STI:       +0.66%     to     3,062.4          KLCI:        +0.13%     to     1,781.3
JCI:       +0.44%     to     4,341.7          SET:          -1.30%     to     1,271.8
HSI:       -0.07%     to     21,960.6         HSCEI:     -0.29%     to     9,764.0
Nifty:     -0.16%     to     6,126.3           ASX200:   -1.26%     to     5,175.1
Nikkei:  -0.17%     to     14,980.2         S&P500:  +0.61%     to     1,792.5

MARKET OUTLOOK:

MACRO DATA:

Thailand
Industrial production fell for the ninth straight month in December, logging a 6.1 percent decline from a year earlier following November’s 10.6 percent contraction. The weakening output adds concerns on the degree of impact from the ongoing political turmoil on the nation's economy and raises the odds of an interest rate cut this quarter. However, the Industry Ministry expects a 1.5-2.5 percent rise this year. For the whole 2013, output declined 3.18 percent.

USA
Confidence among U.S. consumers unexpectedly climbed to a five-month high in January as optimism about the economy and labor market improved. The Conference Board’s index advanced to 80.7 from a revised 77.5 in December that was weaker than initially estimated, the New York-based private research group reported today. The median forecast in a Bloomberg survey of economists called for a reading of 78.

Home prices in 20 U.S. cities rose in November from a year ago by the most in almost eight years, providing a boost to household wealth. The S&P/Case-Shiller index of property prices in 20 cities climbed 13.7 percent from November 2012, the biggest 12-month gain since February 2006, after a 13.6 percent increase in the year ended in October, a report from the group showed today in New York. The median projection of 31 economists surveyed by Bloomberg called for a 13.8 percent advance.
 

Regional Market Focus

Singapore

• The Straits Times Index (STI) ended +19.98 points higher or +0.66% to 3062.41, taking the year-to-date performance to -3.24%.
• The FTSE ST Mid Cap Index declined -0.03% while the FTSE ST Small Cap Index gained +0.04%. The top active stocks were SingTel (+1.43%), DBS (+0.48%), UOB (+1.05%), OCBC (+0.32%) and Keppel Corp (+0.95%).
• The outperforming sectors today were represented by the FTSE ST Telecommunications Index (+1.41%). The two biggest stocks of the FTSE ST Telecommunications Index are SingTel (+1.43%) and StarHub (+0.65%). The underperforming sector was the FTSE ST Basic Materials Index, which declined -1.23% with Midas Holdings’s share price declining -1.06% and Geo Energy Resources ’s share price declining -1.56%.The FTSE ST Basic Materials Index declined -1.23%.  The FTSE ST Financials Index gained +0.32%.
• The technical sentiment is short term bearish due to EM and China macro concerns and has a bearish configuration. The sell off should pause/consolidate this week, as stochastics have a bullish crossover from oversold territory.
• Although we have a longer term bullish bias due to macro fundamentals, we recognize short term market pessimism. Traders can wait for a clearer signal before going long.
• Immediate supports at 3000, 2930.

Thailand

• Thai stock market yesterday plummeted, ending the session down 1.3% as investors were looking forward to the outcome over the Feb-2 election postponement discussion between the Election Commission and caretaker government.
• The US market regained ground in response to upbeat confidence index reported by the Conference Board and stronger-than-expected results from the big-name company, Pfizer for example. Today’s economic event features the Fed’s decision on its massive asset purchase program at the FOMC meeting that the market is widely expected a US$10bn cut.
• Rising tension in domestic political conflict has fueled fund outflows at faster pace with foreign investors yesterday offloading approximately Bt6bn of equities in the past two sessions. In addition, the EC and caretaker government finally go ahead with the Feb-2 election while the bouts of violence against the anti-government demonstrators PDRC has raised concerns over the weekend election.
• A risk to the downside remains intact and any rise presents a good opportunity to reduce stock portfolio to 25%.
• Today we peg resistance for the SET index at 1280-1290points and support at 1260-1240 points.

• The Jakarta Composite Index (JCI) posted moderate gain on Tuesday, as global sell-off sparked by concerns about China’s manufacturing sector contraction began to ease.
• The JCI gained 0.44%, or 18.871 points, to end at 4,341.651. Five of the nine major industry groups finished in green on Tuesday, led by basic industry sector with 1.93%-advance, followed by consumer goods sector with 1.29%-gain, and property, construction and real estate sector with 0.69%-climb. The LQ45 index added 4.854 points, or 0.67%, to end at 727.253.
• Gainers slightly outpaced decliners 152 to 121 Tuesday on the Indonesia Stock Exchange. Trading volume on the regular board was 2.53 billion shares with a total value of IDR 4.07 trillion. Foreign investors’ transactions accumulated to a net sale of IDR 683.31 billion.
• Indonesian stocks may rebound today, as sentiments recovered from recent plunge. Upbeat earnings from the US would also add to upward momentum today. We expect the JCI to gain and trade within 4,270 – 4,390 range.

• The bourse dropped for the second consecutive trading day resulting in the benchmark ASPI to lose 26.98 points and settle just 19 points above the 6,200 boarder. The S&P SL20 ended the day at 3,435.87 having dipped by 25.88 points or 0.75%. As at the daily closure the total market capitalization stood at LKR 2.59Tn recording a year to date gain of 5.18%. The market PER & PBV stood at 16.75x & 2.05x respectively. The total turnover for the day amounted to record LKR 1.46Bn, indicating a gain of LKR 66.90% from its previously recorded. With regard to the movement in share prices, price gainers outpaced the price losers by 94:82. Under the sectorial wrap-up, Bank Finance & Insurance (BFI) sector stood on top providing LKR 941.89Mn accounting a share of 65.00% of the day’s total turnover and Diversified Holdings (DIV) sector secured the second place contributing LKR 179.75Mn. Moreover, the two sectors BFI & DIV collectively accounted to almost 80.00% of the day’s turnover. Foreign participants changed their bearish stance seen during the past two trading days, to result in a net foreign inflow of LKR 267.56Mn, whilst once again pushing the YTD net foreign inflow above the LKR 1.0Bn mark. Foreign purchases for the day amounted to LKR 545.79Mn and sales were recorded as LKR 278.23Mn. The local FOREX market for the day closed with, the USD selling at LKR 132.23/-.

• HSI lost 15 points or 0.07% to 21,960. CEI fell 28 points or 0.29% to 9,763. Trading volume was HKD72.948 billion.
• HSI swung between gains and losses yesterday after DJIA recorded 5-day streak loss.
• China Life (2628.HK) fell 2.1% after posting disappointing estimated profit for year 2013.
• Galaxy Ent (27.HK) and Tencent (700.HK) outperformed market with 3.1% and 2.8% gain respectively.
• Hang Lung PPT (101.HK) slid 2.8% and reached the lowest point since Feb 12.
• Software stocks out-performed. Tencent (700.HK), Kingsoft (3888.HK) and Kingdee Int’l (268.HK) climbed 4%, 8.5% and 2.8% respectively.
• Technically, HSI had a technically rebound on 14-RSI fell below 30 as we expected. The next resistance and support will be at 22,200 and 21,750 respectively

Morning Note
Company Highlights

Singapore Technologies Engineering Ltd announced that its land systems arm, Singapore Technologies Kinetics Ltd (ST Kinetics), has entered into a sale and purchase agreement (SPA) with joint venture partner Beijing Jingcheng Heavy Industry Co., Ltd. (JCHIC) to divest its entire 50% equity stake in Beijing Zhonghuan Kinetics Heavy Vehicles Co., Ltd. (BZK) to JCHIC for a cash consideration of S$3.28m. As part of the SPA, ST Kinetics and JCHIC will co-own BZK’s existing products’ intellectual property. (Closing Price $3.82, 1.1%)

The board of directors (the “Board” or the “Directors”) of Boardroom Limited (the “Company”) refers to the announcement dated 22 January 2014 (the “Offer Announcement”) that CIMB Bank Berhad, Singapore branch made for and on behalf of Salacca Pte. Ltd. (the “Offeror”) relating to the mandatory conditional cash offer (the “Offer”) for all the issued and paid-up ordinary shares (the “Shares”) in the capital of the Company, other than those already owned, controlled or agreed to be acquired by the Offeror and parties acting in concert with the Offeror. (Closing Price $0.58, unchanged)

Source: Phillip Securities Research - 29 Jan 2014