STI:        -0.37%     to     3,123.8           KLCI:        +0.46%    to     1,835.0
JCI:        +3.19%     to     4,390.8          SET:          +0.96%    to     1,295.9
HSI:        -0.43%     to     22,791.3         HSCEI:     -0.33%     to     10,149.2
Nifty:      -0.49%     to     6,241.9           ASX200:   -1.51%     to     5,212.1
Nikkei:   -3.08%     to     15,422.4         S&P500:   +1.08%    to     1,838.9

MARKET OUTLOOK:
By Joshua Tan, Head of Research

MACRO DATA:

Japan
Japan’s current-account deficit widened to a record in November as imports climbed, underscoring challenges for Prime MinisterShinzo Abe as he tries to drive a sustained economic rebound. The 592.8 billion yen ($5.7 billion) shortfall in the widest measure of trade, reported by the Ministry of Finance in Tokyo today, was larger than the median forecast of 368.9 billion yen in a Bloomberg News survey of 24 economists. The deficit is the biggest in comparable data back to 1985.
 

Regional Market Focus

Singapore

• The Straits Times Index (STI) ended -11.74 points lower or -0.37% to 3123.75, taking the year-to-date performance to -1.30%.
• The FTSE ST Mid Cap Index declined -0.67% while the FTSE ST Small Cap Index gained +0.18%. The top active stocks were SingTel (-1.13%), OCBC (-0.31%), DBS (-0.12%), UOB (-1.10%) and Wilmar International (-1.81%).
• The outperforming sectors today were represented by the FTSE ST Basic Materials Index (+2.42%). The two biggest stocks of the FTSE ST Basic Materials Index are Midas Holdings (-1.00%) and Geo Energy Resources (+3.13%). The underperforming sector was the FTSE ST Health Care Index, which declined -1.59% with Raffles Medical Group’s share price declining -0.65% and Biosensors International Group’s share price declining -2.72%. The FTSE ST Financials Index declined -0.40%.
• 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 took a wild ride in the morning session amid persistent political uncertainty before buying interest from institutions returned to the market in the afternoon trade. The composite SET index finished the day up 0.96% on Tue.
• US equities rebounded on Tue after Mon’s sharp losses as strong retail sales reading pointed to healthy economy. The start of the corporate earnings season in the US and other bourses around the globe could also leave the markets vulnerable to greater bouts of volatility amid earnings blitz.
• In Thailand, the focus will turn to PM Yingluck Shinawatra’s call for talks on poll delay after the Election Commission and the anti-government People’s Democratic Reform Committee (PDRC) opted out of today’s meeting hosted by the government to discuss the EC’s proposal to postpone the Feb 2 general election. In our view, the above dialogue effort would ease tensions but it is unlikely to receive strong response. The other key issue to watch today will be the National Anti-Corruption Commission’s decision on whether to press charges against those in connection with alleged irregularities in the rice-pledging scheme including caretaker PM Yingluck Shinawatra.  
• Foreign and institutional trading activity remained mixed in the Thai stock market while buying by proprietary trading desks continued for a fifth day in a row. Watch out for a possible bout of profit taking after the SET index edged higher near a key psychological resistance level of 1300 points. To play safe, we advise investors to take profits to limit risk exposure and then play wait and see until next week when the earnings season in the Thai banking sector kicks off in full swing.
• Today we peg resistance for the SET index at 1300-1330 points and support at 1275-1260 points.

• Indonesian stocks surged Monday (13/01), on the back of stronger Rupiah, and as finance and real estate shares gained after Bank Indonesia decided to keep its key rate unchanged last week.
• The Jakarta Composite Index (JCI) advanced 135.8 points, or 3.19%, to close at 4,390.771. Finance sector and construction sector led gains that included eight of the nine major industry groups, with 5.45% and 6.98%-rise, respectively. Stocks in agriculture sector however, became the laggard on Monday amid fears that CPO exports to India – Indonesia’s largest palm oil trading partner – may decline after India imposed higher import duty for processed palm oil. The blue-chip LQ45 index added 30.312 points, or 4.26%, to 741.742.
• Indonesian Rupiah climbed 0.86% to 12,050 against the US dollar as of 4:00 PM Western Indonesian Time, following disappointing US non-farm payroll report on Friday (10/01). Demand for the currency from foreign funds also boosted the Rupiah on Monday, as investors cheered Bank Indonesia’s decision to let its benchmark rate unchanged in a meeting last week.
• The Jakarta Composite Index (JCI) looked set to continue climbing today, amid stronger sentiments in global markets and on Rupiah’s strength. We expect the JCI to rise today, with support and resistance at 4,258 and 4,460, respectively.

• The Colombo Stock Exchange is closed today. (public holiday)

• HSI lost 97 points or 0.43% to 22,791. CEI dropped 33 points or 0.33% to 10,149. Trading volume was HKD59.747 billion.
• HK market was weak yesterday, tracking overnight weakness in US markets. But obviously, HSI gained support at 250-MA.
• Greatwall Motor (2333.HK), China’s leading maker of SUV, slumped 12.2% as it delayed introduction of its Haval H8 model for 3 months to address technical deficiencies. Geely Auto (175.HK) fell 2.1%.
• China insurance sector out-performed with China Life (2628.HK) and Ping An (2318.HK) up 1.8% and 0.6% respectively.
• Mobile game sector slumped after surging for few days. BOYAA (434.HK) and IGG (8002.HK) fell 13.6% and 12.4% respectively.
• China Lotsyn (1371.HK) surged 32% as it announced cooperation with China Mobile (941.HK) to provide support for mobile payment-based lottery platform.
• Technically, HSI remained in a downward trend but we expect a key support at 250-MA. The next resistance and support will be at 23,000 and 22,601 respectively.

Morning Note
Company Highlights

KrisEnergy Limited announced the award of the Engineering, Procurement, Construction, Installation and Commissioning (EPCIC) contract for the production and processing facilities for the Nong Yao oil development in block G11/48 in the Gulf of Thailand. The EPCIC contract was awarded to Nippon Steel and Sumikin Engineering Co. Ltd. (NSSE) by the operator of G11/48, Mubadala Petroleum. The development concept for the initial phase of the Nong Yao field comprises 23 wells, a wellhead processing platform and a minimum facility wellhead platform with the export of crude oil via a floating storage and offloading vessel. The production capacity will be up to 15,000 barrels of oil per day and 30,000 barrels of fluids per day. First oil is anticipated in the first half of 2015. KrisEnergy holds a 25 per cent working interest in G11/48 and Mubadala Petroleum has the remaining 75 per cent. G11/48 covers 6,791 sq km over the southern margin of the Pattani Basin and the northwest margin of the Malay Basin in water depths of up to 75 metres. (Closing price: S$0.85, -1.163%)

ISDN Holdings Limited announced it has through its wholly owned subsidiary, Aenergy Holdings Company Ltd, today entered into a Memorandum of Understanding with Indonesia-based PT Izmi Power Mandiri (PT Tomuan) to develop an 8.0 megawatt (MW) mini-hydropower plant in Aek Sisira Desa Tomuan Holbung, Kecamatan Bandar Pasir Mandoge, Kebupaten Asahan, North Sumatra Province. PT Tomuan had on 15 June 2012 entered into a power purchase agreement (PPA) with PT PLN (Persero) – Indonesia’s state-owned power distribution company to build, own and operate the proposed mini-hydropower plant. (Closing price: S$0.57, -1.724%)

SIIC Environment Holdings Limited announced that the associate company of the Group, Sichuan SIIC Environment Investment Development Co Ltd (Sichuan Investment), will be investing an aggregate of RMB20,000,000 (approximately S$4,151,1001) in Lang Zhong City Waste Treatment Co Ltd. (Target Company), of which RMB17,000,000 will be paid towards the Target Company’s registered capital, while the remaining RMB3,000,000 will be paid towards its capital reserve. The Total Investment will be carried out in separate tranches. First tranche of the Total Investment of RMB15,000,000 (approximately S$3,113,3251) has been completed, the whole amount of which was paid towards the Target Company’s registered capital. The remaining tranches of the Total Investment of RMB5,000,000 is expected to be carried out by 31 December 2014. (Closing price: S$0.181, +4.023%)

Source: Phillip Securities Research - 15 Jan 2014