STI:        +0.22%    to    3,147.3            KLCI:         -0.60%    to    1,813.0
JCI:         -0.01%    to    4,412.2           SET:            -0.47%    to    1,295.4
HSI:        +0.64%    to    23,133.4         HSCEI:       -0.20%    to    10,167.3
Nifty:       -0.91%    to    6,261.7           ASX200:     -0.06%    to    5,305.9
Nikkei:    -0.08%    to    15,734.5         S&P500:    -0.39%    to    1,838.7

MARKET OUTLOOK:
By Joshua Tan, Head of Research

MACRO DATA:

USA
Factories churned out more cars and appliances in December and homebuilders overcame inclement weather to begin work on more homes than projected, putting the U.S. economy on a strong footing heading into 2014. Output at factories, mines and utilities climbed 0.3 percent to cap the strongest quarter since 2010, according to Federal Reserve figures issued today in Washington. Housing starts fell 9.8 percent to a 999,000 annualized rate following November’s 1.11 million pace that was the highest in six years, the Commerce Department reported.

Consumer confidence in the U.S. unexpectedly declined in January, a sign spending may take time to accelerate early this year.The Thomson Reuters/University of Michigan preliminary index of sentiment fell to 80.4 from 82.5 in December. Economists in a Bloomberg survey called for a reading of 83.5, according to the median estimate.

Job openings in the U.S. climbed in November to the highest level in more than five years, a sign the labor market was picking up before the pause in the final month of 2013. The number of positions waiting to be filled increased by 70,000 to 4 million, the most since March 2008, from a revised 3.93 million in October, figures from the Labor Department showed today in Washington. The pace of hiring was little changed, and more Americans quit their jobs.

Singapore
Singapore’s non-oil domestic exports (NODX) climbed 6 percent on-year in December last year, rebound from a 8.9 percent decline in the preceding month, driven up by an increase in shipments of non-electronic products which outweighed the decline in shipments of electronic products. Exports of non-electronic products grew 10.6 percent as compared to the 3.1 percent decline in electronics exports, according to the trade data from IE Singapore.
 
China
China’s home prices continued to surge for the 12th consecutive month in December as nationwide new home prices climbed 9.9 percent from a year ago, the same pace as the previous month, the National Bureau of Statistics (NBS) announced. The upward trend has been losing momentum as more cities saw price growth easing in December, said Liu Jianwei, a senior NBS statistician, attributed to government efforts to cool the fast-rising property prices.
 

Regional Market Focus

Singapore

• The Straits Times Index (STI) ended +6.89 points lower or +0.22% to 3147.33, taking the year-to-date performance to -0.56%.
• The FTSE ST Mid Cap Index declined +0.18% while the FTSE ST Small Cap Index declined -0.22%. The top active stocks were SingTel (unchanged), DBS (+0.06%), UOB (-0.53%), Ezra (-13.23%) and Keppel Corp (+0.64%).
• The outperforming sectors today were represented by the FTSE ST Consumer Goods Index (+1.00%). The two biggest stocks of the FTSE ST Consumer Goods Index are Wilmar International (+0.62%) and Thai Beverage (+1.85%). The underperforming sector was the FTSE ST Consumer Services Index, which declined -0.53% with Genting Singapore’s share price declining -1.34% and Jardine Cycle & Carriage’ share price decling -1.43%. The FTSE ST Basic Materials Index gained +0.42%.
• 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 traded in the red in another choppy session last Fri after a daylight attack and grenade explosion injured around 30 anti-government protesters marching on Banthat Thong Road, underscoring fears of rising violence. The composite SET index ended the day down 0.47% at 1,295.41 points last Fri.
• Asian equities remained stuck in a tight range on Mon ahead of key economic data due out of China today with focus on GDP, which is expected to show a growth of 7.7%, flat y-y in a Bloomberg poll. In our view, forecast beating figures may give a boost to sentiment in Asian stocks.
• In Thailand, domestic political pressure continued to weigh on Thai stocks. There was a sign of a serious escalation of violence after fresh grenade explosions near the Victory Monument, one of key anti-government protest site that injured 28 people. The PDRC supporters would march on more new government targets. Overall we expect the SET index to trade in the red today as domestic political factor still weighs on sentiment. The Bank of Thailand’s Monetary Policy Committee meeting on Wed, Jan 22 will be the major economic event to watch this week. Even though the odds are in favor of a 25 bps rate cut, we believe it could provide only a short-lived boost if political tensions escalate further. Under this circumstance, we advise investors to maintain equity exposure at 25% of the short-term portfolio with a ‘sell the rallies and buy the dips’ strategy within support and resistance levels. Today we expect a trading range of 1275-1310 points for the SET index.
• We peg resistance for the SET index at 1310-1320 points and support at 1290-1280 points today.

• The Jakarta Composite Index (JCI) treaded water on Friday, following mixed leads in the region, after weak earnings results in the US overnight.
• The JCI shed 0.261 points, or 0.01%, to close at 4,412.228. For the week, the benchmark index of Indonesian stocks climbed 3.7%. The blue-chips LQ45 index trimmed 1.045 points, or 0.14%, to 745.340 on Friday. Shares in finance sector fared best with 0.64%-gain, followed by property, construction, and real estate sector with 0.57%-advance, and mining sector with 0.57%-rise. On the downside, miscellaneous industry sector – which market capitalization predominantly consists of automotive makers – tumbled 4.08% on Friday.
• Gainers outpaced decliners 155 to 108 Friday on the Indonesia Stock Exchange, where 2.92 billion shares worth IDR 3.44 trillion changed hands on the regular market. Foreign investors’ transactions accumulated to a net sale of IDR 21.92 billion.
• Indonesian stocks will likely trade lower today, as investors took cautious stance ahead of China’s economic data scheduled for release later in the day. We expect the JCI to move lower, and peg its near-term support and resistance at 4,373 and 4,449, respectively.

• Investors took a small breather on Friday, resulting in the bourse to re-enter the negative terrain while breaking its line-of-gains seen during the past 6 trading days where it gathered 221.99 points (or nearly 4.00%). Despite the gains seen during the first half hour of trading, the benchmark ASPI trended downwards there on, to close the day at its intraday low of 6,131.05 losing nearly 36 points (or 0.58%). Following a similar trend, the S&P SL20 too ended red at 3,407.94 having dropped by 19.11 points or 0.56%.  A series of off-market deals totaling up to LKR 938.71Mn limited the on-board activity to LKR 709.10Mn, whilst accounting a share of 57.00% of the daily aggregated turnover which amounted to LKR 1.65Bn; the turnover noted a drop of 11.67% against the previous trading day. During the day a total of 90.36Mn shares changed hands charting a drop of 1.49% against its previously recorded. Under the sectorial round-up, Diversified Holdings (DIV) sector stood on top providing LKR 1.02Bn accounting a share of 62.18% of the day’s total turnover and Bank Finance & Insurance (BFI) sector secured the second place contributing LKR 327.37Mn. With regard to the movement in share prices, price losers slammed the price gainers by 129:62. Having recorded inflows for the past two trading days, foreign participants appeared to be bearish for the first time during the week, recording a net foreign outflow of LKR 80.22Mn. Foreign sales for the day amounted to LKR 1.03Bn while purchases were recorded as LKR 947.81Mn. Looking at the local FOREX, the rupee continued to strengthen further against the USD, and is currently selling at LKR 132.10/-.            

• HSI gained 146 points or 0.64% to 23,133. CEI dropped 20 points or 0.20% to 10,167. Trading volume increased to HKD74.891 billion.
• HK market was firmer last Friday, led by Tencent (700.HK) and Galaxy Ent (27.HK), which gained 3.2% and 5.3% respectively. HSI re-gained 23,000 levels. But CEI still under-performed on weak China financial sector.
• China telecom operators under-performed on greater competition. China Unicom (762.HK) and China Telecom (728.HK) dropped 1.9% and 0.8%.
• HK landlords rebounded from almost 1-year low. Wharf Holdings (4.HK) and Hang Lung PPT (101.HK) climbed 2.3% and 1.9% respectively.
• Logistic stocks out-performed with Sinotrans (598.HK) and Gammalogistics (8310.HK) up 8.5% and 5.2% respectively.
• Dynam Japan (6889.HK) surged 5.8% after it acquired equity interest of Macau Legend (1680.HK) from placement.
• K. Wah Intl’ (173.HK), holding 3.9% equity interest of Galaxy Ent (27.HK), surged 15.6% after its chairman became the richest man in HK and Asia by Bloomberg billionaires index.
• Technically, HSI re-gained 23,000 levels and retained above 10-MA and 100-MA, sending positive signal. The next resistance and support will be at 23,244 and 23,000 respectively.

Morning Note
Company Highlights

China New Town Development Company Limited announces that Mr. Cai Lijun will cease to be the Chief Financial Officer of the Company to pursue other career opportunities, with effect from 20 January 2014. The company will look for a suitable candidate as the replacement of CFO as soon as possible. During this transitional period, the Company has established a temporary working group of Finance Managers to cover his duties. (Closing price: S$0.104, 0%)

ComfortDelGro Corporation Limited wishes to announce that its wholly-owned subsidiary, ComfortDelGro (China) Pte Ltd, has divested its 80% interest in the registered capital of Shenyang ComfortDelGro Anyun Bus Co., Ltd at a cash consideration of RMB83.3 million (approximately S$17.2 million) based on its net asset value. Suzhou Comfort Taxi Co., Ltd, a subsidiary of ComfortDelGro, has disposed its entire 100% interest in the registered capital of its subsidiary, Suzhou Comfort Toyota Sales & Service Co., Ltd, for a cash consideration of RMB25 million (approximately S$5.2 million) based on its net asset value. (Closing price: S$1.945, -1.018%)

Advanced Holdings Ltd. is pleased to announce that the Company has on 17 January 2014 entered into a memorandum of understanding with BD Cranetech Pte Ltd, pursuant to which it is proposed that the Company shall acquire the entire share capital of BD Crane & Engineering Pte Ltd. The Crane Business provides custom-engineered lifting solutions through the use of standardised components, which maximises productivity and costs savings to customers. The Company is of the opinion that the Proposed Acquisition will provide an opportunity for the Company to expand its existing engineering and design capabilities and has the potential for growth to the benefit of the Company and its shareholders. (Closing price: S$0.25, 0%)

OUE Limited launches the Public Offer of OUE Commercial REIT with offerings 208 million units (subject to over allotment option). The offering price $0.80 per unit translate to distribution yield of 6.8% for Forecast Year 2013 and 6.89% for Projection Year 2014. The Discount to NAV is 23.9% based on offering price. IPO portfolio comprises of OUE Bayfront Property and The Lippo Plaza Property which are located in Singapore and Shanghai respectively. Public offer opens at 5:00 pm 17 Jan 2014 and closes at 12 pm 23 Jan 2014. Trading of OUE C REIT commences on 27 Jan 2014 2:00 pm. (Closing price: S$2.50, +0.402%)

Ascendas Real Estate Investment Trust announces that the Manager will be revising the basis of computation of the management fees with effect from FY14/15. The Manager has decided to improve the computation of the Base Fee in favour of Unitholders by charging the Base Fee based on 0.5% per annum of the Deposited Property (less such value of the Deposited Property attributable to derivative assets and properties under development). The distribution frequency will be revised from a quarterly basis to a semi-annual basis. (Closing price: S$2.15, -0.463%)

Source: Phillip Securities Research - 20 Jan 2014