STI:        -0.09%     to     3,140.4           KLCI:         -0.60%     to     1,813.0
JCI:        -0.66%     to     4,412.5           SET:          +1.91%     to     1,301.5
HSI:       +0.37%    to     22,986.4          HSCEI:      -0.14%     to     10,187.5
Nifty:     -0.03%     to     6,318.9            ASX200:    +1.21%    to     5,309.1
Nikkei:  -0.39%     to     15,747.2          S&P500:    -0.13%     to     1,845.9

MARKET OUTLOOK:
By Joshua Tan, Head of Research

MACRO DATA:

China
Foreign direct investment (FDI) in China edged up by 5.3 percent last year, bouncing back after skidded 3.7 percent in 2012 (its first time in three years). Overseas investment into China, which excludes financial sectors, totaled $117.59 billion in 2013, an encouraging indicator that the world’s second largest economy’s FDI has steadily rebounded, said Ministry of Commerce.

USA
Jobless claims decreased by 2,000 to 326,000 in the week ended Jan. 11, the least since the end of November, from a revised 328,000 in the prior period, a Labor Department report showed today in Washington. The median forecast of 51 economists surveyed by Bloomberg called for 328,000. A Labor Department spokesman said no states were estimated and there was nothing unusual in the data.

The cost of living in the U.S. climbed in December by the most in six months, led by gains in fuel and rents that indicate inflation is making progress in moving toward the Federal Reserve’s goal. The 0.3 percent gain in the consumer-price index was the biggest since June and followed no change the prior month, a Labor Department report showed today in Washington. It matched the median forecast of 87 economists surveyed by Bloomberg. The core measure, which excludes food and fuel, rose 0.1 percent, restrained by a record decrease in medical commodities including prescription drugs.

Australia
Australian employers unexpectedly cut jobs in December, capping the worst year of full-time losses since 1992, sending the Aussie to the lowest in more than three years and reviving prospects for interest-rate reductions. The number of people employed dropped by 22,600, the statistics bureau said in Sydney today, compared with the median estimate for a 10,000 gain in a Bloomberg News survey of 27 economists. Unemployment held at 5.8 percent as the participation rate fell to the lowest in almost eight years.
 

Regional Market Focus

Singapore

• The Straits Times Index (STI) ended -2.81 points lower or -0.09% to 3140.44, taking the year-to-date performance to -0.77%.
• The FTSE ST Mid Cap Index declined -0.10% while the FTSE ST Small Cap Index declined -0.25%. The top active stocks were SingTel (unchanged), DBS (+0.29%), UOB (-0.53%), OCBC (-0.10%) and Keppel Corp (+0.83%).
• The outperforming sectors today were represented by the FTSE ST Technology Index (+0.74%). The two biggest stocks of the FTSE ST Technology Index are Silverlake Axis (+1.09%) and STATS ChipPAC (+3.13%). The underperforming sector was the FTSE ST Basic Materials Index, which declined -2.44% with Midas Holdings’ share price declining -3.00% and Geo Energy Resources’ share price remaining unchanged. The FTSE ST Financials Index declined -0.16%.
• 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 rallied sharply on Thu with the SET index finishing the session successfully above its key psychological barrier of 1,300 points at 1,301.48 points, up 1.91% led by gains in BANK, PROP and ICT counters.
• US equities fell slightly on Thu on, weighed down by disappointing results but the market however received some boost from the World Bank and International Monetary Fund’s upward revisions of global growth forecasts. 
• Tensions in the Thai stock market eased somewhat during the end of the week after no violence was reported during anti-government protests. Yesterday the National Anti-Corruption Commission (NACC) did not bring former charge of corruption against caretaker PM Yingluck Shinawatra but the anti-graft agency would investigate her role in the rice pledging scheme. Overall we believe volatility is expected to remain high in the Thai stock market as foreign and institutional trading activities were mixed. Investors should also watch out for possible risk-aversion sell-off ahead of the weekend while domestic political pressure would continue to keep a lid on the upside.
• Risks remain in the near term as 60-min charts showed a bearish divergence. To break out of the downtrend, the SET index must technically speaking hold above a key psychological level of 1,300 points. Under this circumstance, we continue to advise investors to follow the ‘sell the rallies, buy the dips’ strategy with focus on earnings and global economic recovery plays.
• We peg resistance for the SET index at 1315-1330 points and support at 1290-1275 points today.

• Stocks listed on the Indonesia Stock Exchange mostly declined Thursday (16/01), retreating from five consecutive day rallies as investors took profits from recent gains.
• The Jakarta Composite Index (JCI) shed 0.66%, or 29.11 points, to close at 4,412.49. The benchmark index of Indonesian stocks halted gains as investors cashed out from a 6.4%-rise in the last 5 days. The blue-chip LQ45 index fell 0.81%, or 6.08 points, to 746.39 on Thursday. Of the nine major industry groups, seven ended in red and the remaining two closed higher. Shares in finance sector fared worst with 1.35%-drop, followed by basic industry sector with 1.22%-decline, and trade and services sector with 0.84%-fall.
• Decliners outpaced gainers 151 to 121 Thursday on the Indonesia Stock Exchange, where 3.3 billion shares worth IDR 4.1 trillion traded on the regular board. Foreign investors posted a net purchase of IDR 274.86 billion.
• The Jakarta Composite Index (JCI) will likely trade rather flat today, with lack of market catalyst and global sentiment after disappointing corporate earnings from the US. We expect the JCI to consolidate today, and trade within 4,382 - 4,473 range.

• Stretching further into the green terrain, the bourse continued to surge further adding another day of gains to its winning streak while closing positive for the 6th consecutive trading day. The active participation of the investors and the buying interest which prevailed pushed the bourse to reach an intraday peak of 6,177.06 (gaining close to 1.0%) towards the latter part of trading, however as at the closure the benchmark ASPI closed a few points lower at 6,166.98 (up by 50.59 points or 0.83%) posting its strongest gain after 19th August 2013. During the past 6 trading days the ASPI gathered 221.99 points or 3.73%. The S&P SL20 also ended within the positive terrain at 3,427.05 having gained 38.98 points or 1.15%. Within the day, many counters witnessed considerable price appreciations hence the gainer to loser being a slamming 139:63. The total market capitalization as at the day’s closure bounded to LKR 2.57Tn extending the year to date gain to 4.30%. The market PER and PBV stood at 16.60x and 2.04x respectively. The recorded turnover for the day was LKR 1.87Bn resulting a gain of 35.35% compared to the previous trading day. During the day, a total of 91.74Mn shares changed hands resulting in a minute drop of 0.85% against the previous trading day. Under the sectorial summary, Bank Finance & Insurance (BFI) witnessed highest investor interest, where 6,477 trades resulted in an aggregate quantity of 28.57Mn shares changing hands, while assisting the sector to top the list providing LKR 868.26Mn (nearly 50% of the total turnover). Manufacturing (MFG) sector stood second contributing LKR 401.20Mn.Moreover, the two sectors BFI & MFG collectively made a 68.05% contribution to the day’s total turnover.  Foreign participants maintained their bullish stance for the second consecutive trading day, resulting in a net foreign inflow of LKR 552.92Mn, being a result of aggregate foreign purchases worth LKR 917.66Mn and selling for the day which amounted to LKR 364.74Mn. Further on this assisted the year to date net foreign inflow (LKR 719.10Mn) to near the LKR 1.0Bn mark. With regard to the local FOREX, the rupee continued to grow stronger against the USD soaring to a highest level post to 1 July 2013. Currently, the USD closed the day at LKR 132.16/- selling and LKR 129.28/- buying.

• HSI climbed 84 points or 0.37% to 22,986. CEI lost 14 points or 0.14% to 10,187. Trading volume increased to HKD65.172 billion.
• HK market was firmer, tracking strong overnight US and Europe markets. HSI opened at 23,085 (+183), but failed to retain at 23,000 levels, dragged by weak China market.
• Lenovo (992.HK), the best-performed blue chip, gained 5% and led index up with AIA (1299.HK).
• China Coal sector under-performed with China Coal (1898.HK) and China Shenhua (1088.HK) down 3% and 2.3% respectively.
• Anton Oilfield (3337.HK) rose 5.8% after announced the Group has backlog of about RMB1 billion. SPT Energy (1251.HK) gained 6.3%.
• Playmates Toys (869.HK) slumped 18.7% after released positive profit alert with profit before tax estimated to surge more than 10 times yoy.
• Chinas South City (1668.HK) surged 60.8% as Tencent (700.HK) acquired 9.9% stake for using its logistics network.
• Technically, HSI failed to break 23,000 levels again; we expect it vulnerable to short-term correction. The next resistance and support will be at 23,000 and 22,599 respectively.

Morning Note
Company Highlights

Singapore Airlines Limited announced that it inked an agreement with Air New Zealand to form an alliance. The agreement will enable Air New Zealand to fly the Auckland-Singapore route and Singapore Airlines to operate the Airbus A380 to New Zealand. (Closing price: S$10.08, -0.297%)

OEL (Holdings) Limited announced it entered into a conditional and binding heads of agreement to buy two companies, Singapore Service Residence Pte Ltd and Expats Residences Pte Ltd, for S$53.9 million. These properties total 41,585 square feet in area and are mostly commercial and residential real estate, including SOHO units along North Bridge road and residential units at Dakota Crescent. The deal was inked with Corporate Space Pte Ltd and its holding company, Hong-Kong-listed Heng Fai Enterprises Ltd (formerly Xpress Group Ltd). (Closing price: S$0.125, +0.806%)

Source: Phillip Securities Research - 17 Jan 2014