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ASEAN STOCK WATCH Asean Affairs   11  April  2011

Asean to set new record highs

Shayne Heffernan

Asean Stocks will set new record highs in the coming month as earnings season, the IMF and a falling US dollar outlook drive more money into emerging markets.

Equities around the world hit a fresh high on Friday, the highest point in almost three years overcoming fears surrounding Japan's costly earthquake and Portugal's debt bailout and even the threat of the U.S. government shutting down.

Emerging market stocks, punished for much of the first quarter have performing strongly, rising as much as 11.6 percent from a March 17 low.

Much of the new confidence investors have found is based on China's management of growth and inflationary pressure, as exemplified by China's rate hike during the past week.

The IMF/World Bank spring meeting should provide updates, as will a G20 fringe meeting of finance ministers and a summit of leaders from Brazil, Russia, India and China, in China.

Each spring, thousands of government officials, the private sector, journalists, civil society representatives, and other interested observers gather in Washington DC for the Spring Meetings of the World Bank and IMF.

At the heart of the gathering are meetings of the joint World Bank-IMF Development Committee and the IMF’s International Monetary and Financial Committee, which discuss progress on the work of the World Bank and IMF.

Also featured are seminars, regional briefings, press conferences, and many other events focused on the global economy, international development, and the world’s financial markets.

These will have a huge impact on sentiment in equities, futures, currencies and commodities, the 11th of April until April 18th may be volatile.

Investors will be looking for any sign that world monetary policy in terms of the quantitative easing money-printing from the developed world and the unorthodox quantitative tightening credit curbs designed as a response in many emerging economies has begun to normalize.

The risk markets recovery of the last two years has been fueled by abundant liquidity, they maybe the lost volatile.

Emerging Markets are set for new all time highs as the future of the USD is in question and valuation of the currency considering the amount of quantitative easing may still seem high.

Earnings season will start Monday with AA setting the tone for the coming week.

We expect profit margins to drop to 8.2 percent in the first quarter from 8.41 percent in the fourth quarter, this is still a very strong economic result and should see a rally over the full period of earnings week.

Alcoa NYSE:AA expects global aluminum consumption to increase 12 percent this year and has restarted some operations that were closed when business dried up during the recession.

Aluminum prices rose about 7 percent in the first quarter, compared with the fourth quarter. So did raw-materials costs, including energy to run refineries and smelters.

Alcoa expects demand for its products to strengthen this year, particularly in growing emerging markets like the Middle East, Latin America and Asia.

Business is improving for many of Alcoa's key customers, including the automobile and aerospace industries and manufacturers of long-lasting consumer products such as appliances and electronics.

Our estimate is earnings of 26.8 cents a share on sales of $6.08 billion.

Last March Alcoa reported a net loss of $201 million, or 20 cents per share, on sales of $4.9 billion. Its share price rose from $15.39 to $17.66 in the quarter.

S&P 500 earnings reports have been beating expectations in recent quarters, with about 70 percent coming in ahead of Wall Street profit views, compared with roughly 60 percent typically.

Paul, myself and other senior analysts at HCM are bullish on equities for 2011, however, we warn investors to stick to high quality stocks, and to rebalance their portfolio to include income derived in foreign currencies.

Shayne Heffernan brings more than 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over US$500m and 1 that reach a peak market cap of US$15billion. He has managed and overseen start-ups in Mining, Shipping, Technology and Financial Services.


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This year in Thailand-what next?

AseanAffairs   04 January 2011
By David Swartzentruber      

It is commonplace in journalism to write two types of articles at the transition point between the year that has passed and the New Year. As this writer qualifies as an “old hand” in observing Thailand with a track record dating back 14 years, it is time take a shot at what may unfold in Thailand in 2011.

The first issue that can’t be answered is the health of Thailand’s beloved King Bhumibol, who is now 83 years old. He is the world's longest reigning monarch, but elaborate birthday celebrations in December failed to mask concern over his health. More


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