ASEAN Strategy - Base building

ASEAN markets finding relief from QE delay; risk appetite should continueto improve and base build for a stronger 2014. Singapore: 3Q13 reporting season to be uninspiring, more important to look towards FY14. Malaysia: Expect more measures to improve Government finances in the upcoming Budget. Retail sentiment yet to turn positive in Thailand; tourism remains resilient; property is cheap. Indonesia: high inflation and weak rupiah to prevail till next year; look for stocks with inflation-hedges and less profit taking risk. Strong Philippine peso to continue to attract fund flows; our only overweightto reflect positive stance on ASEAN. Buy Thai banks as they are significantly oversold. Policy tightening will continue to dampen sentiment for property stocks especially inSingapore and Malaysia; valuations are cheap in Thailand and Indonesia. REITS may get a reprieve in October; rebalance to those with retail exposure and distribution growth. Sell Coal, Buy Gas Utilities. Bottoming out CPO cycle sets the stage for upstream / downstream switch next year. Consumer sector indiscriminately punished on high valuations; focus on strong names for rebound. Construction sector faces infrastructure delay headwinds; stick to stocks with diversified earnings baseand those less dependent on government projects.

Wired Daily

Today’s Market Preview:Despite a partial shutdown in the USgovernment, major stock indices on Wall Street rose between 0.4% and 1.2% last night. Essentially, investors are taking a view that there would be limited economic consequences and the budget impasse could be resolved soon.

This will likely give a lift to sentiment across the region today. In Malaysia, the key FBM KLCI is expected to stage a technical rebound following cumulative losses of 32.8-point or 1.8% over the past 1½ weeks. On the chart, the benchmark index may recover towards the immediate resistance line of 1,785 ahead.

Hoping to ride on the positive vibes today are stocks like: (a) Puncak Niaga, in response to a local daily report saying that it is close to selling its water concessions to the Selangor state government; (b) Favelle Favco, which has received purchase orders for the supply of offshore cranes for a combined value of RM109m in Sep; and (c) Bina Puri, as it has announced the winning of a building construction job worth RM97m and the fixing of an issue price for 7m placement shares at RM1.00 apiece.

Source: HwangDBS Research - 2 Oct 2013