STI:          +0.95%     to     3,150.7               KLCI:         +0.34%     to     1,831.3
JCI:          +0.59%     to     4,200.6               SET:           -0.37%     to     1,257.7
HSI:          +1.25%     to     22,996.6             HSCEI:      +0.92%     to     10,329.8
Nifty:        +0.20%     to     6,174.6               ASX200:     -0.02%     to     5,316.1
Nikkei:     +1.94%     to     16,121.5             S&P500:     -0.02%     to     1,837.5

MARKET OUTLOOK:
By Joshua Tan, Head of Research

MACRO DATA:

USA:
Companies added more workers than projected in December as U.S. employers grew more optimistic about the prospects for demand. The 238,000 increase in employment was the biggest since November 2012 and followed a revised 229,000 gain in November that was stronger than initially estimated. The December tally exceeded the most optimistic forecast in a Bloomberg survey in which the median projection called for a 200,000 advance.

Eurozone:
German factory orders  rose more than economists forecast in November, adding to signs that a recovery in Europe’s largest economy is gathering pace. Orders, adjusted for seasonal swings and inflation, gained 2.1 percent from October, when they fell by the same amount. Economists forecast a gain of 1.5 percent, according to the median of 32 estimates in a Bloomberg News survey. A separate report showed retail sales in the euro area also beat expectations.

Malaysia
Malaysia’s trade surplus widened in November to MYR9.72 billion, its largest surplus in 20 months, after recording a surplus of MYR8.23 billion in October.

Exports grew 6.7 percent on-year in November on higher demand for electronics and petroleum products from Southeast Asia, China and the European Union. Despite lower than the expected 11.1 percent growth, exports grew for the fifth consecutive month in November, after a slump in shipments early in 2013 which led the central bank to cut its full-year gross domestic product forecast. Meanwhile, imports rose 6.4 percent from a year earlier.
 

Regional Market Focus

Singapore

• The Straits Times Index (STI) ended +29.77 points higher or +0.95% to 3150.65, taking the year-to-date performance to -0.45%.
• The FTSE ST Mid Cap Index gained +0.86% while the FTSE ST Small Cap Index gained +0.09%. The top active stocks were DBS (+1.94%), OCBC (+0.10%), Charisma Energy (-2.35%), SingTel (+0.28%) and Yangzijiang (+3.42%).
• The outperforming sectors today were represented by the FTSE ST Real Estate Holding and Development Index (+1.20%). The two biggest stocks of the FTSE ST Real Estate Holding and Development Index are Hongkong Land Holdings (+2.01%) and Capitaland (+0.68%). The underperforming sector was the FTSE ST Utilities Index, which declined -1.32% with United Envirotech’s share price declining -0.52% and Hyflux’s share price remaining unchanged.The FTSE ST Basic Materials Index declined -1.12% and the FTSE ST Financials Index gained +1.04%.
• We said last week that the next resistance was 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 saw wild intraday swings of more than 20 points, seesawing between positive and negative territories on Wed before the composite SET index finished the session down 0.37% on rising volume amid domestic political worries. 
• US equities ended lower on Wed after the minutes of the Federal Reserve’s Dec 17-18 meeting showed maintaining QE would be less beneficial if economic data improved but the US central bank was careful to trade lightly as it embarked on its first tapering process after putting QE3 in place for more than a year.
• In Thailand, the Constitutional Court on Wed ruled the passage of the bill to amend Section 190 of the Constitution violates Section 68 of the Constitution. The Democrat Party would file a petition to the National Anti-Corruption Commission (NACC) asking it to impeach those relating to the charter change. The Constitutional Court would resume its hearing of the legality of the Bt2trn infrastructure loan bill on Jan 15, 2014. Today the Supreme Administrative Court will finish its hearing on the Bt350bn water management scheme and will give its verdict within the next 1-2 weeks.
• Foreign buying returned to both Thai stock and derivative markets in a big way again on Wed. Under this circumstance, we expect Thai stock to remain choppy in range today but the bias may be tilted more towards the upside than the downside. Today we expect a trading range of 1240-1280 points for the SET index.
• Resistance for the main index is expected at 1280-1300 points and support at 1250-1230 points today.

• The Jakarta Composite Index (JCI) finished with moderate gain on Wednesday (08/01), as the Rupiah gained and better-than-estimated US trade balance lifted sentiments in Asia.
• Of the nine major industry groups, seven closed in positive territory Wednesday, led by agriculture sector that advanced 2.44%, property, construction and real estate sector gained 1.89%, and mining sector added 1.73%. The Jakarta Composite Index rose 24.787 points, or 0.59%, to 4,200.593. The LQ45 index, which tracks blue-chip shares, climbed 4.510 points, or 0.65%, to 698.982.
• The Rupiah rose almost 0.5% to 12,205, on expectations that Bank Indonesia will keep its key rate at 7.50% in its board of governors’ meeting slated for Thursday (09/01), as price pressures and domestic consumption eased. The central bank is expected to begin cutting the benchmark rate this year, to spur economic growth.
• The Jakarta Composite Index (JCI) will likely trade lower today, as leads from Wall Street was downbeat, and stock markets in Asia started in negative tone. We expect the JCI to decline today, and peg its near-term support and resistance at 4,146 and 4,232, respectively.

• Witnessing its 4th positive closure for the year, the bourse moved forward witnessing one of the best gains post to the 20th September 2013, while closing above the 6,000 boarder for the first time in 4 months.  The market witnessed an upward trend from its early hours to reach an intra-day peak of 6,064.69 gaining 87.62 points, however closed slightly lower at 6,054.47 (up by 77.40 points or 1.29%), nevertheless reaching a highest point post to 22 August 2013. The S&P SL20 gained 1.51% (or 49.86 points) to close green at 3,350.31. With regard to the movements in share prices, a total of 179 companies posted gains while 38 posted drops. The aggregated turnover for the day amounted to LKR 849.53Mn, indicating a gain of 18.61% against the previous trading day.  Under the sectorial summary, Bank Finance & Insurance (BFI) sector stood out as the prime contributor providing LKR 357.27Mn, accounting to 42.06% of the total turnover. Diversified Holdings (DIV) sector added LKR 266.64Mn to the daily turnover. The two sectors BFI & DIV collectively accounted to nearly 75.00% of the aggregated turnover for the day. During the day, shares totaling up to 49.25Mn changed hands, recording a gain of 94.02% compared with the previous trading day. As at the day’s closure, the total market capitalization soared to LKR 2.52Tn while extending the year to date gain to 2.40%. The market PER & PBV stood at 16.30x and 2.00x respectively. Foreign participants maintained their bullish stance once again, resulting in a net foreign inflow of LKR 215.41Mn; this was resulted by foreign buying worth LKR 280.70Mn and selling of LKR 65.29Mn. With regard to the local FOREX, the USD is selling at LKR 132.23/- and the buying rate stands at LKR 129.35/-.

• HSI climbed 283 points or 1.25% to 22,996. CEI gained 93 points or 0.92% to 10,329. Trading volume increased to HKD75.98 billion.
• HK market was firmer, tracking overnight strong U.S. markets on better-than-expected U.S. trade figures. HK market out-performed China market. Shanghai Composite index slid 0.2%.
• Belle International (1880.HK), the best performed blue chip, surged 12.9% as analysts said the retailer may boost earnings by 13% in second half-year from a year earlier. Daphne International (210.HK) soared 15.9%.
• Mobile game sector out-performed as the industry is expected to enter high growth period and Alibaba will develop a mobile game platform. IGG (8002.HK), BOYAA (434.HK) and Netdragon (777.HK) surged 29.8%, 30.7% and 8.1% respectively.
• Macau gambling stocks remained out-performing with SJM Holdings (880.HK), Galaxy Ent (27.HK) and Melco Crown (6883.HK) up 2.7%, 3.4% and 4.1% respectively.
• Technically, we expect HSI to have technical rebound in near-term. The next resistance and support will be at 23,200 and 22,607 respectively.

Morning Note
Company Highlights

The Board of Directors (the “Board”) of CCM Group Limited (the “Company”, and together with its subsidiaries, the “Group”) wishes to provide a profit warning statement in respect of the unaudited financial results of the Group for the financial year ended 31 December 2013 (“FY2013”). The Group expects to report a more significant loss in its unaudited financial results of the Group for FY2013, as compared to the financial results of the Group for the financial year ended 31 December 2012. Based on preliminary financial figures, the greater loss expected to be reported in FY2013 is primarily attributed to costs overrun for the Group’s construction projects, due to, inter alia, increases in (i) prices of materials; (ii) foreign workers’ levies; (iii) engagement fees of sub-contractors; and (iv) other related overheads. Further details of the Group’s performance will be disclosed when the Company finalises and announces its unaudited results for FY2013, which will be no later than 1 March 2014. (Closing Price S$0.049, -14.0%)

Singapore Technologies Engineering Ltd (ST Engineering) today announced that its electronics arm, Singapore Technologies Electronics Limited (ST Electronics) has restructured the ownership of ST Electronics (Digital Media) Pte. Ltd. (STEE-DM). ST Electronics (Training & Simulation Systems) Pte. Ltd. has transferred all its shareholding in STEE-DM to ST Electronics for a consideration of S$2.3m. The consideration was arrived at based on the Net Tangible Assets of STEE-DM. The restructuring of STEE-DM is a result of an ongoing business review to enhance capabilities within the electronics sector Consequent to the transfer, ST Electronics owns 100% stake in STEE-DM and has also injected additional share capital of S$1.7m into the company and renamed it ST Electronics (Enterprise 1) Pte. Ltd. ST Electronics (Enterprise 1) Pte. Ltd. will operate as a distributor/value-added reseller, offering one-stop enterprise system integration solutions including hardware, software and professional services. (Closing Price S$3.91, +0.8%)

Tigerair and Cebu Pacific, the largest budget carriers based in Singapore and the Philippines respectively, have announced plans to enter into a strategic alliance. Both parties will collaborate commercially and operationally on international and domestic air routes from the Philippines, thereby creating the biggest network of flights to the region. The alliance will enable both parties to leverage their respective strengths and harness synergies to enhance their network coverage, flight frequencies and customer service, and jointly market their routes using interline arrangement. Subject to regulatory approval, the interline partners will jointly operate common routes between Singapore and the Philippines. As part of the strategic alliance, Tigerair will divest its 40% stake in Tigerair Philippines to Cebu Pacific. (Closing Price S$0.510, -1.0%)

Source: Phillip Securities Research - 9 Jan 2014