Asia bourses of Australia and Japan have started the week moderately higher after China's official Purchasing Managers Index (PMI) rose to 51.0 in August, led by new orders.

Pressures on the emerging markets sell-down could ease in the short-term. For example, technically, the Indonesia 10-year yield looks to be consolidating its recent rally. It has pulled back from 8.87% to 8.415% and might consolidate further in coming week(s) to 8% (23.6% downward retracement) or even 7.5% (38.2% downward retracement).

For the STI, we continue to see the prospect of the technical rebound that started at c.3000 last week heading closer towards 3100. Still, with June's low of 3065 take out on the downside last week, STI should head down closer to 2880 (based on Fibonacci projection) subsequently before arriving at a significant low. Based on the latest STI PE forecast, the 2880 level coincides with the 12.3x (-1SD) 12-mth forward PE line by end September. It becomes an attractive level for investors looking for value. Thus, while we see the risk of a moderate c.4% decline below the 3000 line, investors should view such a drop as an opportunity to value hunt.

China Minzhonghas today received a letter from PT Indofood Sukses Makmur Tbk in relation to a possible offer. The offer, if made, is expected to be announced later today.

Super Group is proposing a JV of its subsidiaries with Shanghai Shang Heng to jointly establish a JV company to undertake the manufacturing of liquid glucose syrup solid, which is a key ingredient to Super's non-dairy creamer. EMS Energy is placing 80m new shares at an issue price of S$0.042 each. The net proceeds of about S$3.2m will be used for the funding of the Group's order book and for other general working capital purposes.

JES Internationalhas secured up to US$40m financing. The loan facility will be available for a maximum of US$20m for 3 years, with an option for an additional US$20m. The Group will utilise the loan proceeds for working capital and potential mergers and acquisitions.

Chasen Holdingshas secured a total of four projects worth approximately S$9.1m by its subsidiaries from the Technical & Engineering business since 1st July 2013. The group is upbeat on outlook and expects to secure more major projects from both its Relocation Division and Technical & Engineering business segments.

Bank lending in July continued to slow from a year ago for a third consecutive month, dragged down by slower growth in consumer loans. Domestic banking unit (DBU) loans rose 17.6% y-o-y to $539bn in July, down slightly from June's 17.7% growth. Loans-to-deposits ratio breached the 100% threshold - marking the first time since September 1995 that this has occurred. Over the month, total bank loans rose 1.2% at the end of July, faster than June's 0.7% growth. Business loans grew 1.6% over the month to $321.1bn, rising from the 0.7% growth in June. Compared to a year ago, growth in loans to consumers slowed to 13.2% and reached $217.9 bn, moderating from June's 13.8%. On a month-on-month basis, consumer loans grew at 0.7% in July, as they did in June.

The government has raised development charge (DC) rates for industrial use by around 15% on average, while leaving the rates for commercial use completely untouched. It has also upped DC rates for landed residential use by an average of 7% and those for nonlanded residential use by 5% on average. DC rates for hotel use were left unchanged. The new rates apply for the period Sept 1, 2013 to Feb 28, 2014.

Industrial DC rates have been raised in all geographical sectors by 7-29%. The biggest hike is in sectors 115 (Woodlands, Senoko, Sembawang, Yishun area), 107 (including Upper Thomson Road and Sin Ming Industrial Estate), 73-75 (including Kim Tian Road, Tiong Bahru Road, Delta Road and Jalan Bukit Merah) and 77-88 (which includes Telok Blangah Road and Alexandra Road). For non-landed residential use, the increases in DC rates range from 5% to 28% in 53 out of 118 sectors. Sector 74, which includes the Kim Tian/Tiong Bahru location, saw the biggest rate jump of 28%. Landed residential DC rates have been raised by 5-13% in 76 sectors. The biggest jump of 13% applies to 13 geographical sectors, including those covering the Tanjong Katong Road, Changi Road, Joo Chiat and Telok Kurau areas, Siglap and Bedok South.

China's official Purchasing Managers Index (PMI) rose to 51.0 in August, up for the second month in a row, led by new orders. The sub-index measuring new orders rose to 52.4 in August from 50.6 in July, indicating stronger demand for Chinese goods. Export orders rose to 50.2 from 49.0 in July, suggesting that external demand is also up.              

Source: DBSV