STI: +0.23% to 3066.0                           KLCI: +0.35% to 1840.4
JCI: -0.89% to 4174.8                            SET: -1.11% to 1341.1
HSI: +0.12% to 23245                            HSCEI: +0.58% to 11025
Nifty: -1.10% to 6168.4                          ASX200: +0.62% to 5094
Nikkei: +0.40% to 15403                        S&P500: -0.01% to 1775.3

MARKET OUTLOOK:
By Joshua Tan, Head of Research

Macro Data

USA:
Wholesale prices in the U.S. declined for a third month in November, reflecting lower costs for energy and cars. The 0.1 percent drop in the producer-price index followed a 0.2 percent decrease the prior month, a Labor Department report showed today in Washington. The median estimate in a Bloomberg survey of 77 economists called for no change. The so-called core measure, which excludes food and energy, rose 0.1 percent.

Eurozone:
Spain’s government bonds advanced, pushing five-year yields to the lowest level since 2005, amid optimism the economic and fiscal outlook for the euro-region’s higher-debt nations is improving. The yield difference between Spanish 10-year bonds and German bunds narrowed to the least in more than two years as investors purchased higher-yielding securities before the end of the year. Italian bonds rose as the government in Rome held a buy-back auction, reducing its financing needs for 2014 and 2015. Germany’s two-year notes posted a second weekly decline as investors weighed the prospects of the Federal Reserve cutting asset purchases as soon as this month.

India:
India’s consumer-price inflation exceeded 11 percent last month, adding pressure on central bank Governor Raghuram Rajan to raise interest rates again next week even as industrial output slid more than expected.
 
Singapore:
Unemployment rate in the third quarter fell to the lowest for year 2013, standing at 1.8 percent, down from the 2.1 percent reading in the previous three months, according to data from the Ministry of Manpower. Commenting on the encouraging latest employment figures, acting Manpower Minister Tan Chuan-Jin said that Singapore is in a good position and that the economy is doing well, however, the economic restructuring towards more productivity-led growth has to continue, which will lead to a degree of structural unemployment.
 
Retail sales skidded 9.4 percent y-o-y in October, weighed by lower motor vehicle sales – motor vehicles logged a 39.6 y-o-y decline. Excluding motor vehicle sales, retail sales was down 0.9 percent. On monthly basis, retail sales fell 3.2 percent, or 0.5 percent lower if excluding motor vehicles.
 

Regional Market Focus

Singapore

• The Straits Times Index (STI) ended 6.98 points higher or +0.23% to 3,066.02, taking the year-to-date performance to -3.19%.
• The FTSE ST Mid Cap Index gained +0.46% while the FTSE ST Small Cap Index gained +0.07%. The top active stocks were SingTel (+0.28%), DBS (-0.24%), UOB (-1.08%), Noble Group (+1.49%) and OCBC (+0.51%).
• STI has been selling over the past week due to a lack of catalysts with recent weakness.
• However, we had pegged near term support at the key technical 3050 level and said the probability of a short term bounce is likely at that level. Price is consolidating at these levels.
• We expect a possible short term cycle up. However, if price breaks below this level, it may signal a shift in investor psychology in the longer term.  
• Top Picks are DBS (Accumulate, TP: $17.50), M1 (Accumulate, TP:$3.55), Boustead (Buy, TP: $2.05) and Keppel Corp (Accumulate, TP:$12.07). Deep Value Plays are Amara (Buy, TP $0.74).

Thailand

• The composite SET index fell sharply to end the session down 1.11% in light turnover last Fri as investors were reluctant to make big bets after continued political chaos outside parliament.
• Global equities markets in the first half of the week will turn focus to the US FOMC’s two-day policy meeting. A Bloomberg survey showed 34% of economists in the poll predicted the Federal Reserve will start tapering its QE program at its Dec 17-18 meeting, a move that could spark foreign fund outflows from Asia.
• In Thailand, political pressure continued to weigh on market sentiment. Even though no violence occurred, there were no signs of a breakthrough in the ongoing political crisis in sight after the anti-government People’s Democratic Reform Committee (PDRC) and Student and People Network for Thailand’s Reform (STR) opposed the general elections on Feb 2, 2014. Lingering political uncertainty was also starting to bite into the economy.
• Foreign selling spree looks set to continue in the Thai stock market on fears of QE tapering in the US and persistent political tensions at home. In view of these uncertainties, Thai stocks are likely to trade in a tight range at the start of the week with support seen at 1330, 1320 points, in our view. Cut loss if the SET index breaks below support. A breakdown below these levels could open up the way for further downside towards 1300-1280 points.
• Today we peg resistance for the SET index at 1350-1360 points and support at 1330-1320 points.

• The Jakarta Composite Index (JCI) extended losses for the third consecutive day on Friday (13/12), as the Rupiah plunged to 12,100 against the US dollar - a level not seen since March 2009 – amid increasing expectations for a looming Fed stimulus reduction. The benchmark index of Indonesian stocks shed 37.388 points, or 0.89%, to end at 4,174.830, with all of its nine major industry sectors finished in red. Shares in miscellaneous industry fared worst with 2.70%-drop, followed by basic industry sector with 1.34%-decline, and consumer goods sector with 0.94%-decrease. The LQ45 index slid 8.728 points, or 1.25%, to 691.513.
• Concerns about the US Federal Reserve would scale back its bond purchase program as early as this month’s meeting weighed on the Rupiah. Recent economic data in the US which indicated overall improvement in the world’s largest economy, as well as smooth budget deal in Washington, helped spur investors’ bets that the Fed could cut back its easy money program in near future.
• Decliners outran gainers 148 to 71 Friday on the Indonesia Stock Exchange, where 2.73 billion shares worth IDR 3.21 trillion traded on the regular board. Foreign investors posted net sale of IDR 341.20 billion.
• The Jakarta Composite Index (JCI) will likely move lower today, as global markets provided little leads, and as investors may take cautions ahead of this week’s FOMC meeting announcement. We expect the JCI to trade lower, with support and resistance at 4,134 and 4,235, respectively.

• The market ended the day on a mixed note, resulting in the indices to close on either side. The benchmark ASPI managed to gain a minute 2.47 points (0.04%) and recorded its 3rd consecutive positive closure at 5,795.66. However, the S&P SL20 index closed within the negative terrain having closed positive for the past two trading days, dropping by 3.77 points
• (0.12%) to close at 3,185.67. The total market capitalization as at the daily closure stood at LKR 2.41Tn, charting a year to date gain of 11.24%. The market PER and PBV were 14.83x & 1.95x respectively. The turnover for the day amounted to record 414.67Mn, recording a gain of 67.40% against the previous trading day. Under the sectorial summary, Bank Finance & Insurance (BFI) sector provided LKR 163.52Mn, dominating the list while accounting to nearly 40.00% of the total turnover. Diversified Holdings (DIV) sector added LKR 140.15Mn. Further on, the two sectors BFI & DIV collectively accounted to nearly 75.00% of the total turnover. The traded volume for the day amounted to 17.62Mn shares, indicating a gain of 12.96% as against its previously recorded. Looking at the movements in share prices, 77 companies lost while 82 companies posted gains. With regard to the foreign figures, a net foreign outflow of LKR 42.41Mn was recorded during the day, being a result of foreign sales of LKR 201.35Mn and purchases which amounted to LKR 158.94Mn. Currently the year to date net foreign inflow stands at LKR 23.15Bn.

• Australian shares finished 0.7 percent higher on Friday, snapping six-session losing streak as investors picked up battered mining and banking stocks.
• The S&P/ASX 200 index rose 35.9 points to finish at 5,098.4, but was still hovering around 3-1/2 month lows. The benchmark had its biggest one-day gain in three weeks, but ended the week 1.7 percent lower, its fourth consecutive week of losses.

• HSI gained 27 points or 0.12% to 23,245. CEI climbed 63 points or 0.58% to 11,025. Trading volume decreased to HKD60.034 billion.
• HK market ended 3 days losing streak, led by Galaxy Ent (27.HK) and China financial sector. HSI and CEI lost 2.1% and 3.1% respectively for last week.
• New energy sector out-performed with JNCEC (579.HK), Huadian Fuxin (816.HK) and Datang Renew (1798.HK) up 4-6.7%.
• Telecom equipment sector out-performed. COMBA (2342.HK) and China Wireless (2369.HK) climbed 5.5% and 3.6% respectively.
• Hengan Int’l (1044.HK), the worst blue chip performer, dropped 4.8%.
• Xinyi Solar (968.HK) announced positive profit alert, surged 24.6% in the second listing day.
• Technically, HSI still failed to retain at 50-MA level, sending a negative signal, we expect HSI is vulnerable to short-term correction. The next resistance and support for HSI are 23,649 and 23,000 respectively.

Morning Note
Company Highlights

Centurion Corporation announced that it has acquired at 7,220 sqm plot of land in Jakarta, Indonesia for the development of worker accommodation. The proposed accommodation is located in the eastern part of Jakarta in Bekasi District, approximately 30km from Central Jakarta. Total consideration paid for the land was approximately S$0.8 million and funded by internal resources. (Closing Price: S$0.530, +0.952%)

IEV Holdings, a provider of integrated engineering solutions (“IES”) and clean energy solutions, today announced that it has received a formal 5-year Gas Sales Agreement (“GSA”) from PT Ultrajaya Milk Industry Tbk (“PT Ultrajaya”) to supply compressed natural gas (“CNG”) to its manufacturing plant in West Java, Indonesia. Pursuant to the GSA, PT Ultrajaya will purchase more than 500,000 million metric British thermal units (“mmbtu”) of CNG, assuming the minimum off-take is eighty-five percent (85%) of the total contracted units of CNG. Barring any unforeseen circumstances, the revenue from this GSA, which is in excess of USD8 million (assuming the minimum off-take and minimum contract price), is expected to contribute to the Group’s financial performance over the 5-year period from October 2013 to September 2018, and hence is expected to have a positive impact on the net tangible assets per share or earnings per share of the Group for the current financial year ending 31 December 2013. (Closing Price: S$0.320, 0%)

F J Benjamin Holdings wishes to announce that the Group and Sowind SA, manufacturer of Girard-Perregaux watches, have agreed that the Group's exclusive distributorship agreements for Girard-Perregaux watches in North Asia and Southeast Asia will not be renewed when they expire on 28th February 2014. The Group has entered into an agreement with Sowind SA for them to repurchase all its remaining inventory of watches and accessories at its landed cost by end February 2014. The value of its inventory at the date of this Announcement amounts to approximately S$30 million. (Closing Price: S$0.215, -2.273%)

Source: PhillipCapital Research - 16 Dec 2013