STI:          +0.70%     to     3,116.2           KLCI:             -0.28%     to     1,832.9
JCI:           -0.14%     to     4,189.6           SET:               -1.23%     to     1,326.1
HSI:          +0.48%     to     22,921.6         HSCEI:         +0.18%     to     10,647.4
Nifty:        +0.16%     to     6,284.5            ASX200:       +0.51%     to     5,292.0
Nikkei:     +0.07%     to     15,870.4         S&P500:       +0.53%     to     1,827.9

MARKET OUTLOOK:
By Joshua Tan, Head of Research

Macro Data

USA:
Household purchases, which account for almost 70 percent of the economy, rose 0.5 percent after a 0.4 percent gain in October that was larger than previously estimated, the Commerce Department reported today in Washington. The median forecast of 76 economists in a Bloomberg survey called for a 0.5 percent rise. Incomes climbed less than forecast, reflecting a slump in earnings by farmers.

Consumer confidence in the U.S. rose to a five-month high in December, indicating Americans will keep spending early next year. The Thomson Reuters/University of Michigan final index of consumer sentiment climbed to 82.5 from 75.1 in November. Economists in a Bloomberg survey called for 83, according to the median projection. The preliminary reading for December was 82.5.

Australia:
Australia’s four largest banks will need to carry an extra 1 percent of core tier 1 capital from Jan. 1, 2016, due to their systemically important status, according to the country’s banking regulator.

Malaysia
Unemployment rate in October logged at 3.3 percent, 0.1 percentage point higher from the reading of 3.2 percent in the same period last year, according to the Department of Statistics. On a month-on-month terms, the unemployment rate rose 0.2 percentage point from September’s 3.1 percent.

Singapore
Inflation continued to accelerate to 2.6 percent on-year in November, after recording a 2.0 percent in the previous month. Commenting on the increased consumer price index (CPI), the Ministry of Trade and Industry and the Monetary Authority of Singapore (MAS) said that it was within expectations as service and conservancy charges rebates to HDB households had kept housing-related costs down in October.

MAS Core Inflation, which excludes the costs of accommodation and private road transport, climbed to 2.1 percent in November compared to October’s 1.8 percent.

Hong Kong
Annual inflation held steady at 4.3 percent in November, the same stance as in October despite a slight easing in private housing rental, data from the Census and Statistics Department showed. The core inflation measure, which excludes the effect of government's one-off relief measures, edged up 4 percent over the year.
 

Regional Market Focus

Singapore

• The Straits Times Index (STI) ended 21.74 points higher or +0.70% to 3,116.22, taking the year-to-date performance to -1.61%.
• The FTSE ST Mid Cap Index gained +0.46% while the FTSE ST Small Cap Index declined -0.00%. The top active stocks were SingTel (+0.28%), DBS (+0.54%), Charisma Energy (+1.43%), OCBC (+1.00%) and UOB (+0.87%).
• 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. Since then, price has cycled up cycled up to resistance at 3126.
• Next resistance is at 3170.
• Immediate supports at 3000 and 2930.

Thailand

• Thai stocks fell sharply on Mon, bucking regional trend after the opposition Democrat Party unanimously voted to boycott the Feb 2 general election, a move that could prolong political uncertainty. The composite SET index finished the session down 1.23% on Mon.
• US and European equities extended gains after the Federal Reserve announced plans to trim its massive stimulus program in Jan 2014 following an improvement in economic data and investor confidence. In our view, bullish overseas cues would set the stage for further gains in Asian stocks today.
• Thai stocks also look poised to follow overseas stock markets higher today on positive external sentiment and after yesterday’s sharp losses. The pace of foreign selling in the Thai stock market is likely to moderate this week ahead of the long Christmas and New Year holidays. Persistent political pressure would however continue to be a drag on the Thai bourse and put a lid on the market’s upside but year-end ritual of window dressing should lend some support to the market. For short-term trading ideas, we advise investors to look for fundamentally strong companies that are immune to domestic political risk and derive much of the revenue from overseas markets, which are primed for a rebound on the back of a global economic recovery. Today we expect a trading range of 1315-1345 points for the SET index.
• Resistance for the main index is seen at 1340-1360 points and support at 1310-1300 points today.

• Indonesian stocks finished mostly in negative territory Monday (23/12), as the Rupiah dropped further against the US dollar, on concern about Indonesia’s current account deficit that may become wider after the implementation of the Mining Law. The Jakarta Composite Index (JCI) slipped 5.948 points, or 0.14%, to 4,189.608. The decline on Monday included six of the nine major industry groups, with mining sector fared worst and miscellaneous industry sector performed best. The LQ45 index shed 1.155 points, or 0.17%, to close at 697.065.
• The Rupiah made a historical low on Monday, touching 12,277 against the US dollar before regaining strength to 12,199. Worries about widening current account deficit that follows the ban of raw mineral exports weighed on the Rupiah on Monday, while thin trading volume ahead of Christmas holiday contributed to the JCI’s weak performance. The Indonesian government is set to impose the ban on raw mineral exports starting Jan 12. 2014.
• 176 shares declined and 77 shares advanced Monday on the Indonesia Stock Exchange, where only 2.12 billion shares worth IDR 2.56 trillion traded on the regular board. Foreign investors posted net sale of IDR 51.94 billion.
• The Jakarta Composite Index (JCI) will likely climb today, on positive backdrop from the region and Wall Street overnight. We expect the JCI to advance today, with support and resistance at 4,132 and 4,234, respectively.

• The Colombo bourse witnessed a downward trend from the early hours amidst the inactive sentiment of the investors to settle the day on a negative note ahead of Christmas. The benchmark ASPI charting a loss of 10.94 points or 0.19%, closed the day at 5,846.42 and the S&P SL20 closed the day dropping by 3.93 points or 0.12% to close at 3,224.24.  A total of 65 companies gained during the day whereas 104 companies posted drops in share prices. As at the daily closure, the total market capitalization stood at LKR 2.43Tn, reducing the year to date gain to 12.21%. The market PER and PBV were 14.96 & 1.97x respectively. The turnover for the day amounted to record LKR 267.84Mn, indicating a drop of 74.70% from its previously recorded. Under the sectorial round-up, Bank Finance and Insurance (BFI) sector topped the list providing LKR 136.82Mn and Diversified Holdings (DIV) sector stood next in line providing LKR 64.08Mn to the daily aggregate turnover. The two sectors collective accounted to 3/4 of the day’s total turnover. A total of 15.00Mn shares changed hands during the day resulting in a dip of 43.62% compared to the previous trading day. Foreign participants appeared to be bullish during the day resulting in a net foreign inflow of LKR 83.10Mn, resulted by foreign buying of LKR 128.84Mn and selling of LKR 45.73Mn. This assisted the year to date net foreign inflow to reach LKR 22.36Bn. With regard to the local FOREX, the USD is selling at 132.35/- and is buying at LKR 129.19/-.

• HSI climbed 109 points or 0.48% to 22,921. CEI gained 18 points or 0.18% to 10,647. Trading volume declined to HKD44.008 billion.
• HK market was firmer, tracking strong US markets performance last Friday, but the trading volume was low before Christmas holiday, reflecting investors’ wait-to-see sentiment.
• China Mobile (941.HK) gained 0.8% only after reached agreement with Apple on selling IPhone.
• HK property sector extended downward trend on interest rate hike expectation, Hang Lung Ppt (101.HK) and New World Dev (17.HK) dropped 0.8% and 0.6% respectively, both reached year-low.
• HKTV (1137.HK) surged 65.9% as it decided to launch OTT and mobile television services starting about July of next year.
• CEC Int’l Hold (759.HK) climbed 9.4% after interim results with earnings more than doubled.
• Technically, the next resistance and support for HSI are 23,286 and 22,463 respectively.

Morning Note
Company Highlights

Olam International Limited has entered into an agreement to sell up to 14.99% stake in Open Country Dairy Limited, New Zealand to Talley’s Group Limited for up to NZ$46.5million. Based on the terms of agreement, the effective sale price of Olam’s stake is expected to be at or above the current carrying value of the investment. The transaction will release cash for Olam while still maintaining product off-take arrangement with Open Country Dairy Limited which are strategically important for Olam’s dairy supply chain business. (Closing Price: $1.510, +1.003%)

Jubilee Industries Holding Limited announced a profit warning regarding the unaudited financial results of the Company and its subsidiaries for the FY ending 31 December 2013. Based on its preliminary review, the Group is expected to report a net loss for the FY2013 Results, mainly due to lower revenue and lower gross profit margin. (Closing Price: 0.148, +0.680%)

Source: PhillipCapital Research - 24 Dec 2013