STI:         -0.05%    to     3,143.9           KLCI:         -0.09%     to    1,826.6
JCI:        +1.28%    to     4,255.0           SET:           -0.22%     to    1,255.5
HSI:        +0.26%    to     22,846.3         HSCEI:      +0.12%    to    10,164.7
Nifty:      +0.05%    to     6,171.5           ASX200:    -0.23%     to    5,312.4
Nikkei:    +0.20%    to    15,912.1        S&P500:     +0.23%    to    1,842.4

MARKET OUTLOOK:
By Joshua Tan, Head of Research

MACRO DATA:

USA
Non-Farm Payrolls came in below expectations, 74k jobs added versus 194k consensus. The unemployment rate fell to 6.7% as more people left the workforce. All in all a disappointing Dec print. Nonetheless, one month a trend does not make, and employment numbers are volatile month to month. Forward indicators like supplier deliveries, customer inventories, new orders suggest continued economic expansion.

China
China's annual trade in goods, also a gauge of how global demand is faring, has passed $4 trillion mark for the first time in 2013, surpassing the US as the world’s largest trader.

In 2013, exports climbed 7.9 percent to $2.21 trillion, while imports rose 7.3 percent to $1.95 trillion, according to the General Administration of Customs. Total trade in 2013 stood at $4.16 trillion, an increase of 7.6 percent from 2012, missing government’s target of 8 percent. Nevertheless, trade surplus for the full year widened to $259.75 billion, up 12.8 percent from 2012.

Exports climbed 4.3 percent on-year to $207.74 billion in December, compared to November's 12.7 percent rise. Meanwhile, imports increased 8.3 percent on-year in December to $182.1 billion, from 5.3 percent in the preceding month. Therefore, resulting a trade surplus of $25.6 billion, down from the $33.8 billion logged in November.
 
India
India's trade deficit widened to $10.14 billion in December from November’s $9.22 billion, due to slower growth in exports and increased imports of gold, government data showed. Exports rose 3.49 percent year-on-year to $26.35 billion, slowing from a 5.86 percent pace in November. While imports continued to fall, driven by curbs on gold, to $36.49 billion, a 15.25 percent annual growth rate.

India’s industrial output contracted unexpectedly in November last year, to a six-month low of 2.1 percent on-year, adding pressure on the ruling alliance to bolster the economy as it heads into elections this year. Meanwhile, manufacturing production declined 3.5 percent in November compared to a year ago.
 

Regional Market Focus

Singapore

• The Straits Times Index (STI) ended -1.54 points lower or -0.05% to 3143.87, taking the year-to-date performance to -0.66%.
• The FTSE ST Mid Cap Index gained +0.07% while the FTSE ST Small Cap Index declined -0.09%. The top active stocks were OCBC (+0.10%), Albedo (+23.08%), DBS (+0.17%), GoldenAgri (unchanged) and HanKore (+1.70%).
• The outperforming sectors today were represented by the FTSE ST Utilities Index (+2.30%). The two biggest stocks of the FTSE ST Utilities Index are Hyflux (unchanged) and HanKore (+1.70%). The underperforming sector was the FTSE ST Technology Index, which declined -0.87% with Silverlake Axis’s share price declining -1.08% and STATS ChipPAC’s share price declining -1.54%.The FTSE ST Basic Materials Index declined -0.43% and the FTSE ST Financials Index declined -0.02%.
• The short term consolidation is continuing after an unsuccessful breakout at resistance at 3170 as we mentioned 2 weeks ago.
• We have a longer term bullish bias due to macro fundamentals.
• Immediate supports at 3075, 3050 and 3000.

Thailand

• Thai stocks spent the morning session in the red but losses were pared by a return of some buying interest in the afternoon trade before the composite SET index finished the day down 0.22% at 1255.45 points last Fri on concerns over the anti-government People’s Democratic Reform Committee (PDRC)’s Bangkok shutdown operation on Jan 13.       
• The main focus of the market would be the Bangkok shutdown today. In our view, we see slim chance of violence from the city shutdown given the PDRC’s previous rallies.
• In the US, data showed jobless rate fell more than the market expected at 6.7% last week, reinforcing the case for a continued momentum in US economic recovery. The Bloomberg poll showed the Federal Reserve is likely to reduce its monthly bond purchases in US$10bn increments over the next six meetings.
• In our view, negative internal factors would weigh on market sentiment. Wild intraday swings could be in the cards with the bias skewed to the downside. For today’s trading ideas, global economic recovery plays and weak baht plays remain good bets but investors should continue to limit equity exposure to 25% of the short-term portfolio. Initial support is seen at 1230 points today. A breakdown below 1230 points could open up the way for further downside towards 1200 points.
• Today we peg resistance for the SET index at 1270-1285 points and support at 1230-1200 points.

• The Jakarta Composite Index (JCI) advanced Friday (10/01), as Bank Indonesia’s decision to keep its key rate bolstered stocks in financial and construction sectors. The Rupiah strengthened against the US dollar on Friday.
• The benchmark index of Indonesian stocks climbed 53.753 points, or 1.28%, to finish at 4,254.971. Basic industry sector index surged 2.93%, property, real estate and construction sector gained 2.75%, and finance sector rose 2.36%. The LQ45 index advanced 12.781 points, or 1.83%, to 711.430.
• Investors reacted to Bank Indonesia’s decision to keep the benchmark index at 7.50% for the third time, as the central bank sees less price pressure and narrower current account deficit. Trade volume was also higher on Friday, with more investors began to return from New Year holiday. The Rupiah gained against the US dollar, traded at 12,155 as of 5:25 pm Western Indonesia Time.
• The Jakarta Composite Index (JCI) will likely to consolidate today, as investors digest disappointing jobs data from the US, with lack of market driving events. We expect the JCI to trade sideways today, and peg its near-term support and resistance at 4,159 and 4,318, respectively.

• The Colombo bourse successfully upheld yesterday’s positive momentum while extending gains for the 4th consecutive trading day. The benchmark ASPI crossed the 6,100 mark during early trading to reach its peak of 6,113.71, but as at the day’s close settled below the boarder at 6,083.14, yet charting a gain of 13.80 points or 0.23%; the highest level reached post to 22 August 2013. Moreover, despite the drop on Monday the ASPI managed to end with a weekly gain of 109.34 points or 1.83%. The S&P SL20 gained 22.12 points or 0.66% to close at 3,384.51. A series of off-market blocks totaling up to LKR 700.00Mn amounted to nearly 51.00% of the daily aggregated turnover of LKR 1.38Bn, which indicated a drop of 12.00% as against its previously recorded. Under the sectorial wrap-up, Manufacturing (MFG) sector topped the list providing LKR 563.13Mn and Bank Finance & Insurance (BFI) sector stood next in line providing LKR 402.44Mn to the daily aggregate turnover; the two sectors grasped a share of 70.00% of the day’s total turnover. The day witnessed a total of 59.34Mn shares changing hands, charting a gain of 1.83% compared to the previous trading day. The total market capitalization as at the day’s closure moved up to LKR 2.53Tn, extending the year to date gain to 2.88%. The market PER and PBV were 16.38x & 2.01x respectively. Price gainers surpassed the price losers by 124:69. Foreign participants ended the week on a bearish note, recording net foreign outflow of LKR 72.04Mn for the first time after 5 trading days; the aggregate inflow for the past 5 day’s amounted to LKR 520.67Mn. Foreign selling for the day amounted to LKR 651.21Mn and buying were recorded as LKR 579.17Mn. Looking at the local FOREX markets, the USD is selling at 132.19/- and is bought at LKR 129.31/-.

• HSI gained 58 points or 0.26% to 22,846. CEI rose 11 points or 0.12% to 10,164. Trading volume increased to HKD68.528 billion.
• HSI swung between gain and loss on last Friday. On the macroeconomic front, China export growth was 4.3% yoy in December, fell slightly short of market expectation, import growth was 8.3% yoy, beat consensus estimates. For whole week, HSI gained 28 points while CEI lost 272 points or 2.6%.
• HK property sector out-performed with Henderson Land (12.HK), Wharf Holdings (4.HK) and New World Dev (17.HK) up 2.1%, 2.1% and 2.5% respectively.
• China Res Power (836.HK) and Huaneng Power (902.HK) climbed 3.8% and 4% respectively and led the indexes up.
• Telecom equipment stocks out-performed. SIM Tech (2000.HK), Mobi Dev (947.HK) and C Fiber Optic (3777.HK) surged 38.2%, 19.2% and 6.3% respectively.
• Software stocks remained strong. Kingdee Int’l (268.HK), Chinasoft Int’l (354.HK) and Sinosoft Tech (1297.HK) gained 15.4%, 7.3% and 8.7% respectively.
• Technically, 250-MA showed strong support for HSI. The next resistance and support will be at 23,000 and 22,606 respectively.

Morning Note
Company Highlights

Design Studio Furniture Manufacturer Limited announced that at the Company name is now known as “DESIGN STUDIO GROUP LTD” with effect from 10 January 2014. (Closing price: S$0.475, +23.38%)
 
Otto Marine Limited announced Go Marine Group Pty Ltd (Go Marine), a 90 per cent owned subsidiary of the Company has increased the paid up capital of its wholly-owned subsidiary, Go Offshore (Asia) Pte Ltd (Go Offshore) from S$500 to S$50,000. (Closing price: S$0.084, +3.7%)

Source: Phillip Securities Research - 13 Jan 2014