STI:            -0.59%     to     3,128.8            KLCI:         -0.30%     to     1,807.6
JCI:           +0.44%     to     4,431.6            SET:           -0.42%     to     1,290.0
HSI:           -0.88%     to     22,929.0          HSCEI:       -1.25%     to     10,040.2
Nifty:        +0.68%     to     6,304.0            ASX200:     -0.20%     to     5,295.1
Nikkei:      -0.59%     to     15,641.7         S&P500:      -0.39%     to     1,838.7

MARKET OUTLOOK:
By Joshua Tan, Head of Research

MACRO DATA:

China
Chinese economy expanded at an annual rate of 7.7 percent in the final quarter of 2013, slightly slower than the previous quarter’s 7.8 percent pace. However, full-year growth in 2013 was 7.7 percent, steady from 2012 and above the government’s target rate of 7.5 percent.

Industrial output grew 9.7 percent in December from a year ago, decelerating from the 10 percent growth in the preceding month, according to the National Bureau of Statistics (NBS).

Retail sales growth fell slightly to 13.6 percent year-over-year in December after a 13.7 percent gain in the preceding month. For the whole 2013, retail sales grew 13.1 percent to 23.44 trillion yuan.

Urban fixed-asset investment eased to 19.6 percent y-o-y and totaled to 43.65 trillion yuan at the end of 2013. The growth rate was 0.3 percentage points lower than that of the first 11 months of 2013 and 1.1 percentage points lower than that of 2012, the NBS data showed.

Hong Kong
Hong Kong’s seasonally adjusted unemployment rate fell to 3.2 percent in the three months ended December, from 3.3 percent in September-November. Census and Statistics Department attributed the marginally lower unemployment rate to increased labor demand during the festive season. Unemployment rate is expected to remain low in the near term as vibrant business activity ahead of Lunar New Year in late January will further support the labor market, Secretary for Labor and Welfare Matthew Cheung said.
 

Regional Market Focus

Singapore

• The Straits Times Index (STI) ended -18.54 points lower or -0.59% to 3128.79, taking the year-to-date performance to -1.14%.
• The FTSE ST Mid Cap Index declined -0.20% while the FTSE ST Small Cap Index declined -0.49%. The top active stocks were Mirach Energy (+19.76%), SingTel (-0.85%), DBS (+0.06%), Ezra (-3.14%) and UOB (-0.54%).
• The outperforming sectors today were represented by the FTSE ST Real Estate Investment Trusts Index (+0.13%). The two biggest stocks of the FTSE ST Real Estate Investment Trusts Index are CapitaMall Trust (unchanged) and Ascendas REIT (+1.40%). The underperforming sector was the FTSE ST Utilities Index, which declined -1.93% with Hyflux’s share price declining -0.43% and HanKore’s share price declining-4.35%.
• 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 on Mon in light turnover with the SET index finishing the session down 5.42 points at 1,289.99 points due largely to persistent domestic political instability.
• In the absence of fresh positive catalysts, the SET index looks to extend its losing streak but some short-term rebound may be possible on speculative buying of shares in companies likely to benefit from the prospect of an interest rate cut by the Bank of Thailand’s Monetary Policy Committee at tomorrow’s policy meeting. Please see our ‘Strategy Report: Top Stock Picks to Play Interest Rate Game’ for more details.
• Domestic political factor remains a major drag on sentiment after anti-government protests have dragged on and rice farmers have also taken to the streets to join PDRC protests after a delay in payments for paddy sold under the government’s rice pledging scheme. Caretaker Deputy PM and Finance Minister Kittirat Na-Ranong today will meet the Election Commission to defend its Bt130bn loan plan to pay farmers under the rice pledging scheme for the 2013/2014 crop year. What remains to be seen is whether the EC will approve the above loan plan. If not, anti-government protests would intensify until the Feb 2 election. In our view, there remains a risk of untoward events. To play safe, equity holdings should be maintained at 25% of the short-term portfolio. We expect a trading range of 1275-1300 points for the SET index today. 
• Resistance for the SET index is seen at 1300-1315 points and support at 1280 points today.

• The Jakarta Composite Index (JCI) climbed Monday (20/01), despite negative notes in Asia after China released data that showed slower economic growth in the fourth quarter last year.
• The JCI gained 19.344 points, or 0.44%, to close at 4,431.572. The LQ45 index added 3.122 points, or 0.42%, to end at 748.462. Gains on Monday included five of the nine major industry sectors, led by agriculture sector that advanced 2.63%, followed by infrastructure sector with 2.32%-rise, and consumer goods sector with 0.94%-climb.
• Improved outlook on Indonesia’s capital market in this election year buoyed the JCI since the beginning of 2014, along with returning confidence from foreign investors as the country showed efforts to battle its widening current account deficit. Foreign investors have posted a net purchase of stocks worth IDR 3.17 trillion year-to-date.
• Gainers topped decliners 154 to 121 Monday on the Indonesia Stock Exchange, where 2.65 billion shares worth IDR 3.47 trillion changed hands on the regular market. Foreign investors’ transactions netted in purchase of IDR 80.22 billion.
• For today, we expect the Jakarta Composite Index (JCI) to moderately gain, with the benchmark index’s support and resistance at 4,397 and 4,453, respectively. Stronger US dollar overnight may give support to the Rupiah, and spur buying of blue-chip stocks.

• Followed by the previous day’s negative closure, the Colombo bourse managed to close on a favorable note re-entering the green terrain. The market moved at a moderate pace during the first half of trading, to reach an intra-day apex of 6,177.33 gaining nearly 50 points by mid-day however, as at the daily closure the benchmark ASPI settled lower at 6,156.68, yet charting an increase of 25.63 points or 0.42%. The S&P SL20 gained 0.52% (or 17.77 points) to close the day at LKR 3,425.71. With regard to the movements in share prices, a total of 85 companies posted gains while 97 posted drops. As at the day’s closure, the total market capitalization leaped to LKR 2.56Tn extending the year to date gain to 4.13%. The market PER & PBV stood at 16.58x and 2.04x respectively. The aggregated turnover for the day amounted to LKR 675.78Mn, indicating a dip of 58.99% against the previous trading day.  Under the sectorial summary, Diversified Holdings (DIV) sector stood out as the prime contributor providing LKR 232.86Mn, accounting to almost 35.00% of the total turnover. Bank Finance & Insurance (BFI) sector added LKR 217.65Mn to the daily turnover. The two sectors collectively made a share of 66.66% of the total turnover. During the day, shares totaling up to 54.19Mn changed hands, recording a drop of 40.03% compared with the previous trading day. Foreign participants appeared to be bearish for the second consecutive trading day, resulting in a net foreign outflow of LKR 46.95Mn; this was resulted by foreign selling worth LKR 280.45Mn and buying of LKR 233.51Mn. With regard to the local FOREX the rupee dropped to a week’s low as against the USD, currently the USD is selling at LKR 132.17/- and the buying rate stands at LKR 129.29/-.

• HSI fell 204 points or 0.88% to 22,928. CEI dropped 127 points or 1.25% to 10,040. Trading volume decreased to HKD66.087 billion.
• HK market was weaker, dragged by weak China market. On the macro-economic front, China’s GDP rose 7.7% yoy in December quarter, compared with 7.8% in the third quarter. The benchmark SHCOMP fell 0.7%, closing below 2,000.
• China property sector under-performed even 2013 property data was decent. China Res Land (1109.HK) and Country Garden (2007.HK) both slid 2.5%.
• China financial sector led indexes down as Shibor surged. ICBC (1398.HK), Minsheng Bank (1988.HK) and Ping An (2318.HK) fell 2%, 2.4% and 2.5% respectively.
• Zhongsheng HLDG (881.HK) surged 8.9% as Jardine Strategic agreed to subscribe its shares.
• Dynam Japan (6889.HK) surged 9.3% after it acquired equity interest of Macau Legend (1680.HK) last week. Macau Legend (1680.HK) climbed 3.9%.
• Haier Elec (1169.HK) slumped 6.5% after a major shareholder sold its shares.
• Technically, HSI failed to retain at 23,000 levels. We see it as technically rebound before breaking resistance at 23,433. HSI is vulnerable to further correction. The next resistance and support will be at 23,272 and 22,600 respectively.

Morning Note
Company Highlights

China Environment Ltd. is pleased to announce that its wholly-owned subsidiary, Fujian Dongyuan Environmental Protection Co., Ltd. has secured two contracts amounting to RMB393.6 million in total, comprising (1) A RMB11.0 million contract from Nanjing Iron and Steel United Co. Ltd. for the upgrading of two units of existing electrostatic precipitators to meet new emission standards of 30mg/m3 and to reduce the level of PM2.5 using newly developed PM2.5 removal technology; and (2) A RMB 382.6 million contract from China Energy Engineering Group Shanxi Province Electric Company Electric Environmental Equipment Main Factory for the supply of industrial dust collectors for five (5) projects in 2014. Both the Nanjing Steel and the Shanxi Electric projects are expected to complete by 2014. Hence, the Group expects these contracts to contribute positively to the earnings of the Group for the financial year ending 31 December 2014. (Closing price: S$0.053, -3.636%)

AusGroup Limited subsidiary MAS Australasia Pty Ltd is pleased to announce the award of a two year plus one year option for scaffolding for maintenance services at BHP Billiton’s Worsley Alumina refinery, in the South West of Western Australia, worth up to AUD$7 million per annum with a potential full contract value of AUD$21 million. MAS will be providing scaffolding assets for maintenance services at the Worsley Alumina refinery including the service and maintenance of scaffolding equipment provided by MAS for the completed BHP Billiton Efficiency and Growth Expansion Project. As at 31st Dec and with this contract award, AusGroup’s order book now stands at AU$235.5 million. (Closing price: S$0.275, -1.786%)

Ley Choon Group Holdings Limited is pleased to announce that the Company’s subsidiary, Chin Kuan Engineering and Contractors Pte Ltd has successfully secured a contract worth approximately S$7.0 million awarded by the Public Utilities Board. The Contract is in respect of watermain repairs and other contract work for network services (Closing price: S$0.187, +1.63%)

Sysma Holdings Limited is pleased to announce that its wholly-owned subsidiary, Sysma Construction Pte. Ltd., has secured a contract with an established private owner, worth approximately S$6.2 million for the erection of a two-storey Detached Dwelling House. The Contract shall commence in February 2014 for a period of 17 months. (Closing price: S$0.33, 0%)

Fortune REIT announces that the final purchase consideration for the Acquisition of the Kingswood Ginza Property in accordance with the Share Purchase Agreement dated 28 August 2013 is HK$5,672,495,164. The purchase consideration of HK$5,671,272,746 was paid to the Vendor in the form of cash on 9 October 2013, being the date of Completion of the Acquisition. A further aggregate sum of HK$1,222,418 will be paid by Fortune REIT to the Vendor in cash on or before 30 January 2014. (Closing price: S$5.82, -0.683%)

Aspial Corporation Limited is pleased to announce that the Company through its subsidiary WCL-Cairns (Qld) Pty Ltd has acquired 12 plots of land located at Lots 9, 10, 11, 13, 14, 15,16, 17, 19, 21, 23, 25, 136-166 Moore Road, Kewarra Beach, Queensland 4870, Australia from PTH Vision Pty Ltd. The total purchase consideration for the Properties is A$2,760,000. The Properties measures about 500 square metres each and are freehold vacant land for residential use. WCL intends to build 12 bungalow houses on the Properties. (Closing price: S$0.43, -1.149%)

Source: Phillip Securities Research - 21 Jan 2014