KLCI: -0.12% to 1804.5
JCI: -0.21% to 4476.7                            SET: -1.42% to 1405.0
HSI: -0.60% to 22744.4                          HSCEI: -0.80% to 10390
Nifty: -0.75% to 6140.8                          ASX200: -0.39% to 5400.7
Nikkei: -1.00% to 14086                        S&P500: +1.34% to 1770.6
      
MORNING COMMENTARY:
By Joshua Tan
Boustead Singapore (S$1.43, BUY TP S$1.935)

Boustead’s 2QFY3/14 earnings of S$9m were 41%y-y lower due to last year’s results being boosted by a non-recurring S$10.1m gain (gain on disposal plus overprovision of taxes offsetting an impairment). Without last year’s distortion, core-earnings actually gained 75%y-y.
 
Orderbooks are at a record high (current orders backlog is S$445m vs S$288m last year) while the addition of 60k sqm of industrial portfolio space in the pipeline brings total space to over 163k sqm, which puts Boustead a step closer to eventually list a REIT. In addition, it is currently in a JV to development 120k sqm of industrial land in the Iskandar region. We reiterate our BUY rating on the stock.

MARKET OUTLOOK:
By Joshua Tan, Head of Research

Macro Data

China:

Chinese exports expanded in a faster pace at 5.6 percent on-year to US$185.4 billion in October, reversing the 0.3 percent fall in September, and adding to recent signs the country’s economy is picking up, said the General Administration of Customs. Meanwhile, imports increased 7.6 percent to US$154.3 billion, leading to a wider trade surplus of US$ 31.1 billion as compared to previous month’s US$15.2 billion.
 
October’s annual inflation edged higher to an eight-month high of 3.2 percent in October, pushed up by higher food prices, according to the National Bureau of Statistics (NBS). Inflation accelerated slightly from 3.1 percent in September, thus amounting a 2.6 percent inflation rate for the first 10 months of the year through October – well below the government’s full-year target of 3.5 percent.
 
Producer prices fell 1.5 percent in October from a year ago, marking the 20th consecutive month of decline.
 
Industrial output rose 10.3 percent in October from a year earlier, while retail sales were up 13.3 percent.
 
Fixed-asset investment, a key driver of economic activity, climbed 20.1 percent in the first 10 months from a year earlier.
 
Malaysia:
Exports rose 5.6 percent year-on-year in September, boosted by Southeast Asian demand for refined petroleum products and higher electronics shipments to China, according to data from Statistics Department. On the other hand, imports grew 2.8 percent from the same month a year ago, leaving the largest trade surplus since November 2012. Trade surplus improved to MYR8.67 billion from August’s MYR7.11 billion.
 
Eurozone:
The cost of insuring against a French default fell to the lowest in more than three years, as investors ignored a sovereign-credit rating downgrade by Standard & Poor’s. Credit-default swaps on France fell for a sixth day, declining 1 basis point to about 51 basis points at 1:45 p.m. That would be the lowest closing price since April 20, 2010. The contracts have fallen from 219 basis points on Jan. 13, 2012 when France lost its top rating at S&P.

Australia:
The central bank projected gross domestic product will rise by between 2 percent and 3 percent in the year to December 2014, compared with 2.5 percent to 3.5 percent forecast three months earlier. The outlook for inflation is “to remain consistent” with the 2 percent to 3 percent target, the RBA said.

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Regional Market Focus

Singapore

• The benchmark STI closed 24.85 points lower at 3.177.25 (-0.78%). The 1.7bn shares traded were worth S$0.9bn in value.
• The FTSE ST Mid Cap Index declined -0.18% while the FTSE ST Small Cap Index gained +0.09%. The top active stocks were DBS (-0.12%), OCBC Bk (-0.57%), Genting Singapore (-0.68%), SingTel (-0.26%) and Keppel Corp (-0.18%).
• The STI may end higher today, due to the US payrolls and China Industrial Production data registering positive surprises.
• 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 lost 20.2 points to 1,405.03 points last Fri amid domestic political worries after the Senate failed to reach a quorum to vote on the contentious blanket amnesty bill.
• More downside could be in store for Thai stocks amid heightening domestic political tensions ahead of two major political events today. The International Court of Justice (ICJ) will deliver its ruling on Cambodian-Thai Preah Vihear Temple dispute and the Senate will decide the fate of amnesty bill again today though the bill is expected to be rejected by the Senate. Democrats said they will escalate their anti-amnesty protests if the controversial bill is not dropped from the parliament’s agenda before 1800 hrs deadline today while opponents of the amnesty bill from several protest sites of Silom, Asoke, Ratchadapisek and Aree will march to join protesters at Ratchadamnoen Avenue.
• Even though stronger-than-expected US non-farm payrolls data boosted sentiment in Asia this morning, we believe street protests among opponents of blanket amnesty bill and red-shirts would weigh on Thai stocks today. We expect a trading range of 1380-1420 points for the SET index.
• Today we peg resistance for the SET index at 1415-1430 points and support at 1400-1380 points.

Indonesia

• Indonesian stocks finished mostly lower Friday (08/11), amidst negative notes in Asia, after upbeat US economic growth data released a day earlier that spurred investors’ concerns that the US Federal Reserve may reduce its bond purchase size earlier than expected. The Jakarta Composite Index (JCI) fell 9.389 points, or 0.21%, to close at 4,476.720. The decline on Friday included five of the 9 major industry groups, with property, construction and real estate sector trimmed 1.82%, finance sector slid 1.15%, and consumer goods sector lost 0.16%. The LQ45 index slashed 2.67 points, or 0.35%, to end at 749.582. US economy grew 2.8% in the third quarter, well above expectations and higher than 2.5% posted in the second quarter. Markets reacted negatively to the data, as investors fretted that the Federal Reserve could start to roll back its bond-buying program earlier than expected. From the corporate front, engineering and manufacturer Grand Kartech (KRAH) became the 27th company to go public this year. The company’s 163 million shares were officially listed on the Indonesia Stock Exchange on Friday (08/11). 155 shares declined and 77 shares advanced Friday on the Indonesia Stock Exchange, where 3.58 billion shares worth IDR 4.49 trillion traded on the regular board. Foreign investors accumulated net sale of IDR 268.10 billion.
• The Jakarta Composite Index (JCI) looked set for a gain today, with positive leads from US markets on Friday and upbeat starts in Asia this morning. We expect the JCI to advance today, and trade with minor support and resistance at 4,430 and 4,508, respectively.

Sri Lanka

• The bourse weakens further, amidst hefty foreign selling… Witnessing yet another losing day, the Colombo bourse drowned further into the red terrain mainly due to the lowly buying sentiment and the dreary participation of the investors while triggering the ASPI to fall further and settle at 5,855.34, losing 15.31 points or 0.26% to record its lowest value post to 4th October 2013 (5,837.95). The S&P SL20 settled the day at 3,232.50, dropping by 11.21 points or 0.35%. Price losers slammed the price gainers by 109:63. As at the daily closure the total market capitalization reduced to LKR 2.44Tn, while minimizing the year to date gain to 12.34%. The aggregate turnover for the day amounted to LKR 1.64Bn, indicating a significant rise of 138.13% against yesterday. Under the sectorial wrap-up, Hotels & Travels (H&T) sector provided LKR 1.18Bn, spearheading the list while accounting a share of 72.01% of the aggregate turnover, and Diversified Holdings (DIV) sector added LKR 345.73Mn. Additionally, the two sectors H&T & DIV collective accounted to 93.11% of the aggregated turnover for the day. The daily traded volume amounted to 47.90Mn shares, indicating a gain of 14.05% against the previous trading day. Foreign participants appeared to be bearish during the day having recorded inflows for the past two trading days, to result in the 2nd highest net foreign outflow (LKR 873.68Mn) for the year after 30 January 2013. Foreign selling of LKR 1.18Bn mainly led by AHPL, outstripped the buying which amounted to LKR 309.06Mn while dragging the year to date net foreign inflow below the LKR 23Bn mark. Currently the year to date net foreign inflow stands at LKR 22.70Bn.
• Week at glance…. The Colombo bourse continued its bearish run over the week while declining both indices more than 1% to stretch further into the red terrain and closed the week on a negative note. The benchmark ASPI and S&P SL20 lost 99.02 (1.7%) and 47.83 (1.5%) to close the week at 5,855.34 and 3,232.50 respectively.  The turnover for the week was LKR 3.5Bn supported by 16 crossings while recording a dip of 0.9% compared to the previous week’s turnover. A total of 147.2Mn shares changed hands during the week; this was a decrease of 51.1% compared to the previous week. Foreign sales amounting to LKR 1923.0Mn outpaced the foreign purchases of LKR 1351.0Mn during the week, resulting in a net foreign outflow of LKR 572.0Mn. The local FOREX market closed the week with, USD selling at LKR 132.72/- and buying at LKR 129.46/- .

Australia

• The Australian market on Friday fell as weaker commodity prices weighed down the big miners and banking giant Westpac paid out its dividend. The benchmark S&P/ASX200 index was down 21.3 points, or 0.39 per cent,  5,400.7 points.
• Today (11/11/13) the Australian market looks set to open higher after Wall Street's strong gains following better-than-expected US jobs figures. The US Labor Department reported the US economy added 204,000 jobs in October, double what analysts forecast, and revisions to the previous two months added another 60,000 jobs.
• Locally, in economic news on Monday, Reserve Bank of Australia head of domestic markets department Chris Aylmer speaks on Developments in Secured Issuance and RBA Reporting Initiatives, at the Australian Securitisation 2013 Annual Conference. And, the Australian Bureau of Statistics releases housing finance figures for September.
• In equities news, Orica is expected to post full year results while NRW Holdings and CSG Ltd have annual general meetings scheduled.

Hong Kong

• HSI fell 136 points or 0.6% to 22,744. CEI lost 83 points or 0.8% to 10,390. Trading volume was HKD50.6 billion.
• HK stocks slid with the benchmark index recorded 5 losing streak, after stronger U.S. economic growth fueled concern of sooner-than-expected tapering. The trading volume remained low, reflecting investors’ wait-and-see sentiment before China’s top party officials gather in Beijing for the Third Plenum starting on Sat.
• For last week, HSI lost 505 points or 2.1%. CEI dropped 287 points or 2.7%.
• Mainland property sector under-performed due to policy risk. China Res Land (1109.HK), Country Garden (2007.HK) and Evergrande (3333.HK) lost 1.85-2.2%.
• Software and network stocks maintained downward trends. Tencent (700.HK), Netdragon (777.HK) and Forgame (484.HK) declined 1.5%, 4.6% and 5.3% respectively. We suggest investors to escape from this sector in short-term due to the high valuation.
• China Cosco (1919.HK), the nation’s largest shipping company, shed 5% due to the executive director under investigation by regulatory body.
• Technically, HSI failed retain at 50-MA level, sending a negative signal. HSI is vulnerable to further near-term consolidation. We expect it to refill the bull gap from 22,487 spanning down to 22,438. The next resistance and support for HSI are 22,938 and 22,500 respectively.

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Morning Note
Company Highlights

CSC Holdings Limited announced that it has been awarded a contract through its subsidiary CS Geo (Malaysia) Sdn Bhd, valued in excess of RM80 million, for the construction of foundations as well as a two-storey basement for the new development, Bora Residences @ Tropicana Danga Bay in Iskandar, Johor. Work on this project is expected to commence in November 2013, and be completed by the first half of 2015. With this latest contract win, CSC has secured in excess of RM200 million worth of contracts in Malaysia since April 2013. (Closing Price S$0.101, -)

Jardine Cycle & Carriage announced that Cheah Kim Teck will be stepping down from his current role as Chief Executive Officer, Group Motor Operations of Jardine Cycle & Carriage at the end of the year. The Board would also like to announce that Haslam Preeston will be appointed as Regional Managing Director with effect from 1st February 2014 to succeed Kim Teck. (Closing Price S$35.650, -3.0%)

Tereos and Wilmar International Limited announced that they have formed a new joint venture, through their respective subsidiaries Syral China Investment (“Tereos Syral”) and Wilmar China New Investments Pte. Ltd. (“WCNI”), in a PRC-incorporated company named Liaoning Yihai Kerry Tereos Starch Technology Co., Ltd. The JV Company will engage in the operation of a corn starch facility in Tieling (Liaoning Province), in northern China. The first industrial joint venture under the Wilmar-Tereos partnership involving the construction of a wheat starch facility in Dongguan, near Guangzhou, will be operational during the first half of 2014. This facility will have the capacity to process 500,000 tons of wheat to produce starch, glucose syrups and gluten. (Closing Price S$3.380, -2.0%)