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ASEAN STOCK WATCH Asean Affairs  13 April 2013 

ASEAN Airlines Outperform World

A total of 23 Asia-Pacific airlines made US$1.73 billion compared with $590 million in the same period of 2011, according to the a financial monitor report released this week by the International Air Transport Association (IATA).

The sharp improvement came as they carried a large part of the growth in passenger and cargo volumes, said the Geneva-based trade group whose 240 member airlines carry 84% of all passengers and cargo.

North American airlines, which showed improved profitability earlier in 2012, posted a loss of $53 million in the final quarter, against a profit of $331 million a year earlier, as they were hit by Hurricane Sandy in October.

European airlines continue to face difficult economic conditions, but their fourth-quarter losses of $502 million were slightly smaller than the previous year's level of $661 million.

In its revised outlook issued last month, IATA expected Asian-Pacific airlines to deliver the largest absolute contribution to global industry performance with an expected net profit of $4.2 billion in 2013, up from its previous projection of $3.2 billion.

Asian carriers comprise about 40% of the air cargo market and will be the biggest beneficiaries of the expected upturn in demand.

Regional carriers are expected to see average demand growth of 4.9%, slightly outpaced by a 5% capacity expansion.


The shareholding structure of a special purpose vehicle (SPV) to manage Myanmar's massive deep-sea port and special economic zone project in Dawei is expected to be wrapped up in May.

The two governments are deciding on a structure in which they equally own the SPV, said PM's Office Minister Niwatthamrong Bunsongphaisan, who chaired the Joint Coordinating Committee (JCC) meeting between Thailand and Myanmar.

The Neighbouring Countries Economic Development Cooperation Agency (NEDA) will represent the Thai side in the SPV, whose registered capital is estimated at less than 100 million baht.

Mr Niwatthamrong said the SPV does not need a high level of capital as its role is only to manage the Dawei project.

The Myanmar-Thailand JCC agreed to invite Japan as a partner in the project, both for the SPV and special purpose companies (SPCs) that would be set up to manage individual projects from the deep-sea port, road and rail links, power plants, water facilities, industrial estates, a telecom network and the township.

Another partner may be invited later to join the development, he said.

The SPV will be established and a contract signed with the Myanmar government to handle the Dawei concession, replacing the earlier one signed by Italian-Thai Development Plc (ITD).

He said the JCC agreed to allow the SPV to hire consultants to conduct due diligence for projects ITD already invested in through Dawei Development (DDC), which was set up by ITD to manage the project. DDC will then be transformed into an SPC.

ITD invested US$200 million in the Dawei project over the past two years and will convert those investments into equity for each infrastructure.

"A working group is evaluating the economies of scale for each development project, with the result to be proposed to the next meeting of the Joint High-Level Committee (JHC) in May," he said.

Money Goes to Malaysia

Asian investments into Malaysia are expected to continue to grow underpinned by these countries' vibrant economies, says the Malaysian Investment Development Authority (MIDA).

It said on Thursday it was upbeat on the economic growth in the region and how Malaysia would benefit from these countries' move to venture outwards.

MIDA Seoul director Nelson Samuel said Asian countries accounted for 64% of approved foreign investment last year.

"The outlook for Korea is positive... The investments they have are high-value adding, which is in line with our objective to move up the value chain," he said.

He noted that South Korean conglomerate Samsung had one of the biggest operations here and there were other companies that invested in the fine chemicals and renewable energy sectors here.

MIDA Shanghai director Simon Lee said investments from Asian countries were growing fast. Notably investment from the Chinese companies amounted to RM5bil for the past five years.

Money Leaves Manila

Foreign portfolio investments to the Philippines posted a net outflow in March as concerns over the crisis in the euro zone, punctuated by the debt woes of Cyprus, prompted fund owners to liquefy some of their emerging-market assets.

The Bangko Sentral ng Pilipinas reported Thursday that foreign “hot money” registered a net outflow of $395.14 million during the month, a reversal of the $183.74 million in net inflow in the same month in 2012.

Portfolio investments, or hot money, include investments in stocks, corporate bonds, government securities, and even bank deposit products.

“The drop was due mainly to profit-taking as well as continuing concerns about the euro zone,” the BSP said in a statement.

Gross inflow of foreign portfolio investments during the month hit $2.33 billion, almost a billion dollar higher than the $1.35 billion in the same month in 2012.

However, the increase in the gross inflow was wiped out by the rise in withdrawals, which were triggered by jitters caused by problems in the euro zone. The outflows reached $2.73 billion, up from $1.16 billion.

Reports of debt woes of Cyprus were released in March, when international creditors required the country’s government to impose taxes on bank accounts to make the public share in the burden of paying the country’s huge debts. The taxes on bank accounts, which were set as high as 10 percent, were unprecedented and elicited concerns that the same could be implemented in other indebted countries.

BSP officials said the developments in the euro zone rattled financial markets worldwide.

Nonetheless, for the entire first quarter, foreign portfolio investments to the Philippines still managed to record a significant increase in net inflow. This was because of the gains in the first two months of the year.

Data showed that net inflow of foreign “hot money” for the first quarter amounted to $1.087 billion, more than double the $464.45 million registered in the same period in 2012.

This was a result of the gross inflow of $7.26 billion, which was up from $4.055 billion in the same three-month period in 2012, and the outflows of $6.18 billion, which was up from $3.59 billion.

According to the BSP, the biggest sources of foreign portfolio investments to the Philippines were the United Kingdom, the United States, Hong Kong, Singapore, and Luxembourg.

The BSP earlier projected that for the entire 2013, foreign portfolio investments could register a net inflow of $3 billion.

This projection is under review as officials take into account recent developments that could affect appetite for peso-denominated securities.

One major consideration is the Philippines’ attainment of its first-ever investment grade from a major international credit rating agency.

On the last trading day prior to the Lenten break, Fitch Ratings raised the country’s credit rating by a notch to BBB-, which is the minimum investment grade.

Government officials said the investment grade could boost demand for peso-denominated securities in the months ahead.

Yesterday in Asia

Tokyo rose 1.96 percent, or 261.03 points, to 13,549.16, while Seoul added 0.73 percent, or 14.22 points, to 1,949.80, and Sydney was 0.79 percent higher, advancing 39.1 points to 5,007.1.

Hong Kong added 0.30 percent, or 66.71 points, to end at 22,101.27, but Shanghai eased 0.30 percent, or 6.58 points, to 2,219.55.

– Taipei jumped 1.36 percent, or 105.18 points, to 7,857.98.

Taiwan Semiconductor Manufacturing Co. gained 3.26 percent to Tw$101.5 while leading smartphone maker HTC was 3.64 percent higher at Tw$256.5.

– Manila closed 0.23 percent higher, adding 15.90 points to 6,831.74.

Ayala Corp. rose 0.93 percent to 597 pesos but Philippine Long Distance Telephone slid 0.49 percent to 2,866 pesos.

– Wellington fell 0.24 percent, or 10.52 points, to 4,409.54.

Fisher & Paykel Healthcare slipped 2.4 percent to NZ$2.42 and Telecom was down 1.22 percent at NZ$2.43, while Chorus eased 0.37 percent to NZ$2.67.

– Mumbai’s Sensex rose 0.69 percent, or 127.75 points, to 18,542.2 points.

Tata Motors rose 3.92 percent to 278.15 rupees, while IT outsourcer Infosys rose 3.72 percent to 2,917.85.

– Singapore gained 0.47 percent, or 15.55 points, to close at 3,308.80.

Oil rig maker Keppel Corp gained 0.89 percent to Sg$11.40 while United Overseas Bank increased 1.57 percent to Sg$20.68.

– Kuala Lumpur gained 0.64 percent, or 10.84 points, to close at 1,707.04.

IOI Corp. surged 4.2 percent to 4.98 ringgit while Sime Darby gained 1.5 percent to end at 9.39. Genting Malaysia fell 0.5 percent to 3.71 ringgit.

– Jakarta ended up 0.96 percent, or 46.79 points, at 4,924.26.

Automotive manufacturer Astra International gained 2.65 percent to 7,750 rupiah, while retailer Hero Supermarket fell 1.57 percent to 4,700 rupiah.

– Bangkok rose 1.78 percent, or 26.56 points, to 1,516.81.

Shayne Heffernan Ph.D.
Economist/Hedge Fund Manager

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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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