STI:           -0.27%     to     3,135.5             KLCI:          +0.46%     to     1,835.0
JCI:           +3.19%     to     4,390.8            SET:            +2.24%     to     1,283.6
HSI:          +0.19%     to     22,888.8           HSCEI:       +0.17%     to     10,182.5
Nifty:        +1.64%     to     6,272.8             ASX200:     -0.38%      to     5,292.1
Nikkei:     +0.20%     to     15,912.1           S&P500:     -1.26%      to     1,819.2

MARKET OUTLOOK:
By Joshua Tan, Head of Research

MACRO DATA:

India
Indian consumer price index (CPI) annual growth eased to 9.87 percent in December, a slower pace than the November's revised figure of 11.6 percent. A softer CPI raised expectations that the Reserve Bank of India would maintain the benchmark policy rate for the secnd consecutive month on January 28.
 

Regional Market Focus

Singapore

• The Straits Times Index (STI) ended -8.38 points lower or -0.27% to 3135.49, taking the year-to-date performance to -0.93%.
• The FTSE ST Mid Cap Index declined -0.25% while the FTSE ST Small Cap Index declined -0.72%. The top active stocks were Albedo (-7.81%), OCBC (-0.21%), DBS (-0.69%), SingTel (-0.28%) and UOB (-0.19%).
• The outperforming sectors today were represented by the FTSE ST Health Care Index (+0.08%). The two biggest stocks of the FTSE ST Health Care Index are Raffles Medical Group (-0.32%) and Biosensors International Group (+0.55%). The underperforming sector was the FTSE ST Technology Index, which declined -2.13% with Silverlake Axis’s share price declining -0.55% and STATS ChipPAC’s share price declining -1.56%. The FTSE ST Basic Materials Index declined -0.60% and the FTSE ST Financials Index declined -0.32%.
• 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 on Mon on concerns over the anti-government Bangkok shutdown rally before the market reversed course to trade sharply higher in the afternoon after PM Yingluck Shinawatra called a meeting on Jan 15 with all sides concerned in the current political deadlock to discuss the Election Commission’s proposal to postpone the Feb 2 poll.
• The S&P 500 slipped 1.26% after its forward P/E ratio hit 15X above its five-year average of 14X and on expectations that the US Federal Reserve would continue tapering QE at each of its following policy meetings.
• Yesterday’s gains in Thai stocks were fueled by a signal from the government to hold a meeting with all sides concerned to discuss the EC’s proposal to postpone the Feb 2 election. In our view, we see slim chance that the anti-government People’s Democratic Reform Committee (PDRC) will accept caretaker PM”s call for talks on poll delay as it remains firm in its main demand that the caretaker government step down to pave the way for national reform before calling a new election. Even though election delay may ease tensions in the near term as the Feb 2 poll would not be able to deliver enough MPs to meet the quorum needed to open a new parliament, the move at the same time could hurt confidence in the economy and political system in the long run.
• In our view, any rise towards given resistance levels could present an opportunity to book partial profits to limit risk exposure. Equity holding should also be maintained at 25% of the short-term portfolio.
• Resistance for the SET index is expected at 1300-1310 points and support at 1250-1230 points today.

• The Jakarta Stock Exchange is closed today. (14 January 2014: The Prophet Muhammad’s Birthday)

• The Colombo bourse extended gains and ended the trading day on a positive note, resulting in the indices to close within the green terrain for the 5th consecutive trading day.   The benchmark ASPI closed above the 6,100 boarder for the first time after 21 August last year, gaining 33.25 points (0.55%) to settle the day at 6,116.39. The S&P SL20 index settled at 3,388.07 charting a gain of 3.56 points or 0.11%. A total of 127 companies gained during the day whereas 69 companies posted drops in share prices. A total of 10 of off-board blocks adding up to LKR 602.03Mn accounted a share of nearly 44.00% of the daily aggregated turnover which amounted to LKR 1.38Bn; the turnover noted a minute drop of 0.42% against the previous trading day. During the day, shares totaling up to 92.52Mn changed hands resulting in a gain of 55.93% compared to the previous trading day.  Under the sectorial round-up, Bank Finance & Insurance (BFI) sector topped the list providing LKR 633.87Mn and Diversified Holdings (DIV) sector stood next in line providing LKR 342.34Mn to the daily aggregate turnover; the two sectors collectively accounted to 71.00% of the day’s total turnover.  Foreign participants opened the first trading day of the week on bullish note, resulting in a net foreign inflow of LKR 68.39Mn. This was resulted by foreign buying of LKR 358.33Mn and selling of LKR 289.94Mn. With regard to the local FOREX, the rupee strengthened further against the USD, and is currently selling at LKR 132.17/-.

• HSI gained 42 points or 0.19% to 22,888. CEI climbed 17 points or 0.17% to 10,182. Trading volume decreased to HKD58.172 billion.
• HSI swung between gain and loss again yesterday and 23,000 showed strong resistances. Lenovo Group (992.HK), the largest PC maker in the world, gained 3.8% and led HSI up with Galaxy Ent (27.HK) up 2.7%.
• Smartphone related stocks out-performed. Coolpad Group (2369.HK) climbed 5.5%. Both Tongda Group (698.HK) and FIH (2038.HK) were up 2.6%.
• Solar energy stocks out-performed. Hanergy Solar (566.HK), GCL-Poly Energy (3800.HK) and Singyes Solar (750.HK) surged 13.2%, 6.5%, 6.3% respectively.
• Greenland HK (337.HK) was up 14.3% after announced last year’s contracted sales.
• Power Assets (6.HK), which will spin-off its HK Electric unit, dropped 1.4% to almost the lowest point since Sep-12.
• Technically, 23,000 showed strong resistance to HSI. HSI is vulnerable for further consolidation. The next resistance and support will be at 23,000 and 22,603 respectively.

Morning Note
Company Highlights

Frasers Centrepoint Limited announced that it has incorporated a subsidiary in Singapore named FCL Quartz Pte Ltd with an initial issued share capital of S$1.00 for the purposes of providing business and management consultancy services. (Closing price: S$1.67, +9.868%)
 
United Envirotech Limited announced it inked an agreement with Guangan Municipal Government and West Guangan Jean City Investment Management Co. Ltd (WGIM) to provide industrial water supply, wastewater treatment and wastewater recycling to West Guangan Jeans and Textile Commerce and Technology (JTCT) Park in Guangan City, Sichuan Province, China. WGIM is the main developer behind the sprawling RMB6 billion, 5000 mu JTCT Park, which is expected to house over 1000 enterprises from various parts of the jeans production value chain. (Closing price: S$0.995, +2.051%)
 
Interra Resources Limited announced that its jointly controlled entity, Goldpetrol Joint Operating Company Inc (Goldpetrol), has commenced drilling development well YNG 3263 in the Yenangyaung oil field in Myanmar. Interra has a 60 per cent interest in the Improved Petroleum Recovery Contract of the Yenangyaung field and also owns 60 per cent of Goldpetrol which is the operator of the field. YNG 3263 is being drilled using Goldpetrol’s LTO 350 rig, thus drilling costs are expected to be relatively low, said the company.
Interra’s share of the cost of drilling is being funded from existing funds on hand. (Closing price: S$0.41, -%)
 
LionGold Corp Limited announced its Ghana gold mining subsidiary, Owere Mines Limited (Owere Mines), has finalised its tailings purchase agreement with B&C Gold Pty Ltd (B&C), formalizing the Heads of Agreement previously announced on 21 November 2013. LionGold owns a 77 per cent interest in ASX-listed Signature Metals Limited, which in turn has a 70 per cent stake in Owere Mines. Delivery of the first parcel of tailings is expected to commence in January 2014 with processing expected to commence in March 2014, subject to operational readiness of the plant and tailings dam facility. (Closing price: S$0.154, -2.532%)
 
Miyoshi Precision Limited announced that its indirect wholly-owned subsidiary, Wuxi Miyoshi Precision Co Ltd (WMP) has entered into a sale and purchase agreement with 无锡恒源木业包装有限公司 (Vendor), pursuant to which WMP shall purchase property located at No 108 Hongda Road, Ho ngshan Town ,Wuxi City, Jiangsu, China (Property) from the Vendor. (Closing price: S$0.067, -%)

Source: Phillip Securities Research - 14 Jan 2014