STI:         +0.79%    to    3,094.5           KLCI:         -0.44%    to    1,838.0
JCI:          -0.86%    to    4,195.6           SET:           -0.29%    to    1,342.7
HSI:         -0.33%    to    22,812.2         HSCEI:      -1.39%    to    10,628.5
Nifty:       +1.74%    to    6,274.3          ASX200:    +1.21%    to    5,265.2
Nikkei:    +0.07%    to    15,870.4        S&P500:    +0.48%    to    1,818.3

MARKET OUTLOOK:
By Joshua Tan, Head of Research

Macro Data

Hong Kong
Current account recorded a surplus of HKD33.5 billion (6.1% of GDP) in the third quarter of 2013, compared to a surplus of HKD25.0 billion (4.8% to GDP) in the same quarter last year, according to the Census and Statistics Department (C&SD). The increase in the current account surplus was due to an increase in the invisible trade surplus and a slight decrease in the net outflow of secondary income, partly offset by an increase in the visible trade deficit and a decrease in the net inflow of primary income, it said.
 

Regional Market Focus

Singapore

• The Straits Times Index (STI) ended 24.25 points higher or +0.79% to 3,094.48, taking the year-to-date performance to -2.29%.
• The FTSE ST Mid Cap Index gained +0.51% while the FTSE ST Small Cap Index gained +0.48%. The top active stocks were DBS (+1.03%), Keppel Corporation (+1.12%), SingTel (+1.42%), Keppel Land (+0.61%) and Global Logistic Properties (-0.35%).
• 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. The US market strength also increases the odds of this Santa Claus rally as mentioned in our Monday Webinars.
• We expect a possible short term cycle up. However, if price breaks below 3025, it may signal a shift in investor psychology in the longer term.
• Immediate supports at 3000 and 2930.

Thailand

• Thai stocks traded in the red last Fri on lingering political worries as the anti-government People’s Democratic Reform Committee (PDRC) planned a mass rally on Dec 22 to oust caretaker PM Yingluck Shinawatra. Losses were pared by some bargain buying in late trading before the composite SET index ended the session down a mere 0.29%.
• In our view, the SET index is likely to remain in a choppy downtrend today though a strong lead from US markets would lift sentiment in Asia. The Dow industrials rose to a record closing high after data showed the US economy grew at an annual rate of 4.1% in the third quarter, the fastest pace in almost two years. 
• Despite bullish overseas cues, negative domestic factors would continue to weigh on Thai stocks after the opposition Democrat Party unanimously voted to boycott the Feb 2 elections while the Election Commission (EC) said no setbacks would hinder election candidacy registration on the party list which would run from Dec 23-27. Political woes would continue to drag on amid uncertainty whether the elections will go ahead on Feb 2 and continued anti-government protests of the People’s Democratic Reform Committee (PDRC). Foreign selling spree also continued unabated in the Thai stock market. Today we expect a trading range of 1320-1360 points for the SET index. 
• We peg resistance for the SET index at 1360-1380 points and support at 1325-1300 points today.

• Most Indonesian stocks declined Friday (20/12), amid mixed performance in Asia, as investors digested the Fed’s decision to cut back its stimulus size by January next year. The Jakarta Composite Index (JCI) slipped 36.424 points, or 0.86%, to close at 4,195.556. Seven of the nine major industry sectors finished in red on Friday, with mining sector fared worst, and agriculture sector performed best. The LQ45 index that measures Indonesia’s blue-chip stock slid 7.223 points, or 1.02%, to 698.220.
• Indonesian Rupiah was little changed Friday, hovering around 12,200 after the US Federal Reserve decided to roll back its bond buying on Wednesday (18/12). Shares in mining sector were hit the hardest, as raw mineral export ban loomed. The Indonesian government is set to impose the mining law on January 12th next year, which will prohibit shipments of raw minerals from the country.
• Decliners outran gainers 169 to 78 Friday on the Indonesia Stock Exchange, where 2.66 billion shares worth IDR 3.39 trillion traded on the regular board. Foreign investors’ transactions netted in a total purchase of IDR 2.94 billion.
• The Jakarta Composite Index (JCI) will likely advance today, on expectations that improvement in global economy will help increase demand for exports, after the US reported a stronger-than-expected growth in the third quarter. We peg the near-term range for the JCI at 4,153 – 4,252.

• The Colombo bourse ended the trading day of Friday on a mixed note, resulting in the indices to close on either side. The benchmark ASPI dropped by 9.64 points (0.16%) to close the day at 5,857.36. However the S&P SL20 index settled within the positive terrain at 3,228.17 charting a gain of 3.71 points or 0.12%. A total of 88 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 2.44Tn, recording a year to date gain of 12.42%. The market PER and PBV were 14.99x & 1.97x respectively. The on-board activity which totaled up to LKR 858.80Mn outpaced the crossings which amounted to LKR 199.58Mn, while accounting a share of nearly 20.00% of the daily turnover. Further, the aggregate turnover for the day amounting to 1.06Bn indicated a rise of 86.54% against its previously recorded. Shares totaling up to 26.61Mn changed hands during the day resulting in a gain of 7.48% compared to the previous trading day. Under the sectorial round-up, Diversified Holdings (DIV) sector topped the list providing LKR 587.63Mn and Bank Finance & Insurance (BFI) sector stood next in line providing LKR 225.33Mn to the daily aggregate turnover; the two sectors collectively accounted to more than 75.00% of the day’s total turnover.  Foreign participants appeared to be bearish for the second consecutive day, resulting in a net foreign outflow of LKR 300.40Mn. This was resulted by foreign selling of LKR 495.72Mn and buying of LKR 195.32Mn. The year to date net foreign inflow currently stands at LKR 22.28Bn.

• Australian market rose by 63 points to close 1.21% higher, as the US Federal Reserve’s decision to scale back its bond buying program to $75 billion purchases a month drove a bank rally. Telstra, a component stock, also gained 1.76% on the back of $2 billion stake sale of its HK mobile business CSL.

• HSI lost 76 points or 0.33% to 22,812. CEI dropped 149 points or 1.39% to 10,628. Trading volume was HKD75.972 billion.
• HK market was weak last Friday on surge of China’s money-market rates. The 7-day repurchase rate, a gauge of liquidity in financial system, rose more than 100 basis points. SHCOMP and CSI300 slid 2% and 2.3% respectively.
• HKT-SS (6823.HK) surged 12.5% after it agreed to acquire entire issued share capital of CSL from Telstra and NWD (17.HK). Other HK Telecom operators also out-performed with Smartone Tele(315.HK) and Hutchitel HK (215.HK) up 18.6% and 11% respectively.
• Macau gambling stocks under-performed. Galaxy Ent (27.HK), Wynn Macau (1128.HK) and Macau Legend (1680.HK) lost 2.7%, 2.7% and 5.7% respectively.
• China insurers dragged down indexes. Ping An (2318.HK), the worst performed blue chip last week, dropped 4.6%. China Life (2628.HK) and PICC P&C declined 2.7% and 3.6% respectively.
• Kingdee Int’l (268.HK) surged 15.9% after announced co-operation with Alibaba.
• Technically, 14-RSI dropped to 34.3, we expect HSI to have a technical rebound in near-term. The next resistance and support for HSI are 23,292 and 22,463 respectively.

Morning Note
Company Highlights

Broadway Industrial Group Limited announced that its 96.47% owned subsidiary, Shanghai Broadway Packaging & Insulation Materials Co. Ltd. (“SHBW”), has entered into a JV with KAEFER Service- und Wartungs-GmbH, to incorporate KAEFER Broadway Insulation Systems (Shanghai) Co., Ltd. Total capital commitment is by SHBW is €759,500(49% stake), 15% of which is injected within 3 months of incorporation of the JV and remaining 85% within 2 years. Investment is funded by internal resources. Under the terms of the Agreement, the JV will enter into a hire purchase agreement with SHBW pursuant to which it will acquire SHBW’s assets and machinery relating to its industrial insulation business for a consideration of approximately €1.9 million which will be paid in cash over 2 years. (Closing Price: $0.230, +4.454%)

SP Ausnet announced that a foreign investment application has been conditionally approved where 19.9% is proposed to be acquired by State Grid Corporation of China. (Closing Price: $1.365, +2.632%).

Hisaka Holdings Ltd announced that that the Company has entered into a conditional sale and purchase agreement with Mr Su Chung Jye, Mr Wong Pak Kiong and Mr Low Yew Shen and Temasek Regal Capital Sdn Bhd for the proposed acquisition by the Company of the entirety of issued and paid up share of Regal International Holdings Pte. Ltd for a consideration of S$127,250,000 of which S$20M is in cash and remainder by allotment and issuance of consideration shares at an issue price. (Closing Price: $0.210, +7.692%).

CapitalMalls Asia Limited announced that through its wholly-owned subsidiary, CMA Singapore Investments Pte Ltd has entered into a JV (49% stake) with Jewel Changi Airport Holding Pte Ltd to jointly develop a mixed-use development at Singapore Changi Airport to be built on the approximately 3.5 hectare car park site fronting Terrminal 1 of the airport. (Closing Price: $1.905, +0.263%).

Swissco Holdings Limited announced that it secured 3 charter contract worth an aggregate of S$15.2 million for its vessels. (Closing Price: $0.375, +0%).

Sino Construction Limited announced that it has received a letter of intent from Golden Wave Sdn Bhd that it intends to award Sino Construction Limited the building and construction main contract works contract for the proposed mixed commercial development cum bus terminal on land vested with Dewan Bandaraya Kota Kinabalu (Kota Kinabalu City Hall) in Kota Kinabalu, Sabah, Malaysia. The Project is for the development of a central public transport hub in the heart of Kota Kinabalu City with public amenities such as carparks and stalls. The development will comprise of a 9-storey building with 480 carpark lots, food court, rooftop garden and a multi-purpose hall. The total built-up area of the Project will be 38,144.6 sqm The total estimated contract sum for the Contract is Malaysia Ringgit (RM) 40 million (excluding the M&E components and landscape). (Closing Price: $0.080, +29.032%).

Source: PhilipCapital Research - 23 Dec 2013