STI:         -0.40%    to    3,053.8            KLCI:         -0.13%    to    1,837.9
JCI:         -1.17%    to    4,126.0            SET:          -0.95%    to    1,328.4
HSI:         -0.56%    to    23,114.7          HSCEI:     -0.85%    to    10,932.3   
Nifty:       -0.22%    to    6,154.7            ASX200:    -0.17%   to    5,089.6   
Nikkei:    -1.62%    to    15,152.9          S&P500:    0.63%    to    1,786.5   

MARKET OUTLOOK:
By Joshua Tan, Head of Research

Macro Data

China:
Manufacturing activity remains in expansion territory but at a slower pace compared to last month. The preliminary HSBC China Manufacturing Purchasing Managers Index fell to a three-month low at 50.5 in December, from a final reading of 50.8 in November. The preliminary reading remains higher than the third quarter's average level, albeit marginally lower than previous month's final reading, implying that the "recovering trend of the manufacturing sector starting from July still holds up", said HSBC economist Qu Hongbin.

India:
Wholesale Price Index (WPI) inflation surged to 14-month high in November, on back of accelerating food prices hike. Headline inflation jumped to 7.52 percent from October's 7 percent in October, increasing the odds that the Reserve Bank of India will hike policy rate at its upcoming monetary policy review on Wednesday.

Eurozone:
An index based on a survey of purchasing managers in the manufacturing industry increased to 52.7, a 31-month high, from 51.6 in November, London-based Markit Economics said in a statement today. That’s above the estimate of 51.9 in a Bloomberg News survey of 35 economists. In China, manufacturing output unexpectedly fell to a three-month low, a separate report showed.
 

Regional Market Focus

Singapore

• The Straits Times Index (STI) ended 12.25 points lower or -0.40% to 3,053.77, taking the year-to-date performance to -3.58%.
• The FTSE ST Mid Cap Index declined -0.32% while the FTSE ST Small Cap Index declined -0.12%. The top active stocks were SingTel (-0.28%), DBS (+0.12%), UOB (-0.89%), Keppel Corporation (-1.30%) and OCBC (-0.41%).
• 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 presently 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.
• Immediate support at 3000 and 2930.

Thailand

• Thai stocks traded in the red throughout the session on Mon as domestic political uncertainty remained a cause of concern for investors and drove down trading turnover. The composite SET index finished the session down 0.95% at 1,328.4 points.
• The market’s focus will turn to the US Federal Reserve’s two-day policy meeting, which begins today and ends tomorrow. If QE tapering becomes a reality, it may put pressure on foreign fund flows in the near term. However, we believe the impact may be limited after a recent streak of foreign portfolio rebalancing in the Thai stock market.    
• In Thailand, the same old negative headlines continued to weigh on market sentiment. The economy started to feel the pinch of prolonged political turmoil after tourism industry took a hit as evidenced by data from AOT and a number of research houses embarked on another round of GDP downgrades.
• In our view, the outcome of the Federal Reserve policy meeting and local politics remain key to determining the downside for the Thai stock market with support seen at 1320-1300 points. There is still room for selective trading opportunities as long as the SET index holds above support levels but equity exposure should be limited to 25% of the short-term trading portfolio. In the near term, cut loss if the main index breaks below 1300 points as it could pave the way for further downside near the previous low of 1280-1260 points.
• Resistance for the SET index is expected at 1340-1360 points and support at 1320-1300 points today.

• The Jakarta Composite Index (JCI) finished in negative territory Monday (16/12), as investors weighed the possibility of the US Federal Reserve rolling back its bond purchase program at its meeting this week.
• The benchmark index of Indonesian stocks declined 48.874 points, or 1.17%, to 4,125.956. All main stock sectors finished in red on Monday, with agriculture sector dropped 2.94%, basic industry sector lost 1.95%, and finance sector fell 1.76%. The LQ45 index slid 10.535 points, or 1.52%, to 680.978.
• 184 shares fell as compared to 66 that advanced Monday on the Indonesia Stock Exchange, where 3.45 billion shares worth IDR 3.04 trillion changed hands on the regular board. Foreign investors’ transactions accumulated to a total net sale of IDR 232.08 billion.
• Indonesian stocks looked set for a rebound today, after recent plunges that may prompt undervalued-stocks buying, and as global equity market sentiment improved on US economic data and speculations that the Fed may not taper its bond purchase program on December’s meeting. We expect the JCI to advance today, with support and resistance at 4,081 and 4,183, respectively.

• The Australian share market on Monday closed lower ahead of the US Federal Reserve's last meeting for 2013.   The benchmark S&P/ASX200 index was down 8.8 points, or 0.17 per cent, at 5,089.6 points.
• Today (17/12/13), the Australian market looks set to open higher following gains on international markets ahead of this week's US Federal Reserve policy meeting.
• In economic news on Tuesday, the Federal government is due to release the Mid-Year Economic and Fiscal Outlook (MYEFO), the Reserve Bank of Australia (RBA) is slated to release the minutes of its December board meeting, and RBA assistant governor (financial markets) Guy Debelle will be a panel discussant at the 26th Australasian Finance and Banking Conference. The Australian Bureau of Statistics (ABS) releases November motor vehicle sales figures and international merchandise imports data also for November. Meanwhile, the Australasian Finance and Banking Conference is on in Sydney.
• In equities news, Packaging company Pact Group Holdings lists on the ASX.

• HSI dropped 131 points or 0.56% to 23,114. CEI declined 93 points or 0.85% to 10,932. Trading volume remained low at HKD54.668 billion.
• As we said yesterday, HK market is vulnerable to further consolidation. HSI was weaker, led by China financial sector.
• China financial sector led indexes down, Ping An (2318.HK), PICC P&C (2328.HK) and ICBC (1398.HK) climbed 2.2%, 2.8% and 1.7% respectively.
• China pharmaceutical stocks out-performed. Fosun Pharma (2196.HK) and Weigao Group (1066.HK) gained 4.4% and 3.7% respectively.
• Galaxy Entertainment (27.HK) climbed 3.6%, reaching record high again.
• Power Assets (6.HK) gained 1.2% after announced spin-off of its HK electricity arm.
• Lai Sun Int’l (191.HK) dropped 13.7% after announced new shares issuance.
• Technically, we expect HSI is vulnerable to short-term correction. The next resistance and support for HSI are 23,296 and 23,000 respectively.

Morning Note
Company Highlights

Loyz Energy is pleased to announce that Schlak #3 well in North Dakota, USA, drilled in collaboration with Fram Exploration ASA and Rex Oil & Gas, will be the first well to be put on production, following an oil discovery. The onshore well has now reached a stable early production rate of approximately 50-60 barrels of oil per day. (Closing Price: S$0.330, +4.762%)

Raffles Medical Group announced that it will be buying a property for S$54.8 million. The 1,942.3 square metres property is located at the junction of Taman Warna and Holland Avenue, and is adjacent to the Holland Village MRT station. The company intends to redevelop the property into a 5-storey commercial building with five above-ground levels, one basement level, and two levels of basement car parks. (Closing Price: S$3.04, +1.618%)

Global Logistic Properties has signed a pre-lease agreement with Qingdao Haier Logistics for 35,000 square meters at GLP Park Liantang in Shanghai, Eastern China. Haier Logistics will use the facilities as its Eastern China regional distribution center to meet rising demand for logistics services from both traditional retail and e-commerce customers. This pre-lease agreement marks the continuation of a strategic partnership between GLP and Haier Logistics. Since the partnership was announced in September 2012, it is the second lease agreement between the two companies. (Closing Price: S$2.870, -1.375%)

Source: PhillipCapital Research - 17 Dec 2013