20131007-大和证券-Asia_Pacific_Daily_43页_1mb

Asia Pacific Daily Summary - 7 October 2013

Core Content

This document is a comprehensive report from Daiwa Investment Conference in Hong Kong, covering macroeconomic research, technical analysis, economic calendar, company roadshows, and regional indices. It also includes specific investment recommendations and market insights for various Asian markets, including Japan, South Korea, Taiwan, and others.

Main Views and Key Information

Macro Research

• Technical Daily Comment:

  • The Nikkei Stock Average tested the 14,000 mark due to overnight weakness on Wall Street and a higher yen to the dollar.
  • The TOPIX declined for five consecutive days, marking the first such occurrence since November 2012.
  • The dollar weakened against the yen, trading in the Y96/$ range, and pulled back to the up trend line since February 2013.
  • A Japanese Nobel Prize win is expected to boost new stock markets like JASDAQ and TSE Mothers, as seen in 2008, 2010, and 2012.

• U.S. Economic Comment:

  • The U.S. government shutdown is expected to have moderate direct effects on GDP growth and limited initial private-sector effects.
  • The Congressional Budget Office estimated a 0.5 percentage point reduction in GDP growth for the final quarter of 1995, with the current shutdown likely to have a larger impact.
  • The weekly impact of the shutdown is likely to be significant due to the large number of affected workers.
  • The shutdown may lead to indirect effects such as reduced consumer and business spending, but these are expected to be minor initially.

• Euro Wrap-up:

  • The European market saw a significant drop in the value of Silvio Berlusconi, who was voted to be expelled from the Senate due to tax fraud convictions.
  • The coming week features key industrial production data from Spain, Germany, France, and Italy, along with trade and CPI data.

• Yen 4Sight Highlights:

  • Japan's economy is benefiting from Shinzo Abe's macroeconomic policies, with the Tankan survey indicating broad-based growth momentum.
  • The April consumption tax hike is not expected to derail the recovery, especially with the new fiscal stimulus and support from the BoJ.
  • The construction sector is also showing strong growth, driven by public works contracts and increased housing demand.

Other Research

• Asia Small-cap Weekly:

  • Small-cap ideas in Korea and the Taiwan non-tech space are attracting interest among Hong Kong investors.
  • Discovery Ideas: Merry Electronics (2439 TT) and Credit China (8207 HK).
  • Pick of the Week: Scinopharm (1789 TT), which is perceived as a high-quality name with good earnings upside potential from new drug developments.

• Hong Kong Banks:

  • The household debt-to-GDP ratio in Hong Kong reached 62% by end-1H13, up from 51% in 2008, but still comparable to regional peers.
  • Banks are expected to shift focus to other consumer loans as mortgage loan growth slows.
  • Dah Sing Financial (DSF, 440 HK) is recommended as a "Buy" due to its strong exposure to the consumer loan and credit card segments, with credit card receivables contributing significantly to its fee income.

Company Roadshows

• A series of roadshows and investor meetings are scheduled for various companies in Hong Kong and abroad from 7-18 October 2013.
• Notable roadshows include Macau Legend (1680 HK), CR Cement (1313 HK), Texhong Textile (2678 HK), and others.

Daiwa Asian Events

• Daiwa is hosting the KOSDAQ Global Investors Conference 2013 in Hong Kong and Singapore on 16 and 18 October.
• The Daiwa Investment Conference is scheduled for 19-22 November 2013 in Hong Kong.

Regional Indices

• Performance, EPS growth, and PER (price-to-earnings ratio) data for various Asian indices are provided.
• The TPX (Tokyo Stock Price Index) showed a decline, while the HSCEI (Hang Seng China Enterprises Index) and HSI (Hang Seng Index) had mixed performance.
• The KOSPI (Korea Composite Stock Price Index) and TWSE (Taiwan Weighted Stock Index) showed positive trends.
• The SENSEX (India), FSSTI (Malaysia), and PCOMP (Philippines) had varied performance, with some indices showing declines.

Summary of Investment Recommendations

• Hang Lung Properties (101 HK): Buy
• CIMC Enric (3899 HK): Buy
• Thai Union Frozen Products (TUF TB): Buy
• Dah Sing Financial (DSF, 440 HK): Buy
• Credit China (8207 HK): Not Rated
• Hyundai Hysco (010520 KS): Hold
• Cambridge Industrial Trust (CREIT SP): Hold
• United Engineers (UEM SP): Not Rated
• Merry Electronics (2439 TT): Discovery Idea
• Scinopharm (1789 TT): Pick of the Week

Additional Highlights

• Mortgage Asset Quality: Robust in Hong Kong, with low LTV ratios and manageable interest rate risk.
• Credit Card Receivables: Stable and a good source of fee income for Hong Kong banks, with a rollover ratio of 17.4% by end-1H13.
• Economic Calendar: Includes key data releases for the coming weeks, such as industrial production, trade data, and CPI figures.

Summary of Key Events

• Government Shutdown Effects: Expected to have a significant impact on the U.S. economy, with potential indirect effects on private sector spending.
• Nobel Prize Impact: Historical data shows that Japanese Nobel Prize wins have positively influenced new stock markets.
• Company Visits: Daiwa analysts have visited various companies in Hong Kong and other regions, including Macau Legend, Texhong Textile, and Scinopharm.
• Regional Indices: Performance data shows mixed trends across different Asian markets, with some indices showing positive growth and others declining.

Summary of Key Data

• Interest and Exchange Rate Forecasts:

  • BoJ ONR (overnight rate): 0-0.10%
  • JPY/USD: 97 to 103
  • JPY/EUR: 132 to 134

• MSCI Small-cap Index:

  • Asia: 1-week -0.5%, 1-month +6.5%, 3-month +5.9%, 6-month +3.8%
  • Asia ex-Japan: 1-week +1.0%, 1-month +5.8%, 3-month +5.9%, 6-month -1.0%
  • China: 1-week +1.1%, 1-month +2.5%, 3-month +10.1%, 6-month +4.2%
  • Hong Kong: 1-week +0.4%, 1-month +3.8%, 3-month +11.8%, 6-month +6.8%
  • Taiwan: 1-week +2.4%, 1-month +4.1%, 3-month +6.7%, 6-month +10.0%
  • Korea: 1-week -0.5%, 1-month +2.5%, 3-month +4.9%, 6-month -3.0%
  • India: 1-week +2.0%, 1-month +9.3%, 3-month -3.1%, 6-month -8.0%
  • Singapore: 1-week -0.5%, 1-month +8.0%, 3-month +5.5%, 6-month -5.9%
  • Indonesia: 1-week -1.4%, 1-month +6.8%, 3-month -9.9%, 6-month -18.2%
  • Malaysia: 1-week +0.0%, 1-month +3.6%, 3-month +0.1%, 6-month +10.5%
  • Philippines: 1-week -0.7%, 1-month -2.4%, 3-month -9.2%, 6-month -28.8%