STI:         +0.16%     to     3,133.8            KLCI:         +0.43%     to     1,815.3
JCI:         +0.47%     to     4,452.5           SET:           +0.24%     to     1,293.1
HSI:         +0.45%     to     23,033.1         HSCEI:      +1.78%     to     10,218.4
Nifty:       +0.16%     to     6,313.8           ASX200:    +0.69%     to     5,331.5
Nikkei:    +0.99%     to     15,796.0         S&P500:    +0.28%     to     1,843.8

MARKET OUTLOOK:
By Joshua Tan, Head of Research

MACRO DATA:

Eurozone
German investor confidence unexpectedly fell for the first time in six months, signaling caution over the outlook for the euro area’s economic recovery. The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations, slid to 61.7 in January from a seven-year high of 62 in December. Economists predicted an increase to 64, according to the median of 40 estimates in a Bloomberg News survey.
 

Regional Market Focus

Singapore

• The Straits Times Index (STI) ended +4.97 points higher or +0.16% to 3133.76, taking the year-to-date performance to -0.98%.
• The FTSE ST Mid Cap Index gained +0.45% while the FTSE ST Small Cap Index gained +0.47%. The top active stocks were DBS (-0.23%), SingTel (+0.86%), UOB (-0.15%), HanKore (+6.36%) and OCBC (-0.10%).
• The outperforming sectors today were represented by the FTSE ST Utilities Index (+3.15%). The two biggest stocks of the FTSE ST Utilities Index are Hyflux (+1.73%) and HanKore (+6.36%). The underperforming sector was the FTSE ST Health Care Index, which declined -0.38% with Raffles Medical Group ’s share price declining -0.32% and Biosensors International Group’s share price declining -0.57%.The FTSE ST Basic Materials Index gained +2.04%.  The FTSE ST Financials Index declined -0.01%.
• 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 staged a strong rebound towards a key psychological level of 1,300 points but failed to break through before the SET index finished the session up a mere 3.11 points at 1,293.1 points on Tue ahead of the Bank of Thailand’s Monetary Policy Committee meeting.
• Political tensions were heightened after the government declared a state of emergency in Bangkok and its vicinities for 60 days effective today in response to anti-government protests that have paralyzed the city and stirred up increasingly violent attacks while the People’s Democratic Reform Committee (PDRC) vowed to continue its anti-government protests. Foreign countries have also upgraded travel warnings for Bangkok after Hong Kong raised the outbound travel alert for Thailand to black. Eyes will be on China as the next potential country to raise travel warning. The move could further exacerbate tourism woes especially during the upcoming Chinese New Year festival.
• On the economic front, the Bank of Thailand’s Monetary Policy Committee, which will meet today, is expected to cut its policy interest rate by 25 bps as prolonged political turmoil could bite deeper into the overall economy. Even though the rate cut would be positive for the stock market, we believe the positive impact may only be short-lived and limited by domestic political pressure.
• A close watch will also be kept on the government’s decision on a plan to borrow Bt130bn to pay farmers owed money under the rice pledging scheme after the Election Commission rejected its request for approval of the above loan plan, citing a lack of authority for approval. Government failure to resolve the controversial rice pledging scheme could add more fuel to the anti-government protests.
• Today we peg resistance for the SET index at 1300-1310 points and support at 1285-1280 points.

• Most stocks listed on the Indonesia Stock Exchange rose Tuesday (21/01), as equity markets in Asia climbed after People’s Bank of China moved to inject money to its financial system.
• The Jakarta Composite Index (JCI) gained 20.927 points, or 0.47%, to finish at 4,452.499. The blue-chip LQ45 index advanced 2.863 points, or 0.38%, to 751.325. Property, construction and real estate sector led gains that included seven of the nine major industry groups, with 2.30-rise, followed by mining sector with 1.02%-gain, and finance sector with 0.91%-climb. The Rupiah inched 0.18% up, to trade around 12,087 against the US dollar at 16:30 Western Indonesia Time.
• On Tuesday, 187 stocks gained and 105 stocks fell at the Indonesia Stock Exchange. Volume on the regular market neared 3.3 billion shares, with the total value of IDR 3.79 trillion. Foreign investors posted net purchase of IDR 43.61 billion.
• Indonesian stocks will likely trade in a mixed bag today, amid lack of leads from global markets and domestic market drivers. We expect the JCI to consolidate today, and peg its immediate support and resistance at 4,433 and 4,467, respectively.

• The Colombo bourse ended on a mixed note resulting in the indices to close on either side, mainly resulted by the slothful participation of the investors observed on most occasions of the day’s trading. The benchmark ASPI dropped by a tiny 3.14 points (0.05%) to close the day at 6,153.54. However the S&P SL20 index maintained its stay within the positive terrain at 3,428.16 charting a minute gain of 2.45 points or 0.07%. The total market capitalization as at the day’s closure stood at LKR 2.56Tn, recording a year to date gain of 4.07%. The market PER and PBV were 16.57x & 2.04x respectively. The total turnover for the day amounted LKR 414.15Mn, indicating a drop of LKR 38.72% from its previously recorded. During the day a total of 31.82Mn shares changed hands recording a drop of 41.29% against its previously recorded. Under the sectorial wrap-up, Bank Finance & Insurance (BFI) sector stood on top providing LKR 164.78Mn accounting a share of 40.00% of the day’s total turnover and Diversified Holdings (DIV) sector secured the second place contributing LKR 147.79Mn. Moreover, the two sectors BFI & DIV collectively accounted to almost 80.00% of the day’s turnover. With regard to the movement in share prices, the price gainers were the same as the price losers, whilst recording the gainer to loser ratio as 90:90. Foreign participants appeared to be bullish for the first time during the week, resulting in a net foreign inflow of LKR 92.07Mn. Foreign buying for the day amounted to LKR 136.80Mn and selling was recorded as LKR 44.73Mn. The local forex market for the day closed with, the USD selling at LKR 132.18/-.

• HSI gained 104 points or 0.45% to 23,033. CEI climbed 178 points or 1.78% to 10,218. Trading volume was HKD64.482 billion.
• HK market was firmer on PBOC adding cash to the financial system. China financial sector led the indexes up and CEI out-performed.
• China banks out-performed with Bank of China (3988.HK), CCB (939.HK) and ICBC (1398.HK) up 2.1-3%.
• CNOOC (883.HK) slumped 6.3% after posting a disappointing production target for this year.
• China car markers rebounded from year-low. GAC Group (2238.HK) and Greatwall Motor (2333.HK) gained 4.7% and 3.3% respectively.
• Lenovo Group (992.HK) climbed 2.8% to the new high since 2001, as company is said to be in discussion to acquire of IBM’s low-end server business.
• Technically, HSI re-gained 23,000 levels. But we see it as technically rebound before breaking the 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

Courts Asia Limited today announced an earlier than expected opening for the first ‘Big-Box’ Megastore in Indonesia. The Group’s first ‘Big-Box’ Megastore in Indonesia, located in Bekasi, Kota Harapan Indah, East of Jakarta, is slated to open by Q2 FY14/15. Construction of the twostorey 170,000 sq. ft. Megastore began in October last year by Sinar Mas Land and is expected to be completed by end-June, ahead of the 12-month build period, allowing more preparation time for a store-fit. Strategically located along a major retail strip in close proximity to Carrefour and Giant, the Courts Megastore in Bekasi will be the Group’s largest ever store in its portfolio, and will cater to a population of more than 2.4 million. Courts Megastore in Bekasi is expected to contribute to the Group’s FY14/15 revenue results. (Closing price: S$0.61, -0.813%)

Stamford Land Corporation confirms it has lodged a development application for 93-97 Macquarie Street in Sydney where its Sir Stamford Circular Quay hotel currently stands. The proposal includes retention and adaptive reuse of the former Health Department Building as well as the construction of a 19-storey building for residential and commercial use. With a gross floor area of 14,835 sq m, the proposed building will comprise 104 residential apartments and 1,331 sq m of retail and commercial space. (Closing price: S$0.58, -0.855%)

Libra Group Limited is pleased to announce that the Company had, through its wholly-owned subsidiary Kin Xin Engineering Pte. Ltd., been awarded the following contracts: (1) a sub-contract for air conditioning and mechanical ventilation worth S$6,390,000 from China Construction (South Pacific) Development Co Pte Ltd. The Company had commenced work on the First Contract and the First Contract is scheduled to be completed in February 2016; and (2) a contract for mechanical & electrical works worth S$9,870,000 from the Ministry of National Development. The Company had commenced work on the Second Contract and the Second Contract is scheduled to be completed in October 2014. The aforementioned contracts are expected to have a positive impact on the consolidated earnings per share and/or net tangible assets per share for the Group for the financial year ending 31 December 2014. (Closing price: -, 0%)

Keppel Land Limited has entered into an agreement to acquire a well-located three hectare site for approximately Rp. 400.8 billion (S$ 42.0 million) in West Jakarta where it will develop a high-rise condominium with ancillary shophouses for sale to strengthen its foothold in Indonesia, with a focus on Jakarta. Located along the Jakarta Outer Ring Road, residents can enjoy excellent connectivity to key business districts and various entertainment hotspots. The new site is also a 15-minute drive from the Soekarno-Hatta International Airport, and about 12 km away from International Financial Centre Jakarta, Keppel Land’s Grade A commercial development in the city centre. Targeted at homebuyers in the middle income segment, the first phase of the development is expected to be launched in the first quarter of 2015. (Closing price: S$3.29, +1.231%)

Source: Phillip Securities Research - 22 Jan 2014