STI:         -1.36%    to    3,131.5               KLCI:        -0.98%    to    1,834.7
JCI:         -1.61%    to    4,257.7              SET:           -0.50%    to    1,224.6
HSI:         -2.24%    to    22,817.3            HSCEI:      -2.55%    to    10,436.8
Nifty:       -0.16%    to    6,211.2              ASX200:    -0.33%    to    5,350.1
Nikkei:    +0.69%    to    16,291.3           S&P500:    -0.03%    to    1,831.4

MARKET OUTLOOK:
By Joshua Tan, Head of Research

Macro Data

China
China's official non-manufacturing Purchasing Manager Index (PMI) fell to 54.6 in December, a four-month low, after recording a reading of 56 in November, the National Bureau of Statistics said. While the services PMI held above the 50 level that indicates expansion, slackening growth mirrors a fourth-quarter cool down in factory activity and the broader economy as credit supply moderated and firms rebuilt inventories more slowly. Sub-index for business expectations tanked to 58.7 from November's 61.3, weighed by the property and water transportation sectors where firms expected activity to contract. Meanwhile, sub-index for new orders held steady at 51 in December.
 

Regional Market Focus

Singapore

• The Straits Times Index (STI) ended 43.18 points lower or -1.36% to 3131.47, taking the year-to-date performance to -1.06%.
• The FTSE ST Mid Cap Index declined -1.01% while the FTSE ST Small Cap Index declined -0.31%. The top active stocks were HanKore (+1.71%), SingTel (-1.64%), DBS (-0.70%), UOB (-1.51%) and Keppel Corporation (-1.52%).
• We said last week that the next resistance is at 3170, and a short term consolidation is likely at these levels – this is what we are experiencing this week.
• We have a longer term bullish bias due to macro fundamentals.
• Immediate supports at 3075, 3050 and 3000.

Thailand

• Thai stocks took a roller coaster ride last Fri. The composite SET index fell to a session’s low of 1208.06 points amid domestic political pressure but losses were later pared by some bargain buying before the main index ended the day at 1224.62 points.
• US equities gained in light trading last Fri as many market participants were out in the wake of the New Year’s holiday. The market was looking to US labor market data due out later in the week and the latest FOMC meeting minutes during the middle of the week for clues on the speed of the tapering of the Federal Reserve’s QE program while the pace of acceleration in US inflation appeared to gather steam. If inflation rises too fast, the US central bank may consider reducing the speed of QE tapering.
• Local politics will remain the main attention of investors after the People’s Democratic Reform Committee (PDRC) continued its anti-government protests and announced its ‘Bangkok shutdown plan’ on Jan 13. Eyes will also be on the National Anti-Corruption Commission (NACC)’s decision whether to punish 381 MPs and senators on Jan 7 and the Constitutional Court’s ruling on whether the amendment of Section 190 of the Constitution on international treaties and agreements violates the Section 68 of the charter on Jan 8. Under this circumstance, we believe a choppy downside bias will remain likely for Thai stocks. Even though some rebound looks likely, the upside would be limited. We expect a trading range of 1200-1240 points for the SET index today.
• We peg resistance for the main index at 1240-1260 points and support at 1200-1180 points today.

• Indonesian stocks finished mostly in negative territory Friday (03/01), erasing gains from the previous day, as concerns about China’s manufacturing and service sectors’ slowdown and negative lead from the US weighed on markets in Asia.
• The Jakarta Composite Index (JCI) lost 69.602 points, or 1.61%, to close at 4,257.663, paring gains from a day earlier, even as data showed a more-than-expected trade surplus in November. Agriculture sector fared worst with 2.88%-drop, followed by mining sector with 2.68%-decline, and miscellaneous industry sector with 2.52%-decrease.
• Decliners outran gainers 194 to 49 Friday on the Indonesia Stock Exchange, where 2.19 billion shares worth IDR 2.86 trillion traded on the regular board. Foreign investors posted net sale of IDR 134.56 billion.
• The Jakarta Composite Index (JCI) will likely trade lower today, with economies offering little drivers and as Asian market started weak this morning. We expect the JCI to move lower, and trade within 4,218 - 4,318 range.

• The combo bourse ended the day on a positive note resulting in the indices to close within the green terrain. The benchmark ASPI index closed at 5,973.80 gaining 5.76 points or 0.10% and the S&P SL20 closed at 3,294.82 gathering 9.43 points or 0.29%. With regard to the movement on share price, 97 companies gained whereas 96 companies posted dips in share price. The total market capitalization stood at LKR 2.49Tn, charting a year to date gain of 1.03%. The market PER and PBV were 16.08x & 1.98x respectively. The daily aggregated turnover amounted to record LKR 349.64Mn, indicating a drop of 62.97% from its previously recorded. Under the sectorial wrap-up, Bank Finance & Insurance (BFI) sector topped the list providing LKR 110.67Mn and Diversified Holdings (DIV) sector stood next in line providing LKR 64.75Mn to the daily aggregate turnover. Shares totaling up to 47.51Mn changed hands within the day resulting in a gain of 68.19% compared to the previous day. Foreign participants ended the day on a bullish note resulting in a net foreign inflow of LKR 7.84Mn; foreign purchases for the day amounted to LKR 49.71Mn and sales amounted to LKR 41.88Mn. Looking at the FOREX markets currently the USD is selling at 132.21/- and is bought at LKR 129.25/-.

• HSI lost 522 points or 2.24% to 22,817. CEI slumped 272 points or 2.55% to 10,436. Trading volume increased to HKD68.128 billion.
• Tracking overnight weakness in the US markets and weak China PMI readings, HK market was weaker. HSI lost 425 points or 1.8% and CEI dropped 379 points or 3.5% for last week. On the macroeconomic front, China's non-manufacturing PMI dropped to 54.6 in December, the lowest since August and down from 56 a month earlier.
• China financial sector led the indexes down. China Life (2628.HK), ICBC (1398.HK) and CM Bank (3968.HK) slipped 3.4%, 2.7% and 3.2% respectively.
• China coal sector under-performed with China Shenhua (1088.HK) and Yanzhou Coal (1171.HK) down 4.4% and 3.9% respectively.
• Macau gambling stocks out-performed with Melco Crown (6883.HK) and MGM China (2282.HK) up 2.6% and 1.7% respectively.
• Technically, HSI further dropped below 100-MA, sending negative signal. We expect next support will be at 250-MA of 22,605. The next resistance will be at 23,000.

Morning Note
Company Highlights

Otto Marine Limited (the “Company”) is pleased to announce that its 90% owned subsidiary, Go Marine Group Pty Ltd has entered into a Memorandum of Agreement dated 31st December 2013 to sell seven (7) vessels known as GO 4 IT, GO Puriya, GO Shaula, Piparn, Yikara, Minotaur and Centaur to RSOV Marine Pte Ltd (the “Buyer”) for an aggregate consideration of US$10 million. Mr Yaw Chee Siew, the Company’s Executive Chairman and controlling shareholder, owns a 29% interest in the issued and paid-up share capital of the Buyer, with the remainder held by unrelated third party (Closing Price S$0.096, -2.0%)

In respect of the Proposed REIT, OUE Limited wishes to announce that the SGX-ST has issued the “eligibility-to-list” letter for the proposed initial public offering and listing of the Proposed REIT on the SGX-ST (the “Offering”). The Offering will be subject to, among other things, prevailing market conditions, the receipt of all requisite regulatory approvals as well as the evaluation of all relevant considerations. (Closing Price S$2.49, -0.4%)

CapitaMalls Asia Limited (“CMA”) wishes to announce that JG2 Trustee Pte. Ltd., in its capacity as trustee (“IOT Trustee”) of Infinity Office Trust, has today granted: (i) an option to purchase to Westgate Commercial Pte. Ltd. (“WCPL”) in respect of the sale of the office strata units located on levels 6 to 16 of the office building (“Westgate Tower”) of the development known as Westgate (“Westgate Development”) at a sale consideration of S$297,971,300 (the “WCPL Consideration”); and (ii) an option to purchase to Westgate Tower Pte. Ltd. (“WTPL”) in respect of the sale of the office strata units located on levels 17 to 25 of Westgate Tower at a sale consideration of S$281,460,300 (the “WTPL Consideration”), (together, the “Options”). The office strata units comprised in the Options constitute all the office strata units of Westgate Tower. WCPL and WTPL are parties unrelated to CMA. (Closing Price S$1.915, -2.3%)

Source: Phillip Securities Research - 6 Jan 2014