STI:        -0.19%     to     2,960.1            KLCI:        +0.40%     to     1,785.9
JCI:        +0.74%     to     4,384.3           SET:          +0.27%     to     1,280.3
HSI:        -0.60%     to     21,269.4          HSCEI:     -0.41%     to     9,470.6
Nifty:      +0.36%     to     6,022.4            ASX200:  -0.52%     to     5,070.3
Nikkei:   +1.23%     to     14,180.4          S&P500:  -0.20%     to     1,751.6

MARKET OUTLOOK:

MACRO DATA:

US
US services expanded more than forecast in January as the biggest part of the U.S. economy overcame the effects of snow and freezing temperatures to boost hiring by the most in more than three years. The Institute for Supply Management’s non-manufacturing index increased to 54 from 53 in December. New orders rose to 50.9 from 50.4. The employment gauge climbed to 56.4 in January from 55.6 the month before, led by retailers, wholesalers and support services.

In contrast the ADP jobs report showed that Companies added fewer workers than projected in January as colder-than-normal weather limited progress in the U.S. job market, the private report based on payrolls showed today. The 175,000 increase followed a revised 227,000 rise in December that was weaker than initially reported. The median projection of 40 economists surveyed by Bloomberg called for an advance of 185,000.

Indonesia
Indonesia economy expanded at a faster pace in the last quarter of 2013 on the back of increased exports which offset a drop in domestic demand amid weakening currency and aggressive interest rate hikes. Gross domestic product (GDP) was up by 0.1 percentage point to 5.72 percent one-year as compared to the 5.62 percent growth in 3Q 2013.

For the whole year of 2013, GDP rose 5.78 percent, its slowest growth since 2009, after recording a 6.2e per cent increase in 2012.

Singapore
The purchasing managers' index (PMI)  for January swings back to expansion territory, a positive headstart to 2014, as well as reflecting an upbeat outlook of the Singapore manufacturers for the sector despite global uncertainties. PMI came in at 50.5 in January after the Republic's economy slipped into contraction at 49.7 in December, the Singapore Institute of Purchasing and Materials Management (SIPMM) reported.

The sub-indexes for new orders and new export orders for January jumped 1.2and 1.9 points to 51.5 and 52.4 respectively. Meanwhile, electronics PMI inched up 1.9 points to 52.6, with the electronics production sub-index rose 4.8 points to 55.2 last month. The improved readings for new orders and factory output will bode well for the manufacturing sector in near term.
 

Regional Market Focus

Singapore

• The Straits Times Index (STI) ended -5.71 points lower or -0.19% to 2960.09, taking the year-to-date performance to -6.47%.
• The FTSE ST Mid Cap Index declined -0.07% while the FTSE ST Small Cap Index declined -0.17%. The top active stocks were SingTel (-0.58%), DBS (-0.80%), UOB (-0.15%), OCBC (+0.11%) and Keppel Corp (+0.98%).
• The outperforming sectors today were represented by the FTSE ST Oil & Gas Index (+0.90%). The two biggest stocks of the FTSE ST Oil & Gas Index are Keppel Corp (+0.98%) and Sembcorp Industries (+1.73%). The underperforming sector was the FTSE ST Utilities Index, which declined -1.93% with Hyflux’s share price declining -1.72% and HanKore’s share price declining -0.91%.The FTSE ST Basic Materials Index gained +0.55%.  The FTSE ST Financials Index declined -0.16%.
• Support at 3000 is broken on the downside. The technical sentiment is short term bearish.
• The headwinds from Jan's economic data - under performing ISM mfg data, housing sales, auto sales, good jobs report (more tapering) and lower-than-expected corporate results suggest a weak, muted or ranged bound market.
• Although we have a longer term bullish bias due to macro fundamentals, we recognize intermediate term market pessimism.
• Daily RSI is oversold, and there is a good possibility of short covering for this week and next before a resumption of intermediate downtrend.
• Immediate support at 2930.

Thailand

• Thai stocks traded in the green tracking overseas markets on Wed but gains were later pared by Criminal Court’s approval of DSI’s request for arrest warrants for 19 PDRC leaders for alleged violation of the emergency decree before the SET index finished the session up a mere 3.41 points at 1,280.25 points. 
• In our view, Thai stocks could be in for more choppy range-bound trade today amid a lack of political progress, a key factor that has been widely watched by the market. Yesterday the Constitutional Court dismissed a plea asking it to decide whether caretaker PM Yingluck Shinawatra's decision to enforce the state of emergency is unconstitutional, citing there are not enough grounds to validate the charge. The Constitutional court also rejected a complaint filed by Puea Thai Party, accusing the anti-government PDRC and its affiliates of attempting to overthrow the political system, citing the right to freedom of assembly guaranteed under the charter.
• A lack of conviction in the market amid ongoing uncertainties was also reflected in light daily trading volumes. In the near term, key factors to watch will be local politics and US labor market data due out later in the week. Foreign selling also continued unabated. Net foreign sell-off of Thai bonds topped Bt8.6bn yesterday, the biggest in three months. For trading strategy, we maintain our ‘sell on rallies, buy on dips’ strategy within support and resistance levels of 1265-1295 points.
• Resistance for the SET index is expected at 1286-1295 points and support at 1275-1265 points today.

• HSI slid 128 points or 0.6% to 21,269. CEI declined 39 points or 0.41% to 4,045. Trading volume was HKD65.357 billion.
• HSI opened high at 21,564 (+167 points) on rebound in U.S. markets. But the indexes turned to loss, dragged by Macau gambling sector.
• Galaxy Ent (27.HK) and Sand China (1928.HK) slumped 7.3% and 7.5% respectively on much weaker than expected Macau casino revenue data in January 14.
• Handset related stocks out-performed. Coolpad Group (2369.HK) and BYD Electronic (285.HK) climbed 4.7% and 8.7% respectively.
• China financial stocks kept under-performed with NCI (1336.HK) and Citic Sec (6030.HK) down 1.5% and 1.2% respectively.
• Technically, we expect a short-term technical rebound as 14-RSI of HSI fell to 24, sending an oversold signal. The next resistance and support for HSI will be at 21,746 and 21,000 respectively.

Source: Phillip Securities Research - 6 Feb 2014