ASEAN KEY DESTINATIONS
ASEAN Markets fell on Wednesday and look set to continue falls today, consolidating after recent strong fund inflows pushed regional markets higher, as Ebeling Heffernan has been suggesting will be common in 2010 as Asia leads the world out of the global down turn.
Indonesia which is now trading near an all-time high, was the star ASEAN performer in the first quarter with a strong gain of 6.5 percent, against a 1.47 percent rise on average in the MSCI index of Asian shares.
Jakarta closed down 0.75 percent on Wednesday at 2,777.30 as profit taking and consolidation dominated the session. Bank Mandiri (BMRI) fell 2.7 percent after a gain of nearly 19 percent in the past three weeks, while Bank Central Asia (BBCA) eased 0.9 percent after a 6.7 percent gain.
Ebeling Heffernan believe funds are going to continue flowing into undervalued regional markets. Ebeling Heffernan Data shows net foreign investment this year has totalled $410 million for Indonesia, $389 million for Thailand and $149 million for the Philippines.
Indonesia will allow foreigners to buy property in the country and own bigger stakes in health-care companies as it completes a review of investment rules, the country’s investment coordination agency said.
Southeast Asia’s largest economy plans to deregulate its property industry by the end of the first half, allowing foreigners to buy homes and commercial real estate directly, Gita Wirjawan, chairman of the Investment Coordination Board of Indonesia, said in a forum in Singapore today. The move will “unleash value,” he said.
Singapore was down 1.6 percent on Wednesday and ended the quarter 0.35 percent lower, making it ASEAN’s worst performer. The market is trading at 15-18 times estimated 2010 earnings, analysts said. Banks led decliners on Wednesday, with United Overseas Bank (UOBH), which had risen over 8 percent in the past three weeks, down 2.7 percent, while leader DBS Group (DBSM) lost 1.8 percent.
In Thailand economic data confirmed the economic recovery was continuing. However, the main index SET drifted down 0.1 percent, erasing an early gain of over 1 percent. While many analysts considered Thailand overbought, Ebeling Heffernan remain bullish on the exchange.
PTT (PTT) jumped 3.1 percent and Krung Thai Bank (KTB) rose 4.2 percent, but Siam Commercial Bank (SCB) fell 2.13 percent and Bangkok Bank (BBL) lost 1.9 percent.
Thailand, the world’s largest rubber exporter, is “very satisfied” with prices that have surged to a record in local-currency terms on strong overseas demand and limited supply, a deputy minister said.
“Prices have risen on their fundamentals,” Supachai Phosu at the ministry of agriculture and cooperatives said in a phone interview today, without giving a forecast. “The government doesn’t need to build up inventory and will leave it to exporters to manage their stockpiles,” Supachai said.
Rubber priced in baht reached an all-time high this week, while the yen-denominated contract in Tokyo has surged to the highest level since 2008, buoyed by increased demand as the global economy moves out of recession. Drier-than-usual weather in southern Thailand, which has coincided with the annual low- output season, has also spurred the rally.
The Philippines .PSI lost 1.3 percent after hitting its highest in over two years on Tuesday, with Philippine Long Distance Telephone (TEL) falling 2.2 percent and property developer Ayala Land (ALI) shedding 3.7 percent. Manila closes for its Easter break on Thursday.
Cebu Air Inc, operator of the Philippines’ leading budget carrier, on Wednesday said it had deferred its 25.7 billion ($565 million) initial public offering to after national elections in May, knocking down shares of its parent.
The sale of new and existing shares, the second airline IPO in Asia this year, was expected to kick off with a roadshow on April 5, with a listing slated for May 3.
In Kuala Lumpur, gaming group Genting (GENT) fell 1.9 percent but top planter Sime Darby (SIME) edged up 0.11 percent. Sime Darby said it would spend 3-5 billion ringgit on its palm estates this year as global demand for the oil grows.
The listing of two of Petronas subsidiaries will bring back foreign investors attention to the Malaysian market, said Bursa Malaysia Bhd’s chief executive officer, Datuk Yusli Mohamed Yusoff.
“Every listing is good for the market. Every big listing is even better because a big listing will attract strong interest from domestic and foreign investors. It will bring back the attention of investors to our market,” he told Bernama at the sideline of Invest Malaysia 2010 here, today.
Prime Minister Datuk Seri Najib Tun Razak announced yesterday that Petronas has identified two sizable subsidiaries with good track record to be listed on Bursa Malaysia this year.
Although no indication has been given on which units will be listed, Yusli said assuming the units’ financial reports are up to date and in good shape the process can take place very fast.
On another note, he said he expected the initial public offering for the year to be good compared with 2009, which only saw 14 companies being listed.
Vietnam .VNI fell for a second day and the index dropped below 500.
Overnight in the USA
US stocks barely budged most of the day then fell sharply in the afternoon following reports that stoked unease about the health of the labour market and regional manufacturing, offsetting the energy sector’s strength.
A legal ruling in US oil giant Chevron’s favour drove the Dow component’s stock up 1 per cent to $US76.06, which helped limit the Dow’s decline and prompted investors to buy some energy-related shares. A jump in oil’s price above $US83 a barrel also helped the sector.
Dow 10,841.67 -65.75 (-0.60%)
The broader market also got support from Honeywell International Inc, up 1.2 per cent at $US45.50 a day after raising its first-quarter profit outlook.
But Wall Street’s attention was fixed on the economy, with sentiment hurt by the Chicago Purchasing Managers Index, which showed business activity in the U.S. Midwest slipped to 58.8 in March — falling short of economists’ consensus forecast.
Earlier, the ADP jobs report showed U.S. private employers shed 23,000 jobs this month, missing expectations for a gain of 40,000 jobs.
Investors were looking to the ADP report for insight into the coming March non-farm payroll number, which will be released on Good Friday, when the US stock market will be closed.
“The ADP number was a disappointment, but some investors are thinking that it may not directly reflect what could happen on Friday,” said Terry Morris, senior equity manager at National Penn Investors Trust in Reading, Pennsylvania.
The Dow Jones industrial average dipped 9.83 points, or 0.09 per cent, to 10,897.59. The Standard & Poor’s 500 Index rose 0.96 point, or 0.08 per cent, to 1174.23. The Nasdaq Composite Index gained 4.20 points, or 0.17 per cent, to 2414.89.
Morris said that because Friday’s payrolls report will include the impact of Census hiring, “it may not be worse than expected like the ADP report. That could be one of the reasons we’re not selling off more on the news.”
The median projection from the 20 economists who have forecast payrolls most accurately over the past year predicts 200,000 jobs were created in March — slightly above the 190,000 median forecast from a broader sample of 82 economists — according to a Reuters poll.
Wednesday’s closing bell will mark the end of the first quarter. With just two hours of trading to go, the first- quarter gains for the major indexes so far stand at Dow, up 4.5 per cent; S&P 500, up 5.2 per cent, and Nasdaq, up 6.3 per cent.
Those gains have spurred some investors to trim some of their stock bets, however. Investors pulled $US926 million from domestic stock funds in the week ending March 24, the first drawdown since the week ended March 3, according to the Investment Company Institute.
On Nasdaq, shares of Research In Motion inched up just 0.02 per cent at $US74.93 ahead of the BlackBerry smartphone maker’s quarterly results after the bell.
Investors hope RIM will shed light on how it intends to fight competition from Apple Inc, which is reportedly developing a new iPhone to work on Verizon Communications Inc’s mobile network.
The top drag on the Dow was Boeing Co, which said it would take an income tax charge of about $US150 million in its first quarter because of recent healthcare legislation. Boeing fell 0.9 per cent to $US72.90; but it remains the Dow’s best-performing stock so far this year, with a 34 per cent gain.
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