STI:        -0.03%   to 3,187.67               KLCI:       +0.34%  to 1,824.29
JCI:        -0.77%   to 4,288.77               SET:         +0.70%  to 1,383.89
HSI:        -0.53%   to 23,910.47             HSCEI:     -0.86%  to 11,448.35
Nifty:      -0.26%   to 6,201.85               ASX200:  -0.44%  to 5,256.07
Nikkei:   +0.60%  to 15,749.66            S&P500:   -0.32%  to 1,795.15

MARKET OUTLOOK:
By Joshua Tan, Head of Research

Macro Data

Australia
Australia’s central bank left its benchmark interest rate unchanged at a record low and said the currency is “still uncomfortably high,” even after a 4.6 percent decline since its previous meeting.
RBA 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 30 economists surveyed.

Japan
Japan’s salaries extended the longest tumble since 2010, increasing pressure on household finances as inflation begins to take root. Regular wages excluding overtime and bonuses fell 0.4 percent in October from a year earlier, a 17th straight monthly decline, according to labor ministry data released today. Total cash earnings rose 0.1 percent.

China
The non-manufacturing purchasing managers index (PMI) fell marginally to 56.0 in November from the previous month’s 56.3, according to the National Bureau of Statistics (NBS) and the China Federation of Logistics and Purchasing (CFLP). The sub-index for employment stood at 51.9, up 0.4 from October, as the construction and information services pick up, absorbing more labor, said Cai Jin, CFLP vice chairman. External demand improved as the sub-index for new export orders rose to 49.9, despite the sub-index for overall new orders slipped to 51 from 51.6 a month ago. Companies in the non-manufacturing sectors are more optimistic in their business in the coming three months, with the business confidence index hitting 61.3, 0.8 higher than the reading in October.

Thailand
Consumer confidence fell for the eight consecutive month, hitting a 22-month low in November, on escalating political tension and anti-government protests in capital Bangkok. The November’s Thai consumer confidence index skidded to 75.0 from 76.6 in October, according to a survey by the University of Thai Chamber of Commerce. Sentiment was also hurt by lower economic growth and a poor outlook, as well as weakening baht and falling farm product prices, the university added.

Singapore
The Singapore Institute of Purchasing & Materials Management's Purchasing Managers' index (PMI) stood at 50.8 in November, declined from 51.2 reading in the previous month on weaker production and new orders. The institute's PMI for the electronics sector, however, rose to 51.2 in November from 51.0 in October.
 

Regional Market Focus

Singapore

• The Straits Times Index (STI) ended 1.09 points lower or -0.03% to 3,187.67, taking the year-to-date performance to +0.65%.
• The FTSE ST Mid Cap Index declined -0.50% while the FTSE ST Small Cap Index gained +0.20%. The top active stocks were SingTel (-0.80%), DBS (unchanged), Noble Group (-0.93%), UOB (+0.19%) and Ezra (+8.99%).
• STI has been drifting sideways over the past 2 months due to a lack of catalysts.
• We peg near term support at the 3150 level.
• Top Picks are DBS (Accumulate, TP: $17.50), Singtel (Accumulate, TP:$4.06) and Keppel Corp (Accumulate, TP:$12.07). Deep Value Plays are Amara (Buy, TP $0.74), and Boustead (Buy, TP: $2.05)

Thailand

• Thai stocks gained on Tue as no violence occurred after the Metropolitan Police Bureau (MPB) stopped its resistance against anti-government protesters attempting to breach barricade, allowing them to easily occupy the MPB but gains were later pared as protest leader Suthep Thaugsuban vowed to continue the protests to topple the Thaksin regime.
• The Dow industrials extended losses for the third consecutive day on Tue amid mixed economic data with VIX Index, Wall Street’s fear gauge up 2%, reflecting a rise in investor anxiety ahead of the US FOMC’s Dec 17-18 policy meeting.
• In Thailand, the market’s focus will remain on domestic political situation though month-long political confrontation has come to a pause as the nation prepares for HM the King’s birthday celebration despite failure to reach compromise between anti-government protesters and the government. Today attention will also turn to the Constitutional Court’s decision whether to accept the Bt2trn infrastructure loan bill petition. If the court accepts the petition, the projects will be further delayed.
• In the midst of protest truce in the run-up to HM the King’s birthday and growing external worries with focus shifting to key economic data, we believe Thai stocks will likely remain choppy in a tight range of 1360-1400 points.
• Today we peg resistance for the SET index at 1400-1420 points and support at 1375-1360 points.

• Most Indonesian stocks declined Tuesday (03/12), amid lower closes in Asia following negative lead from the US markets, and as the Rupiah erased gains from a day earlier. The Jakarta Composite Index (JCI) shed 33.213 points, or 0.77%, to close at 4,288.764. All main stock sectors ended in red on Tuesday. Property, construction and real estate sector performed worst with 1.63%-drop, followed by consumer goods sector with 1.33%-loss, and infrastructure sector with 1.15%-decline. The LQ45 index trimmed 5.665 points, or 0.79%, to 714.084.
• The Rupiah pared Monday’s gain, to trade near 11,900 on Tuesday, after the US dollar strengthened to more than 103 against the Japanese Yen. The Rupiah has appreciated to around 11,600 on Monday, after Statistics Indonesia released the data that showed trade surplus of USD 50 million in October.
• Decliners outpaced gainers 157 to 84 Tuesday on the Indonesia Stock Exchange, where 3.05 billion shares worth IDR 3.25 trillion changed hands on the regular board. Foreign investors’ transactions accumulated to a net sale of IDR 48.51 billion.
• With negative leads from the US markets overnight and downbeat start in Asia today, the Jakarta Composite Index (JCI) looked set for further decline today. The greenback’s weakness, however, may provide support for the Rupiah and Indonesian stocks. We expect the JCI to decline today, with support and resistance at 4,242 and 4,344, respectively.

• The market reached its intraday peak at 5,805.07 gaining 31 points (0.54%) during the early hours, but towards the latter part of trading day the trend reversed putting the indices into the red space once again, which was mainly due to the selling pressure and the slothful participation of the investors. The benchmark ASPI posted a tiny drop of 0.98 points (-0.02%) to close negative at 5,773.12. The S&P SL20 settled the day at 3,160.94, losing 4.94 points or 0.16%. With regard to the movement in share prices, 77 companies gained whereas 91 companies recorded dips in share price.  The turnover for the day amounted to LKR 960.77Mn, charting a gain of 15.05% compared to the previous trading day; But, nearly 60.00% of this was accounted by the three prime contributors for the day. During the day a total of 156.31Mn shares changed hands resulting in a gain of 72.25% against the previous day. Under the sectorial wrap-up, Bank Finance & Insurance (BFI) sector stood on top providing LKR 584.78Mn and Diversified Holdings (DIV) sector emerged second contributing LKR 165.53Mn. Notably, the two sectors BFI & DIV collectively accounted to nearly 80.00% of the daily aggregated turnover. The total market capitalization as at the day’s end stood at LKR 2.40Tn, charting a year to date gain of 10.81%. The market PER & PBV were 14.97x and 1.96x respectively. Foreign participants appeared to be bearish for the 2nd consecutive trading day, resulting in net foreign outflow of LKR 105.30Mn, reducing the year to date net foreign inflow to LKR 22.44Bn. Foreign sales for the day amounted to LKR 213.97Mn and buying were recorded as LKR 108.67Mn. With regard to the local FOREX, the USD is selling at LKR 132.87/- and bought at LKR 129.44/-.

• HSI lost 128 points or 0.53% to 23,910. CEI declined 99 points or 0.86% to 11,448. Trading volume was HKD59.025 billion.
• For the macro-economic front, China’s non-manufacturing PMI fell to 56 in Nov, from 56.3 in the month before but still indicated expansion. 
• Nuclear power related stocks out-performed on Premier promoting nuclear power co-operation. DongFang Elec (1072.HK) and SH Electric (2727.HK) surged 11% and 9.1% respectively.
• China banking sector under-performed on smaller PboC’s reverse repo scale, Bank of China (3988) and Minsheng Bank (1988.HK) dropped 1.3% and 1.8% respectively.
• China Cement sector was firmer on increasing cement prices. Shanshui Cement (691.HK), CNBM (3323.HK) and Chinares Cement (1313.HK) gained 5.6%, 1.6% and 2% respectively.
• Hutchison (13.HK) gained 2.4% to HK$102.3, reaching the highest since 2001.
• Macau  gambling stocks out-performed with Macau Legend (1680.HK) and Sand China (1928.HK) up 6% and 2.5% respectivelyl.
• Technically, we remain biased HSI will be bounded between 23,500 and 24,000 in short term. The next resistance and support for HSI are 24,000 and 23,500 respectively.

Morning Note
Company Highlights

Hyflux Ltd (Hyflux) is pleased to announce that its wholly-owned subsidiary, Tuaspring Pte Ltd (Tuaspring), has achieved financial close for the project financing of Tuaspring Desalination Plant. Tuaspring secured the S$720 million 18-year term loan facility to fund the development of the desalination and power plant facilities in September 2013. The project financing is provided by Maybank Singapore and Maybank Kim Eng Securities Pte Ltd, who are the lead arrangers, sole underwriters and bookrunners for the facility. With a capacity of 70 million gallons or 318,500 cubic metres of desalinated water a day, Tuaspring Desalination Plant is currently Asia’s largest seawater reverse osmosis Desalination plant. It is also the first to be integrated with an on-site power generation plant. (Closing price: S$1.19, +1.709%)

Sino Construction Limited wishes to announce that the Company has incorporated wholly-owned subsidiary in Singapore known as SC Building & Construction Pte. Ltd. The issued and paid-up share capital amount is S$100,000.00 comprising 100,000 ordinary shares at an issue price of S$1.00 each. In relation to the Company’s internal restructuring and reorganisation dated 6 November 2013, the Sino Construction intends to re-focus its strategic direction in its core business of construction in the PRC as well as Singapore and other Asia-Pacific regions. The purpose of incorporating SCBC is to carry on the business of design, construction and civil engineering activities and project consultancy and management services in Singapore and other Asean markets. The appointment of the General Manager for SCBC shall be announced later. (Closing price: -, 0%)

Tiong Seng Holdings Limited’s subsidiary, Tiong Seng Contractors (Private) Limited, has secured a S$204,505,000.00 contract from Housing and Development Board (“HDB”) to construct 11 blocks of 14/16-storey residential building together with two blocks of multi-storey carpark, commercial/community facilities, precinct pavilion and an ess at Woodlands Crescent and Woodlands Rise. Building on its track record of public housing projects such as the Punggol Waterway Terraces I & II, Tiong Seng is strengthening its presence in the construction of public housing. Through the development of the Woodlands project, Tiong Seng will be applying its core competency of industry leading precast construction technology1 and continues to adopt the advanced formwork system which could reduce the on-site labour requirement by as much as 30 per cent.  This latest contract win brings our order book currently to S$1.28 billion, which will be delivered progressively till FY2016. (Closing price: S$0.225, 0%)

Global Logistic Properties Limited has signed a lease agreement of approximately 30,000 square metres (323,000 square feet) with Womai.com (“Womai”), the B2C e-commerce platform of COFCO, China’s largest food processing, manufacturing and trading company.  Womai.com, the B2C e-commerce platform of COFCO, will establish a regional distribution center at GLP Park Langfang, serving consumers in Northern and Northeastern China. GLP’s partnership with COFCO now extends to three cities in China, including Greater Guangzhou- Foshan, Langfang and Suzhou. (Closing price: S$2.93, -1.347%)

Source: PhillipCapital Research - 4 Dec 2013