomfortably high.”

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Regional Market Focus

Singapore

• The benchmark STI closed flat at 3.205.54 (+0.05%). The 2.0bn shares traded were worth S$0.9bn in value.
• The FTSE ST Mid Cap Index declined -0.19% while the FTSE ST Small Cap Index gained +0.05%. The top active stocks were Genting SP (+0.99%), Noble Group (+5.56%), DBS (+0.54%), SingTel (-0.27%) and Viking (+62.20%).
• The STI is expected to remain muted today, due to continued market uncertainty.
• 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 gained as much as 1.95% on Tue after Senate Speaker Nikom Wairatpanich vowed after consultation with senators to reject the blanket amnesty bill scheduled for its first reading in the Senate on Nov 11.
• European and US equities lost little ground on Tue as cut in euro-zone growth forecast reflected a slower-than-expected recovery of the global economy.
• In Thailand, the greatest weight was given to domestic political factor. Although domestic political tensions eased somewhat yesterday after Senate speaker vowed to reject the blanket amnesty bill, street protests by several groups have however continued until the bill is rejected on Nov 11.
• If the SET index can decisively break above a key psychological level of 1,400 points, we advise investors to gradually raise equity holdings but not exceed 50% of the portfolio in the near term as there remain a number of key political events on tap throughout the month of Nov. 
• Today we peg resistance for the SET index at 1420-1440 points and support at 1400-1380 points.

Indonesia

• The Jakarta Composite Index (JCI) declined Monday (04/11), on concerns about current account gap that has not showed steady improvement. The composite index of Indonesian stocks shed 9.301 points, or 0.21%, to close at 4,423.288. Decline on Monday included seven of the nine major industry groups. Property, construction and real estate sector fared worst with 0.96%-decline, followed by the automotive-dominated miscellaneous industry sector with 0.85%-drop, and trade, services and investment sector with 0.50%-fall. The LQ45 index slid 1.042 points, or 0.14%, at 738.242. Indonesia’s trade shortfall was USD 657 million in September. A Bank Indonesia senior deputy governor said the gap will improve in the last months of this year. A USD 9.8 billion deficit was posted in 2Q13. Third quarter’s current account figures are slated for release on Nov 13. Decliners outpaced gainers 156 to 102 Monday on the Indonesia Stock Exchange, where regular market’s volume was lower, at only 2.43 billion shares worth IDR 3.19 trillion, due to upcoming Moslem’s New Year 1435H on Tuesday (05/11). Foreign investors posted net sale of IDR 465.17 billion.
• The Jakarta Composite Index (JCI) will likely trade mildly lower today, as investors weigh bleak growth outlook in Europe, and mixed earnings from Jakarta-listed firms. We expect the JCI to trade modestly lower today, within range of 4,381 – 4,467.

Sri Lanka

• Sluggish activity results in low volume and turnover. The trading day concluded 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 5,912.91, experiencing a loss of 14.50 points or 0.24% while falling to a lowest level in a week. The S&P SL20 index dropped by 10.80 points or 0.33% to settle the day at 3,263.51. Furthermore, the lazy participation of the investors and the selling pressure which prevailed resulted in one of the lowest turnovers being logged for the year; the daily turnover amounted to LKR 220.90Mn (drop of 47.33% compared to the previous trading day), indicating its lowest post to 17th July. During the day a total of 13.15Mn shares changed hands resulting in a drop of 40.69% against the previous day. Under the sectorial round-up, Bank Finance & Insurance (BFI) sector stood on top providing LKR 111.70Mn and Manufacturing (MFG) sector emerged second contributing LKR 25.33Mn. Notably, the two sectors BFI & MFG collectively accounted to 62.03% of the daily aggregated turnover. As at the daily closure the total market capitalization stood at LKR 2.46Tn, indicating a year to date gain of 13.44%. The market PER and PBV stood at 15.64x and 2.07x respectively.  With regard to the movement in share prices, price losers smashed the price gainers by 105:65. Foreign participants changed their bullish stance, to record a net foreign outflow of LKR 5.61Mn for the first time after 4 trading days, resulted by foreign selling of LKR 78.95Mn and buying which amounted to LKR 73.34Mn whilst adding further to the year to date net foreign inflow which aggregates up to record LKR 23.27Bn. With regard to the local FOREX, the USD currently stands at LKR 132.71/- selling and LKR 129.45/- buying.

Australia

• The Australian share market on Tuesday enjoyed a strong finish on Melbourne Cup day, with the big miners leading the way. The benchmark S&P/ASX200 index was up 41.5 points, or 0.77 per cent, at 5,432.
• Today, the Australian market looks set to open flat after international markets retreated after downward revisions of eurozone growth and unemployment. The European Union cut its 2014 forecast for the 17-member single currency to 1.1 per cent growth next year, down from the 1.2 per cent it forecast in May, and a 12.2 per cent unemployment rate, up from the previous 12.1 per cent.
• In economic news on Wednesday, the Australian Bureau of Statistics releases September international trade in goods and services figures. CEDA launches a research report entitled Australia Adjusting: Optimising national prosperity.
• In equities news, Commonwealth Bank of Australia September is expected to post its quarterly trading update, while Downer EDI has its annual general meeting scheduled.

Hong Kong

• HSI dropped 150 points or 0.65% to 23,038. CEI lost 48 points or 0.46% to 10,637. Trading volume increased to HKD50.158 billion. 
• Similar to previous day, HSI opened high but dragged down by weaker China market, HSI closed with 160 points lost and just retained at 23,000 level. On the macroeconomic front, HSBC China Services PMI (Oct) came in at 52.6, 7-month high.
• HSBC (5.HK) gained 1.5% after 3Q13 results which missed analysts’ estimates.
• Want Want China (151.HK) and Tingyi (322.HK), two F&B stocks, lost 4.8% and 1.8% respectively.
• Shale gas related stocks out-performed due to the third round tender expectation. CIMC ENRIC (3899.HK) and Honghua Group (196.HK) gained 4.6% and 3.4% respectively.
• Automobiles sector out-performed with Greatwall Motor (2333.HK), Brilliance Chi (1114.HK) and BYD Company (1211.HK) up 3.9-5.1%.
• AAC Tech (2018.HK), an acoustic components manufacturer, slumped 7.3% after some brokers gave sell ratings.
• Technically, the next resistance and support for HSI are 23,500 and 22,880 respectively.

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Morning Note
Company Highlights

EuNetworks Group announced it is undertaking a significant London network expansion. The Company is adding Slough to its fibre based metropolitan network to the West of London, with diverse routes across London. With this strategic investment, euNetworks will have developed additional high density fibre-rich infrastructure with direct connection to a further 25 key data centres. (Closing Price:  S$0.760, -5%)

Vard Holdings secures new contract for a survey vessel for Circle Maritime Invest JSC. The value is approximately NOK 55 million. The vessel will be delivered in 3Q 2014. (Closing Price: S$0.880, 0%)