STI:        -1.09%     to     3,042.4           KLCI:        -1.31%     to     1,778.9
JCI:        -2.58%     to     4,322.8           SET:          -1.98%     to     1,288.6
HSI:        -2.11%     to     21,976.1         HSCEI:     -2.21%     to     9,792.6
Nifty:      -2.09%     to     6,135.9            ASX200:  -0.42%     to     5,240.9
Nikkei:   -2.51%     to     15,005.7         S&P500:  -0.49%     to     1,781.6

MARKET OUTLOOK:
By Joshua Tan, Head of Research

MACRO DATA:

Japan:
Japan recorded a record Trade Deficit in 2013 thanks to a surging energy bill. Imports rose 25% in December from a year earlier and exports gained 15 percent, leaving a monthly deficit of 1.3 trillion yen in a record 18th straight shortfall. A lack of export momentum could partly reflect Japanese firms shifting business overseas and their declining competitiveness. Japan had a trade gap of 11.5 trillion yen ($113 billion) in 2013, almost double the previous year.

Europe:
German Business Confidence rose on countries improving economic outlook. German business confidence rose to the highest level in more than two years and beat economists’ forecasts in a signal that the expansion in Europe’s largest economy may be accelerating. The Bundesbank has predicted that the German economy will expand “strongly” in coming months after a weak start to the final quarter of 2013.

Hong Kong:
Hong Kong's trade deficit widened significantly in December as compared to last year as exports held steady amid rising imports, according to the data from the Census and Statistics Department. The value of total exports of goods remained unchanged on a yearly basis at HKUSD310.9 billion, while, the value of imports of goods advanced 1.8 percent to USD365.2 billion. Hence, the visible trade deficit swelled to HKUSD54.4 billion (or equivalent to 14.9% of the value of imports of goods) from the preceding year's HKUSD47.9 billion.

For the whole 2013, exports increased 3.6 percent and imports climbed 3.8 percent, giving a total trade deficit of HKUSD501 billion (or equivalent to 12.3 percent of the value of imports of goods).
 

Regional Market Focus

Singapore

• The Straits Times Index (STI) ended -33.56 points lower or -1.09% to 3042.43, taking the year-to-date performance to -3.87%.
• The FTSE ST Mid Cap Index declined -0.80% while the FTSE ST Small Cap Index declined -1.25%. The top active stocks were SingTel (-0.57%), DBS (-0.60%), Keppel Corp (-1.50%), UOB (-0.45%) and GLP (-1.04%).
• The outperforming sectors today were represented by the FTSE ST Basic Materials Index (+0.67%). The two biggest stocks of the FTSE ST Basic Materials Index are Midas Holdings (-1.05%) and Geo Energy Resources (-1.54%). The underperforming sector was the FTSE ST Technology Index, which declined -2.08% with Silverlake Axis’s share price declining -3.83% and STATS ChipPAC ’s share price declining -1.54%. The FTSE ST Financials Index declined -0.54%.
• Immediate supports at 3000, 2930.

Thailand

• Thailand’s SETI nosedived 26.04 points to close at 1,288.59 yesterday.  The fall was in line with its regional peers, as well as negative local political sentient.
• There is no fresh news to the Thai market today.  Yesterday, Thai Election Commission (EC) urged restart of poll process but no political parties have yet accepted the idea.  Today the EC is due to meet with caretaker PM Yingyuck to conclude on the date of the upcoming election.
• US stock markets dropped further last night due to unimpressive earnings results and well as focus on FED meeting scheduled to start today.  There have also been lingering concerns over volatile currencies of emerging markets will adversely impact FX markets.
• We expect a delay to the general election will only help relief pressure in the short term.  On the negative side, it may impact confidence and economic sentiment.  As such, we advise investors to sell on strength whereby we gauge the upside to this round to be around 1320.  In the short-term, support and resistance are pegged at 1280-1300.

• Indonesian stocks closed mostly lower on Monday (27/01), as investors fled from emerging markets on signs of China’s economic deceleration and unregulated shadow-banking sector, and ahead of the FOMC meeting that may see the US Federal Reserve taking another slash on the stimulus.
• The Jakarta Composite Index (JCI) dropped 114.56 points, or 2.58%, to close at 4,322.78, with all of its nine main sectors closed in red. The blue-chip LQ45 index fell 24.64 points, or 3.30%, to end at 722.40. Property, construction and real estate sector fared worst on Monday with 3.30%-loss, followed by mining sector with 3.29%-fall, and consumer goods sector with 3.09%-decline.
• Decliners outran gainers 252 to 49 Monday on the Indonesia Stock Exchange, where 2.7 billion shares worth IDR 4.44 trillion changed hands on the regular board. Foreign investors posted net sale of stocks worth IDR 973.52 billion.
• Indonesian stocks may decline today, however with limited losses, as worries about emerging markets’ assets continue. We expect the JCI to move lower today, and set its near-term support and resistance at 4,249 and 4,397, respectively.

• Investors took a small breather on the first trading day of the week, resulting in the bourse to re-enter the negative terrain while breaking its line-of-gains seen during the past 3 trading days where it gathered 102.09 points (or nearly 2.00%). The benchmark ASPI ended lower at 6,245.81 losing nearly 10 points (or 0.16%). Following a similar trend, the S&P SL20 too ended red at 3,461.75 having dropped by 16.34 points or 0.47%. As at the day’s close, the total market capitalization stood at LKR 2.60Tn, with a year to date gain of 5.63%. The market PER and PBV stood at 16.82x and 2.06x respectively. The aggregate turnover for the day amounted to LKR 872.64Mn, charting a drop of 39.93% as against the previous trading day. During the day a total of 55.81Mn shares changed hands charting a drop of 58.48% against its previously recorded.  Under the sectorial round-up, Diversified Holdings (DIV) sector stood on top providing LKR 400.91Mn accounting a share of 46.00% of the day’s total turnover and Bank Finance & Insurance (BFI) sector secured the second place contributing LKR 184.90Mn; nearly 70.00% of the daily turnover flowed in through the contribution made by these two sectors. With regard to the movement in share prices, price losers slammed the price gainers by 138:48. Foreign participants appeared to be bearish for the second successive day, recording a net foreign outflow of LKR 33.04Mn. Foreign sales for the day amounted to LKR 282.60Mn while purchases were recorded as LKR 249.56Mn. Looking at the local FOREX, the rupee strengthened against the USD, and is currently selling at LKR 132.16/-.

• HSI lost 473 points or 2.11% to 21,976. CEI dropped 221 points or 2.21% to 9,792. Trading volume increased to HKD88.571 billion.
• HK market was weak, tracking overnight weakness in US markets. HSBC (5.HK) and Stanchart (2888.HK) slid 2.7% and 3.4% respectively and led the indexes down.
• China banks remained weak on default risk of financial products. CCB (939.HK) and ICBC (1398.HK) both dropped 1.9%. CEB Bank (6818.HK) was down 3.4%.
• Galaxy Ent (27.HK) closed with 0.5% gain after falling 7.3% to  $68.2. Sands China Ltd (1928.HK) gained 0.3%. The two stocks are only gainers among 50 blue chips.
• LE Saunda (738.HK) was up 4.8% after posting a positive profit alert.
• Evergrande (3333.HK) soared 4.6% as the company will acquire Huaxia Bank’s 4.5% equity interest.
• Technically, HSI lost 250-MA at 22,587 as we expected. But we expect a short-term technically rebound as the 14-RSI fell below 30, sending a over-sold signal. The next resistance and support will be at 22,200 and 21,750 respectively.

Morning Note
Company Highlights

Cordlife announced that Cryoviva Singapore Pte Ltd ("Cryoviva") has entered into an amicable settlement with Cordlife, with respect to Cryoviva's passing off and infringement of Cordlife's registered trademarks and copyrights. Cryoviva shall pay Cordlife damages for Trade Mark and Copyright infringements. Extent of infringement and quantum of damages to be paid by Cryoviva shall be assessed by the Court, if not agreed by parties. (Closing Price $1.195, -0.8%)

Sembcorp announces that its wholly-owned subsidiary, Sembcorp Environment, has completed the divestment of its entire stake in Sembcorp Enviro (India) to Ramky International (Singapore). The transaction is not expected to have a material impact on the EPS and NAV of the Sembcorp for the financial year ending December 31, 2014. (Closing Price $5.24, -1.1%)

GLP leases 43,000 sqm (463,000 sq ft) in China to three global industry leaders. 16,000 sqm (172,000 sq ft) leased to Sankyu Logistics, an international third-party logistics service provider. 15,000 sqm (161,000 sq ft) leased to LightInTheBox.com, a global e-commerce company. 12,000 sqm (129,000 sq ft) leased to Watsons,one of the world’s largest health and beauty retail chains. (Closing Price $2.86, -1.0%)

China Environment Ltd has incorporated a new subsidiary in the People's Republic of China, namely Xiamen Gongyuan Environmental Protection Co Ltd. The Company holds 80% of the equity interest in the Xiamen subsidiary. (Closing Price $0.545, -4.4%)

GRP Limited (1) announced that the Company’s 100% owned indirect subsidiary, GRP Development Pte Ltd (“GRPD”) has signed a Letter of Intent with MGS Resort & Entertainment Co., Ltd (“MGSR”) on 25 January 2014 where MGSR will assign their rights to a plot of land at 40B Phoe Sein Main Road, Tamwe Township, Yangon, Myanmar with an approximate area of 32,670 square feet (the “Land Plot”) including the rights for the construction and development of Apartments on the Land Plot and to manage and operate the development as service apartments to GRPD by effecting a 30 year sub-lease of the Land Plot to GRPD. MGSR is currently in negotiation to acquire rights to the Land Plot for a 30 year lease from the land owner. Upon the signing of the Letter of Intent, GRPD is to advance US$200,000 to MGSR. (Trading Halt)

GRP Limited (2) announced that the Company’s 100% owned indirect subsidiary, GRP Projects Pte Ltd (“GRPP”) has signed a Letter of Intent with MGS Resort & Entertainment Co., Ltd (“MGSR”) on 25 January 2014 where MGSR will grant and GRPP will acquire the participation rights on the plot of land at 14 Natmauk Avenue Street, Tamwe Township, Yangon, Myanmar with an approximate area of 37,287 square feet (the “Land Plot”) to design, construct and develop, residential apartments and sell and receive all moneys upon the sale, and to manage the proposed development. MGSR is currently in negotiation to acquire the freehold rights to the Land Plot from the land owner. The cash consideration payable by GRPP to MGSR for the acquisition and assignment of the participation rights for the Land Plot is US$12 million and US$800,000 is payable at the signing of the Letter of Intent. (Trading Halt)

HTL International Holdings Limited has established a wholly-owned subsidiary known as HTL Home (Jiang Su) Co Ltd in Jiangsu province in the People's Republic of China, to undertake the sale and distribution of furniture and home furnishing products in the People's Republic of China. HTL Jiang Su will have a registered capital of US$1,000,000 which will be injected by the Company in cash from its internal resources. (Closing Price $0.305, -1.6%)

OUE Limited has completed its disposal of the OUE Bayfront Property to OUE Commercial Real Estate Investment Trust. (Closing Price  $2.39, -0.8%)

China Bearing (Singapore) Ltd has entered into a term sheet (“Term Sheet”) with (i) Lim Tahir Ferdian, Hungdres Halim, and Edward Halim (each, a “Vendor” and collectively, the “Vendors”), (ii) Lim Victory Halim, Rudi Wijaja, and PT Millennium Investment (each, a “Covenantor” and collectively, the “Covenantors”), and (iii) PT Vasco Nusantara (“Vasco”), PT Millennium Danatama Resources (“Danatama”) and PT Millennium Mining and Resources (“Millennium Mining”) (collectively, the “Targets”), pursuant to which the Company shall acquire the entire issued and paid-up share capital of the Target Holding Company (as defined below) from the Vendors for the Consideration (as defined below) (“Proposed Acquisition”). The Proposed Acquisition is expected to constitute a “Very Substantial Acquisition” or “Reverse Take-over” under Chapter 10 of the Listing Manual of the Singapore Exchange Securities Trading Limited (“SGX-ST”) (“Listing Manual”).  (Closing Price $0.036, -5.3%)

Source: Phillip Securities Research - 28 Jan 2014