ASEAN KEY DESTINATIONS
ASEAN MArket Outlook
By Shayne Heffernan Ph.D.
Economic concern grew as euro-area manufacturing fell and data indicated China’s production will contract for a sixth month. Today’s drop trimmed this year’s gain in the S&P 500 to 8.7 percent, which had been driven by better-than-estimated economic and corporate data. Earnings per share have topped forecasts at 84 percent of S&P 500 companies that reported results since April 10.
U.S. stocks joined a global sell-off as political uncertainty in France and the Netherlands intensified concern about Europe’s sovereign debt crisis.
All 10 groups in the S&P 500 fell today. The Morgan Stanley Cyclical Index of companies most-tied to economic growth lost 1 percent. The Dow Jones Transportation Average, a proxy for the economy, declined 0.9 percent. A measure of homebuilders in S&P indexes tumbled 2.3 percent.
American banks joined a 3 percent drop in a gauge of European lenders. Bank of America declined 2.2 percent to $8.18. The shares have risen 47 percent this year. Citigroup Inc. (C) decreased 1.9 percent to $33.25.
A measure of commodity shares in the S&P 500 dropped 1.4 percent. Monsanto, the world’s largest seed company, slid 1.8 percent to $75.74. U.S. Steel, the country’s largest producer of the metal by volume, lost 2.7 percent to $28.22.
Hedge funds cut their bets on higher commodity prices by the most in four months on mounting concern that Europe’s debt crisis will derail global growth and curb demand for raw materials. Money managers lowered net-long positions across 18 U.S. futures and options by 11 percent to 898,022 contracts in the week ended April 17, the most since Dec. 20, data from the Commodity Futures Trading Commission show.
Inflation shot up an unexpectedly high 5.2 per cent in March as vehicle prices and rentals continued to escalate, and rising wages add to health and education costs.
The sharp increase in the consumer price index, which caught out economists, reverses the trend of moderating inflation seen in the first two months of the year.
Prices rose 4.8 per cent in January, and then 4.6 per cent in February, but the March figure raises the spectre of a further period of painful price rises.
The banking industry, including 11 SET-listed companies, posted total net profits of 41.36 billion baht in the first quarter, up 8.9% year-on-year.
Siam Commercial Bank (SCB) reported the sector's biggest net profit of 10.34 billion baht. Land and Houses Bank (LH Bank) recorded the highest growth with 54.5%, up from 101 billion baht in the first quarter of 2011 to 156 million baht in the first quarter this year.
Three banks _ SCB, TMB Bank and Kiatnakin Bank (KK) _ reported a lower net profit in the first quarter this year compared with a year earlier.
SCB's net profit fell 20.8% year-on-year as a result of a one-time investment gain arising from the acquisition of shares in SCB Life that were booked in March 2011. Excluding the item, the bank booked a net profit rise of 29.4%.
TMB posted a net profit decline of 5.8%, due to rising provisions for loan loss in accordance with asset quality of the corporate banking business.
KK's net profit fell 7.4% because of rising interest expense associated with higher deposit fees under new regulations of the central bank's Financial Institutions Development Fund (FIDF). The new requirement is imposed on all banks.
Sime Darby and Genting fell 14 sen each to RM9.75 and RM10.66, dragging the KLCI down 3.2 points while Axiata's three sen decline to RM5.34, pushed the index down 0.59 of a point.
BAT fell the most, down RM1.04 to RM55.44, KLK 22 sen to RM23.90, Subur Tiasa 12 sen to RM2.96 and Jaya Tiasa 11 sen to RM9.86 and HL Bank 10 sen to RM2.34.
Among the blue chips, Petronas Chemicals added six sen to RM6.62, pushing 0.605 of a point to the index.
United Plantations was the top gainer, adding 86 sen to RM26, Aeon Credit 38 sen to RM9.56, Dutch Lady 12 sen to RM35 and SapCres 10 sen to RM5.
Standard & Poor’s Rating Services left the status on Indonesia’s sovereign debt at junk, citing the nation’s failure to reduce the fuel subsidy among its concerns over government policy.
The rating agency affirmed the country’s long-term credit rating at BB+ and short-term credit at B, it said in a statement released on Monday. The country’s outlook remained positive. Both credit ratings are one notch below investment grade.
S&P said the ratings reflected “low reported central government fiscal deficits, declining public sector debt burden, strengthening external liquidity and resilient economic performance.”
Indonesia’s government had been hopeful that S&P would follow moves by the two other major rating agencies in the past few months by raising the nation’s debt to investment status for the first time since 1997. Fitch Ratings upgraded Indonesia’s rating in December, followed by Moody’s Investors Service in January.
The Philippine Stock Exchange (PSE) expects P197 billion in fresh equity to be raised from the local bourse this year, including the two high-profile IPOs by GT Capital Holdings of taipan George Ty and the Gotianuns’ banking arm East West Bank.
GT Capital is raising as much as P24.6 billion from an April IPO, while East West Bank is planning a stock debut of up to P6.63 billion, marking the first time a local bank goes public in eight years.
Apart from companies raising fresh capital for expansion, good valuations make it compelling for companies to sell shares to meet the 10-percent minimum public ownership required by the PSE for continued listing.
In 2013, the bourse will start suspending companies that do not meet this requirement.
Yesterday in Asia
Tokyo gave up early gains to close down 0.20 percent, Hong Kong finished 1.84 percent lower, Sydney shed 0.32 percent, Seoul closed off 0.10 percent and Shanghai closed down 0.76 percent.
The preliminary HSBC China manufacturing purchasing managers index rose to a two-month high of 49.1 in April compared with a final reading of 48.3 in March.
– Taipei closed down 0.35 percent, or 26.06 points, to 7,481.09.
Hon Hai Precision lost 3.01 percent at Tw$99.9 while leading smartphone maker HTC was 2.38 percent higher at Tw$473.0.
– Manila bucked the trend to close up 0.13 percent, or 6.63 points, to 5,163.09. Top-traded GT Capital Holdings gained 0.04 percent to 492.20 pesos while Megaworld Corp. was up 3.9 percent to 2.13 pesos.
However, Metropolitan Bank and Trust Co. was down 0.55 percent to 90 pesos.
– Wellington was flat, with the NZX-50 edging down 2.78 points, or 0.08 percent, at 3,513.45.
Contact Energy fell 2.25 percent at NZ$4.78 and Telecom Corp. gained 1.8 percent at NZ$2.25.
– Singapore closed down 1.07 percent, or 32.13 points, to 2,962.35.
Vehicle distributor Jardine Cycle and Carriage was down 1.19 percent at Sg$46.70 while Oversea-Chinese Banking Corp. shed 0.90 percent to Sg$8.83.
– Kuala Lumpur shares fell 0.51 percent, or 8.05 points, to end at 1,583.80.
Plantation group Sime Darby lost 1.62 percent to 9.73 ringgit, while telecommunications company Axiata Group Bhd shed 0.93 percent to 5.32. Malayan Banking gained 0.11 percent to 8.86 ringgit.
– Jakarta closed 0.6 percent lower, or 25.88 points, to 4,155.49.
Car maker Astra International slipped 1.5 percent to 72,200 rupiah, gold and nickel miner Aneka Tambang fell 2.3 percent to 1,730 rupiah and cement maker Semen Gresik declined 1.7 percent to 11,750 rupiah.
– Bangkok edged down 0.44 percent, or 5.25 points, to close at 1,189.35.
Banpu lost 1.06 percent to 558 baht, and PTT Plc fell 1.98 percent to 347 baht.
– Mumbai shares fell 277.16 points or 1.60 percent to 17,096.68. India’s largest private aluminium producer Hindalco fell 4.88 percent to 118.9 while Infosys ended down 3.92 percent at 2,311.95.
Shayne Heffernan Ph.D.
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