STI:          0.45%    to    3,067.6                       KLCI:          0.71%    to    1,850.9
JCI:          1.37%    to    4,182.4                       SET:            0.66%    to    1,337.2
HSI:         -0.20%    to    23,069.2                    HSCEI:        -0.35%    to    10,894.3
Nifty:       -0.25%    to    6,139.1                      ASX200:      0.27%    to    5,103.2
Nikkei:     0.83%    to    15,278.6                     S&P500:      -0.31%    to    1,781.0

MARKET OUTLOOK:
By Joshua Tan, Head of Research

Macro Data

Singapore
Non-oil domestic exports (NODX) dropped unexpectedly sharp in Novembers due to a drop in shipments of both electronic and non-electronic products. November’s NODX fell 8.8 percent y-o-y after rising 2.8 percent y-o-y in October, said Trade agency International Enterprise Singapore (IE Singapore), missing economists’ median expectation of 4.3 percent y-o-y gain.

Electronic exports extended its downward trend in November, logging a shortfall of 8.9 percent y-o-y after declining 1.4 percent y-o-y in October. Meanwhile, non-electronic shipments skidded 8.8 percent after a 4.9 percent growth the previous month. In the non-electronics sector, pharmaceutical exports tanked 46.9 percent after falling 27.3 percent in the previous month. On a seasonally adjusted monthly terms, exports contracted 9.3 percent after growing 3.2 percent in October.

Hong Kong
Unemployment rate remains stable at 3.3 percent in the three months ended November, the same stance as the reading for August-October period, according to the Census and Statistics Department. The unemployment rate is likely to remain low in the near term as labour market remains tight in the run-up to the year-end holiday season, said Secretary for Labour and Welfare Matthew Cheung.
 

Regional Market Focus

Singapore

• The Straits Times Index (STI) ended 13.80 points higher or +0.45% to 3,067.57, taking the year-to-date performance to -3.14%.
• The FTSE ST Mid Cap Index gained +0.30% while the FTSE ST Small Cap Index gained +0.12%. The top active stocks were DBS (-0.30%), SingTel (+1.40%), UOB (+0.35%), Albedo (unchanged) and OCBC (+0.20%).
• 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 supports at 3025, 3000 and 2930.

Thailand

• Thai stocks gained 0.66% on Tue on bullish external environment as upbeat US manufacturing data allayed economic concerns if the Federal Reserve tapered its QE program.
• Data showed US consumer prices were flat in Nov and came in below market expectations, fueling uncertainty about QE tapering at US FOMC policy meeting tonight as reflected by still-high levels of VIX Index, a favorite Wall Street gauge of investor anxiety, which jumped 1.12% on Tue. In Thailand, political tensions edged up a notch after the anti-government People’s Democratic Reform Committee (PDRC) called another mass rally for this Sun to pressure caretaker PM Yingluck Shinawatra to step down but the impact appears limited as much of the news has already been priced in, in our view.
• The pace of foreign sell-offs slowed from the prior week but uncertainty remained amid nagging headwinds in the near term from domestic political factor and possible QE tapering in the US. Under this circumstance, Thai stocks are expected to remain stuck in a trading range of 1320-1345 points today. For investment strategy, we advise investors to play wait and see until QE clarity emerges. If investors have a high risk tolerance, we recommend buying on dips at support levels to bet on a rebound driven by buying interest from LTF/RMF and year-end ritual of window dressing over the remaining course of the year.
• Today we peg resistance for the SET index at 1340-1360 points and support at 1320-1300 points.

• Indonesian stocks ended mostly higher Tuesday (17/12), as investors sought undervalued stocks following recent plunges, and amidst optimism that the US Federal Reserve would not scale back its stimulus program in December.
• The Jakarta Composite Index (JCI) surged 56.390 points, or 1.37%, to finish at 4,182.346. Shares in basic industry sector led gains that included all nine major industry groups, with the sector index gained 2.81%, trailed by finance sector that rose 2.45%, and consumer goods sector climbed 1.48%. LQ45 – the index that tracks Indonesia’s blue-chip shares – added 12.674 points, or 1.86%, to close at 693.652.
• Gainers outpaced decliners 175 to 80 Tuesday on the Indonesia Stock Exchange, where 3.7 billion shares worth IDR 3.74 trillion changed hands on the regular market. Foreign investors accumulated net sale of IDR 129.07 billion.
• The Jakarta Composite Index may continue to rise today, but with limited gains, as global markets provided modest leads, and with investors begin to focus on the US Federal Reserve’s meeting announcement. We expect the JCI to edge up today, with support and resistance at 4,127 and 4,224, respectively.

• The Colombo bourse ended the trading day on a positive note, resulting in the indices to close within the green terrain.  The benchmark ASPI gained 16.22 points (0.28%) to close the day at 5,811.88 and the S&P SL20 index settled at 3,193.87 charting a gain of 8.20 points or 0.26%.
• A total of 81 companies gained during the day whereas 79 companies posted drops in share prices. The total market capitalization as at the day’s closure moved up to LKR 2.42Tn, extending the year to date gain to 11.55%. The market PER and PBV were 14.87x & 1.96x respectively.
• A series of off-market blocks totalling up to LKR 879.81Mn outpaced the on-board activity which amounted to LKR 393.63Mn, whilst accounting a share of nearly 70.00% of the daily aggregated turnover which amounted to LKR 1.27Bn; the turnover noted a momentous gain of 207.10% against the previous trading day. Shares totalling up to 15.53Mn changed hands during the day resulting in a drop of 11.84% compared to the previous trading day.
• Under the sectorial round-up, Diversified Holdings (DIV) sector topped the list providing LKR 1.02Bn and Bank Finance & Insurance (BFI) sector stood next in line providing LKR 206.21Mn to the daily aggregate turnover; the two sectors collectively accounted to 97.00% of the day’s total turnover.  Foreign participants opened the first trading day of the week on bearish note, resulting in a net foreign outflow of LKR 617.71Mn. This was resulted by foreign selling of LKR 1.10Bn and buying of LKR 483.65Mn. This dragged the year to date net foreign inflow (LKR 22.53Bn) below the LKR 23.00Bn mark once again. Looking at the local FOREX markets, the USD is currently selling at LKR 132.40/-.

• The Australian share market on Tuesday managed a slight gain as defensive stocks performed well after the release of the federal government's budget update. The benchmark S&P/ASX200 index rose 13.6 points, or 0.27 per cent, to 5,103.2.
• Today (18/12/13), the Australian market looks set to follow Wall Street's lead and open flat as investors wait for the outcome of the Federal Reserve's policy meeting. The Federal Open Market Committee is expected to announce the tapering of the Fed's $US85 billion-a-month stimulus program when its two-day meeting concludes on Thursday (Australian time).
• Locally, in economic news on Wednesday, Reserve Bank of Australia governor Glenn Stevens is scheduled to appear before the House Economics Committee. The Westpac-Melbourne Institute Leading Indexes of Economic Activity is due out.
• In equities news, Orora Ltd lists in the ASX while ANZ and Ten Network have annual general meetings scheduled.

• HSI slipped 45 points or 0.2% to 23,069. CEI lost 37 points or 0.35% to 10,894. Trading volume was HKD57.363 billion.
• HK market was firmer in the morning, tracking the strong overnight US market, but turned to loss in afternoon, dragged down by Tencent (700.HK) and Cheung Kong (1.HK). The annual Central Economic Work Conference ended without giving economic growth target and the weak HSBC PMI are believed to affect the sentiment negatively.
• Haier Elec (1169) and Hisense Kelon (921.HK) declined 1.1% and 8.7% respectively, led declines for consumer-discretionary stocks.
• Environmental stocks under-performed with New Env Energy (3989.HK), Tianjin Capital (1065.HK) and CTEG (1363.HK) down 9.2%, 4.6% and 4.1% respectively.
• China Banking sector led indexes down as SHIBOR surged, Bankcomm (3328.HK) and CCB (939.HK) slipped 0.55% and 0.5% respectively.
• Great Wall Tech (74.HK) surged 33.9% as parent company proposed privatization with nearly 43% premium price.
• Technically, we expect HSI is vulnerable to short-term correction. The next resistance and support for HSI are 23,298 and 22,800 respectively.

Morning Note
Company Highlights

Keppel Corporation announced that its subsidiaries have secured five contracts worth about S$150 million in total. Work on the Armada C7 project has commenced and is scheduled to complete in 3Q 2014. With the latest contracts, Keppel O&M has secured almost S$7 billion in new orders year-to-date. (Closing Price: S$10.810, +1.789%)

LionGold Corp announced an updated Mineral Resource estimate at its Ballarat Gold Mine, which is reported in accordance with the JORC Code 2012 and is based on ongoing diamond drilling at the mine and a review of the geological controls to gold mineralisation. The updated Mineral Resource, classified as an Inferred Mineral Resource, totals 411,000 tonnes at a grade of 8.5 grammes per tonne gold (g/t Au) for 112,200 troy ounces contained gold when reported at a zero cut-off grade. The previously released Ballarat resource estimate was 263,000 t at 8.5 g/t Au for 71,700 oz Au reported in July 2012.This update represents an increase of 55% in gold ounces despite ongoing mining since July 2012. (Closing Price: S$0.173, +0.581%)

Source: PhillipCapital Research - 18 Dec 2013