STI:      -1.15%   to 3,124.38            KLCI:       +0.16%  to 1,824.86
JCI:      -0.58%   to 4,216.90           SET:           -0.52%  to 1,376.63
HSI:      -0.07%   to 23,712.57         HSCEI:     +0.24%  to 11,395.74
Nifty:    +1.30%   to 6,241.10           ASX200:    -1.44%  to 5,197.96
Nikkei:   -1.50%   to 15,177.49        S&P500:    -0.43%  to 1,785.03

MARKET OUTLOOK:
By Joshua Tan, Head of Research

Macro Data

USA
Jobless claims decreased 23,000 to 298,000 in the week ended Nov. 30, the Labor Department said today in Washington. The median forecast of 41 economists surveyed by Bloomberg called for an increase to 320,000 from an initially reported 316,000 the prior week. The reading was the lowest since the first week in September when the Labor Day holiday also played havoc with the figures.

Eurozone
European Central Bank President Mario Draghi said officials cut their inflation forecast for next year, and signaled that the ECB will keep interest rates low for the foreseeable future.
 

Regional Market Focus

Singapore

• The Straits Times Index (STI) ended 36.32 points lower or -1.18% to 3,124.38, taking the year-to-date performance to -1.35%.
• The FTSE ST Mid Cap Index declined -0.93% while the FTSE ST Small Cap Index gained -0.54%. The top active stocks were SingTel (-1.08%), DBS (-0.59%), CapitaLand (-0.66%), UOB (-0.38%) and OCBC (-1.27%).
• 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 succumbed to selling pressure in late trading on Wed with the SET index finishing the session down 0.52% at 1,376.63 points after seesawing between positive and negative territory throughout the day. Net foreign sell-off of Thai shares topped Bt28bn on Wed.
• QE uncertainty sent the Dow industrials lower as the latest batch of better-than-expected economic data fueled fears of an earlier-than-expected QE tapering. Today global markets would turn attention to US non-farm payrolls data, a factor that could keep equities on a wild ride for the meantime.
• In Thailand, the market’s focus would remain on anti-government demonstrations after Suthep Thaugsuban, secretary-general of the People’s Democratic Reform Committee (PDRC) said protests would continue until the political machine of former PM Thaksin Shinawatra is wiped out. There are no signs of negotiation breakthrough yet in sight. Prolonged protests would undermine the country’s economic fundamentals.
• In the absence of catalysts to trigger a strong rebound, the room for upside appears limited for Thai stocks. Given that buying interest from LTF/RMF before the end of the year should lend support to the market, we think any dips would create an opportunity to accumulate stocks with initial support seen at 1360-1350 points.
• Resistance for the SET index is seen at 1385-1395 points and support at 1360-1345 points today.

• Indonesia stocks extended losses Thursday (05/12), as investors weighed the outlook for the Federal Reserve to begin paring its stimulus program following a series of US economic reports. The Rupiah - poised around 11,960 – has also hinted grim outlook for dollar-denominated corporate debts this year.
• The Jakarta Composite Index (JCI) shed 24.408 points, or 0.58%, to end at 4,216.894. Supports came from commodity sectors, where index of agriculture stocks gained 0.76%, and mining shares climbed 0.70%, amid hopes that rebound in commodity prices next year will contribute to earnings. On the downside, miscellaneous industry sector dropped 1.51%, finance sector slipped 1.22% and construction sector lost 1.14%. The LQ45 index trimmed 4.829 points, or 0.69%, to close at 698.947 with 23 of its 45 blue-chip components ended in red.
• Moody’s Investors Service warned Indonesian government over risk from mounting private debt, which could make the country more susceptible to external financial shocks. The rating agency however, said weakening Rupiah is not a threat to Indonesia’s investment grade status, citing resilient growth and low debt burden. Decliners outran gainers 160 to 73 Thursday on the Indonesia Stock Exchange, where 3 billion shares worth IDR 3.61 trillion changed hands on the regular board. Foreign investors’ stock trades accumulated to a net sale of 546.53 billion.
• As investors are likely step back ahead of the broadly watched US jobs data later in the day, we expect the Jakarta Composite Index (JCI) to remain in negative territory today. The benchmark index of Indonesian stocks is likely to trade lower today, with support and resistance at 4,160 and 4,270, respectively.

• The Colombo bourse ended the trading day on a negative note, resulting in the indices to re-enter the re terrain once again.  The benchmark ASPI dropped by a minute 2.34 points (0.04%) to close the day at 5,780.58 and the S&P SL20 index settled at 3,161.62 charting a loss of 3.43 points or 0.11%. A total of 79 companies gained during the day whereas 76 companies posted drops in share prices. The total market capitalization as at the day’s closure stood at LKR 2.41Tn, with a year to date gain of 10.95%. The market PER and PBV were 14.93x & 1.95x respectively. A series of off-market deals totaling up to LKR 1.05Bn outpaced the on-board activity which amounted to LKR 272.54Mn, whilst accounting a share of nearly 80.00% of the daily aggregated turnover which amounted to LKR 1.32Bn; the turnover noted a gain of 66.34% against the previous trading day.  Under the sectorial round-up, Bank Finance & Insurance (BFI) sector topped the list providing LKR 808.30Mn and Manufacturing (MFG) sector stood next in line providing LKR 232.54Mn to the daily aggregate turnover.  A total of 116.35Mn shares changed hands during the day resulting in a gain of 63.68% compared to the previous trading day. Foreign participants appeared to be bullish for the second consecutive trading day resulting in a net foreign inflow of LKR 292.12Mn, resulted by foreign buying of LKR 607.22Mn and selling of LKR 315.09Mn. This assisted the year to date net foreign inflow to reach LKR 22.79Bn. Looking at the local FOREX markets, the USD is selling at 132.43/- and is bought at LKR 129.27/-.

• The Australian share market on Thursday fell heavily in afternoon trade after starting the day flat. Business news was marked by the dramatic descent of national airline Qantas, which flagged a big financial loss and widespread job cuts. The benchmark S&P/ASX200 index was 70.6 points, or 1.34 per cent, at 5,196.9 points.
• Today (06/12/13), the Australian market looks set to open lower following falls on international markets after data showed that the US economy was growing at a speedy 3.6 per cent.
• In economic news on Friday, the Australian Industry Group/Housing Industry Association performance of construction index (PCI) for month just ended is due to be released.
• In equities news, Nine Entertainment (NEC) makes its debut on the ASX while Washington H Soul Pattinson has its annual general meeting.

• HSI lost 16 points to 23,712. CEI climbed 26 points to 11,395. Trading volume was HKD59.624 billion.
• HK market recorded 3 losing streak on weakness in US markets.
• HK banks led declines, SCB (2888.HK) and HSBC (5.HK) dropped 4.7% and 1.4% respectively.
• Telecom equipment sector out-performed on 4G licenses released. Trigiant (1300.HK) and SIM Tech (2000.HK) climbed 4.7% and 7.5% respectively.
• Telecom operators had little changed after 4G licenses announcement. China Mobile (941.HK) climbed 0.5%, China Unicom (762.HK) dropped 1.2% and China Telecom (728.HK) rose 0.2%.
• Macau gambling stocks out-performed, particularly the second-tier. Macau Legend (1680.HK), Melcolot (8198.HK) and Amax Int Hold (959.HK) surged 15.6%, 10.4% and 22.9% respectively.
• Technically, HSI failed to sustain at 10-MA level of 23,793. The next resistance and support for HSI are 24,000 and 23,500 respectively.

Morning Note
Company Highlights

Rex International Holding is pleased to announce that its 65 per cent indirectly owned jointly controlled entity, Lime Petroleum Norway (Lime), has on 3 December 2013, signed an additional agreement with North Energy ASA to acquire a 20 per cent stake in a new licence in Norway, PL509. The transfer of the 20 per cent stake is pending regulatory approval. PL509 contains oil prospects in areas totalling some 977 square kilometres which are located in the North Sea. The licence holders will make a decision whether to drill an exploration well in the licence by mid-2014. LIME is anticipated to be able to grow its portfolio up to 15 licences in 2014. On 18 September 2013, Rex International Holding announced that it was acquiring 10 per cent stakes in two exploratory licences - PL707 and PL708 - from North Energy, through Lime. Following regulatory approval, the transfer of stakes in PL707 and PL708 was effected on 29 November 2013. With the acquisition of a stake in PL509, Rex International Holding’s portfolio of licences in Norway will increase to seven, up from the initial four at its initial public offering on 31 July 2013. Rex International Holding has since its IPO four months ago, grown its portfolio from 10 licences to 16, extending also its geographical footprint from Norway, the Middle East and the USA to include Trinidad & Tobago. (Closing price: S$0.605, -2.42%)

F J Benjamin’s brand, Raoul which is Singapore’s best-known international fashion label, has inked yet another franchise deal, this time in the vibrant Middle East market with the Chalhoub Group, the leading partner for luxury across the Middle East.  The franchise agreement, signed with CGR FZE, part of the Chalhoub Group, in November 2013 will see 9 standalone Raoul stores open by 2017, the first two in the United Arab Emirates and Bahrain next year.  The latest franchise, the third this year, will bring the number of stores in the Raoul‘s franchise network in the Middle East, China and Sri Lanka, to a total of 37 over the next five years. With Chalhoub Group’s access to talent and retail infrastructure built up over five decades, the Group will be able to help F J Benjamin grow the Raoul brand very quickly in one of the top 10 markets globally for luxury goods. (Closing price: S$0.22, -2.22%)

People’s Food Holdings Limited announce that the SGX-ST has approved the application for delisting and wavier of Rule 1307of the Listing Manual in regard to the announcement of voluntary conditional offer by Sac Capital Private Limited for and on behalf of New Oceana Limited on 14 Nov 2013 to acquire all the issued and paid-up ordinary shares in the capital of People’s Food Holdings Limited. New Oceana Limited has become entitled to exercise the Compulsory Acquisition of all the Shares of Shareholders who have not accepted the Offer as at 5.30 p.m. on the Final Closing Date 17 Dec 2013. Upon completion of the Compulsory Acquisition, the Company will be delisted from the Official List of the SGX-ST. The exact date of the delisting of the Company from the Official List of the SGX-ST will be announced in due course. (Closing price: S$1.20, 0%)

Source: PhillipCapital Research - 6 Dec 2013