STI:       -0.84%     to     2,965.8           KLCI:        -1.40%     to     1,778.8
JCI:       -0.78%     to     4,352.3           SET:          -1.24%     to     1,276.8
HSI:       -2.89%     to     21,397.8         HSCEI:     -3.14%     to     9,509.7
Nifty:     -0.01%     to     6,000.9           ASX200:   -1.75%     to     5,097.1
Nikkei:  -4.18%     to     14,008.5         S&P500:   +0.76%    to     1,755.2

MARKET OUTLOOK:

MACRO DATA:

Hong Kong
Retail sales rose at a slower pace in December but will continue to be underpinned by a tight labor market and sustained growth of inbound tourism in the months ahead, the Census and Statistics Department said in a statement. In value term, retail sales grew 5.7percent on-year in December, easing from the previous month’s 8.5 percent gain. In volume terms, retail sales rose 6.1 percent on-year in December, decelerating from November's 9.1 percent growth.

Australia
The Reserve Bank of Australia held its policy interest rate steady at 2.5% Tuesday, as expected, but also removed language in its statement about further possible easing, sending the nation’s currency higher.
 

Regional Market Focus

Singapore

• The Straits Times Index (STI) ended -25.15 points lower or -0.84% to 2965.8, taking the year-to-date performance to -6.29%.
• The FTSE ST Mid Cap Index declined -1.44% while the FTSE ST Small Cap Index declined -1.17%. The top active stocks were DBS (-1.45%), Keppel Corp (-1.07%), SingTel (-0.86%), OCBC (-0.87%) and UOB (-1.42%).
• The outperforming sectors were represented by the FTSE ST Utilities Index (+0.36%). The two biggest stocks of the FTSE ST Utilities Index are Hyflux (+1.75%) and HanKore (-0.90%). The underperforming sector was the FTSE ST Industrials Index, which declined -2.79% with Jardine Strategic Holdings’ share price declining -0.93% and Jardine Matheson Holdings’ share price declining -0.67%.The FTSE ST Basic Materials Index declined -2.45%.  The FTSE ST Financials Index declined -1.48%.
• Support at 3000 is broken on the downside. The technical sentiment is short term bearish.
• Although we have a longer term bullish bias due to macro fundamentals, we recognize short term market pessimism. Traders should wait for a clearer signal before going long.
• Immediate support at 2930.

Thailand

• Thai stocks lost 15.97 points to finish the session at 1,276.84 points on Tue after weaker-than-expected US economic data raised fears of the impact on the global economy after the Federal Reserve tapered its QE3 program.
• US equities rebounded on Tue after Mon’s sharp losses. Data showed new orders for US factory goods fell in Dec but came in better than market forecast. Bullish cues from Wall Street also helped lift sentiment in Asian stocks in today’s early trade.
• Domestic political pressure continued to weigh on market sentiment after the Democrat Party yesterday filed a petition with the Constitutional Court, asking it to (i) rule on whether the Feb 2 election is invalid and (ii) disband the Puea Thai Party after it pushed the Feb 2 ballots to be held despite an Election Commission recommendation to delay the poll. Eyes will also remain on rice farmers’ protests, which may intensify and the government’s efforts to seek money to pay farmers owed money under its controversial rice pledging scheme after several banks refused rice loans to the government.
• Thai stocks could be poised for a short-term rebound today but gains may be limited after heavy foreign selling of Thai shares continued to the tune of up to Bt4.8bn yesterday. YTD net foreign selling of Thai shares topped Bt21.5bn. Overall we believe the SET index may remain stuck in a range of 1260-1295 points today.
• We peg resistance for the main index at 1283-1295 points and support at 1265-1260 points today.

• The Jakarta Composite Index (JCI) declined on Tuesday (04/02), amid regional sell-off that followed disappointing manufacturing data from the US.
• The JCI slipped 34 points, or 0.78%, to 4,352.26, with all of its major stock sectors finished in red. The blue-chip LQ45 index fell 7.531 points, or 1.03%, to 726.63. Shares in basic industry sector fared worst on Tuesday, as the sector’s index dropped 1.64%, followed by miscellaneous industry sector that fell 1.25%, and construction sector shed 1.18%. Decliners outpaced gainers 199 to 99 Tuesday on the Indonesia Stock Exchange, where 2.35 billion shares worth IDR 3.54 trillion changed hands on the regular board. Foreign investors posted net sale of IDR 340.79 billion.
• US manufacturing activity slowed to its lowest pace in January, data from the Institute of Supply Management showed on Monday. The ISM purchasing managers’ index fell to 51.3 in January, near the contraction level of 50. The data added pressure to the already low sentiments in regional Asia on Tuesday.
• The Jakarta Composite Index (JCI) will likely to advance today, however with limited gains. We expect the JCI to climb, and peg its near-term support and resistance at 4,300 and 4,393, respectively.

• Public holiday on 4 Feb.

Hong Kong

• HSI slumped 637 points or 2.89% to 21,397. CEI lost 308 points or 3.14% to 9,509. Trading volume was HKD75.7 billion.
• HK market was weak, tracking overnight weakness in U.S. markets. Tencent (700.HK) and Galaxy Ent (27.HK) lost 6% and 6.3% respectively and led the indexes down. HSI slid more than 600 points in the first trading day of Chinese hose year.
• Lenovo (992.HK), the largest PC maker in the world, slid 16.7% after acquiring Motorola Mobile.
• China financial stocks under-performed. CCB (939.HK), ICBC (1398.HK) and China Life (2628.HK) all dropped more than 3%.
• International financial sector also led the indexes down with Stanchart (2888.HK) and HSBC (5.HK) down 5.6% and 2%. Prudential (2378.HK) and Manulife-S (945.HK) lost 7.8% and 3.2% respectively.
• Technically, we expect a short-term technical rebound as 14-RSI of HSI fell below 30, sending an oversold signal. The next resistance and support for HSI will be at 21,746 and 21,000 respectively.

Morning Note

Company Highlights

Wee Hur Holdings has secured a S$103.6 million building works project from the Housing & Development Board. This newly secured contract strengthens order book to S$358.5 million; revenue from project will flow in mainly from FY 2014 to FY 2017.

Logistics Holdings has been awarded a contract amounting to S$31.7 million by the Housing & Development Board for the design and build of upgrading projects for G17C and contingency works. With the award, the Group’s order book amounted to approximately $245.9 million.

Source: Phillip Securities Research - 5 Feb 2014