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ASEAN STOCK WATCH Asean Affairs  25 April 2013 

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Durable goods orders slumped 5.7 percent as demand fell almost across the board, the Commerce Department said on Wednesday. The drop in orders for these goods - items from toasters to aircraft that are meant to last three years or more - followed a 4.3 percent rise in February.

Financial data firm Markit said on Tuesday its preliminary factory purchasing managers' index hit a six-month low in April, and other regional factory surveys have also exhibited weakness this month.

Against the backdrop of a tame inflation environment, the soft durable goods data strengthened the argument for the Federal Reserve to maintain its monetary stimulus. The U.S. central bank meets next week and is widely expected to keep purchasing bonds at a pace of $85 billion a month.

U.S. Treasury debt prices squeezed higher, while stocks on Wall Street were little changed after the data. The dollar weakened against the yen.

Shipments of core capital goods - which the government uses to calculate equipment and software spending in its gross domestic product report - rose 0.3 percent in March. However, shipments for February were revised to show a 1.2 percent rise rather than the previously reported 1.9 percent increase.

That suggests growth in business spending in the first quarter slowed sharply from the fourth quarter's 11.8 percent annual pace. Indeed, some economists lowered their January-March gross domestic product estimates.

Singapore

Singapore Airlines has almost doubled its stake in Virgin Australia Holdings Ltd, just a day after the competition watchdog cleared Virgin's takeover of Tiger Airways.

In a release to the Australian Securities Exchange, Virgin revealed Singapore's voting power had increased to 19.9 per cent from its previous standing at 10 per cent.

Singapore paid more than $122 million to acquire 255,541,946 shares at 48 cents each from airline co-founder Richard Branson, lifting its total shareholding to 513,665,123.

The move now installs Singapore as the most powerful shareholder on Virgin's register, overtaking Air New Zealand.

Yesterday, the Australian Competition and Consumer Commission said it would not oppose Virgin's proposed acquisition of a majority stake in Tiger Airways.

If it clears the final hurdle of approval by the Foreign Investment Review Board, the deal will effectively return the Australian aviation market to a duopoly shared by Virgin and Qantas Airways Ltd.

In a statement, the ACCC said Virgin acquiring a 60 per cent stake in Tiger was unlikely to lead to a substantial lessening of competition in the Australian market for domestic air passenger transport services.

"Essential to reaching this view was the ACCC’s assessment, made after thorough and extensive testing of the issue, that Tiger Australia would be highly unlikely to remain in the local market if the proposed acquisition didn’t proceed," ACCC chairman Rod Sims said.

The Straits Times Index rose 38.36 points to end at 3,322.71.

Volume was 2.4 billion shares.

Gainers led losers 290 to 126.

Golden Agri-Resources climbed 4.76 per cent to S$0.55, Wilmar International was up 0.9 per cent at S$3.31, while Noble Group advanced 0.9 per cent to S$1.14.

Among banks, OCBC ended 3.3 per cent higher at S$10.90, DBS gained 3.0 per cent to S$15.98, while UOB rose 0.1 per cent to S$20.60.

Singapore Airlines climbed 1.2 per cent to S$10.78 while Keppel Corp. declined 3.36 per cent to S$10.92.

Indonesia

Bank Internasional Indonesia, the country’s seventh-largest lender, plans to raise funds through the sale of new shares in June, a top executive said.

The lender, majority-controlled by Malaysia’s Maybank, expects to raise Rp 1.5 trillion ($154 million) from the move, BII president director Khairussaleh Ramli said in Jakarta on Monday. The terms of the limited public offering were not disclosed.

Khairussaleh said the lender would hold a shareholder meeting to vote on the plan.

Meanwhile, the lender plans to reactivate its branch office in Mumbai in June.

He said the branch in the Indian city was closed in 2008, when the company decided to focus on its Indonesia business.

“We chose Mumbai because nowadays, many companies from this region are opening offices there, in trade and in business,” Khairussaleh said.

BII has used $25 million of its internal cash to reopen its Mumbai branch. The amount, he added, is in line with regulations set by India’s central bank.

“We are now awaiting the approval of the Central Bank of India,” Khairussaleh said, adding that BII did not expect the Mumbai branch to generate much profit this year, but that it is expected to reach a substantial profit by the third year.

BII also has a branch in Mauritius, focusing on investment, but its contribution to corporate profit is negligible.

Khairussaleh added that the bank plans to expand its branches across Indonesia from the current 415 to 500 by 2015. Each new branch office requires Rp 50 billion to Rp 75 billion to establish .

Thailand

Most of Thai people believed the country is ready for the ASEAN Economic Community (AEC) due to be established at the end of 2015, poll revealed on Wednesday.

Puntaree Issarangkul Na Ayudhaya, assistant director of Assumption University's Abac Poll, said that about 61.7 percent of respondents said they believed Thailand is ready for AEC.

However, 33.4 percent of respondents disagreed, saying the country is not well prepared for the planned regional economic community.

The pollster surveyed 1,525 people aged over 18 in Bangkok, seeking opinions on Thailand's readiness for the AEC, between April 15 and April 23.

Moreover, most Thais, about 80 percent, said Prime Minister Yingluck Shinwatra should give priority to the country's preparation for the AEC's establishment whose objective is to create a single market.

Asked about top priorities for getting the country ready for the new ASEAN community, 24.8 percent said the development of an educational standard nationwide, followed by improving people's abilities in foreign languages, particularly English (23.6 percent) . The upgrading of laborers' skills took the third place, with 18. 2 percent support.

Asked to choose the top three countries which they believed have the highest readiness and potential for the AEC, 34.5 percent pointed to Singapore, 25.7 percent preferred Thailand and 9.8 percent backed Malaysia.

Puntaree said the poll results showed that the respondents gave importance to the preparation of both the people and the country for the debut of the AEC.

Philippines

Gaming firm Melco Crown Philippines (MCP) has raised $377 million from an equity placement deal priced at the top end of the target range.

Melco’s follow-on offering or re-initial public offering (IPO) was priced at P14 a share—the high end of the P11-P14 indicative price range—in another warmly received equity deal out of the Philippines.

“The successful deal exemplifies the strong prospects of the Philippine gaming industry and MCP’s experience to deliver as an operator,” said Lauro Baja, managing director at UBS Philippines, which arranged the equity deal together with Citigroup.

The order book was more than six times oversubscribed with 140 investors participating in the transaction. By geographical distribution, Asia accounted for 48 percent of the deal while the United States took up 37 percent and Europe, 15 percent.

A lion’s share of the subscriber base, about 72 percent, consisted of anchor and long-term investors, UBS reported.

The $377-million deal included the over-allotment in case of strong demand. Melco sold a total of 1.1 billion shares, of which the over-allotment portion was 117 million shares, Baja said.

MCP is the local unit of Macau’s casino giant Melco group, which recently entered into a partnership with the SM group to operate the $1.1-billion Belle Grande integrated resort complex in the Entertainment City that will open its doors by the third quarter of next year.

Melco’s key investors—Lawrence Ho, the son of casino tycoon Stanley Ho, and his business partner, Australian billionaire James Packer—were recently in town to formalize the gaming cooperation deal with the SM group and leisure estate unit Belle Corp. During his visit, Ho said he had no doubt that the Philippine gaming industry could be as big as Las Vegas or Singapore over the next five to six years.

Citing the “clustering” effect of gaming hubs being developed at Entertainment City, the co-chair and chief executive officer of Melco Crown Entertainment Ltd. said the Philippine gaming market had the potential to grow quite significantly, citing analysts’ consensus that gaming revenues in the Philippines could hit $3 billion by 2015 with the opening of its hub alongside those of Solaire, Resorts World and the existing operations of state-controlled Philippine Amusement and Gaming Corp.

Melco is investing at least $600 million in the entertainment complex. This does not include the investment to be made by the SM group.

Malaysia

The property market outlook for this year is flat overall with some growth opportunities in prime locations and more focus on areas near public transport lines and affordable housing.

According to real estate services provider CH William Talhar & Wong managing director Foo Gee Jen, the total transaction value for the sector will likely be lower as there will more affordable housing entering the market, although volume is unlikely to drop.

“I believe this year will be the reverse of last year when transaction value was higher because the market was focused on developing properties RM500,000 and up in 2011 and 2012,” he said.

Foo also believed there will be a range of new high density residential developments along the expanding public transport lines.

“The market for affordable houses is those who rely on public transport, (therefore) developers won't go into such housing projects unless the area is supported by infrastructure,” he said.

Yesterday in Asia

Tokyo rose 2.32 percent, or 313.81 points, to 13,843.46, while Seoul was up 0.87 percent, or 16.68 points, at 1,935.31 and Sydney was 1.72 percent higher, adding 86.2 points to 5,102.4.

In the afternoon Shanghai rose 1.55 percent, or 33.78 points, to 2,218.32 while Hong Kong added 1.73 percent, or 376.44 points, to 22,183.05.

– Singapore rose 1.17 percent, or 38.36 points, to 3,322.71.

Oversea-Chinese Banking Corporation added 3.32 percent to Sg$10.90, while Singapore Airlines was up 1.22 percent to Sg$10.78

– Taipei rose 1.02 percent, or 80.94 points, to 8,023.71.

Formosa Plastics was up 4.78 percent at Tw$72.3 while HTC added 3.92 percent to Tw$278.5.

– Manila fell 0.14 percent, or 9.67 points, to 6,972.69.

Philippine Long Distance Telephone shed 0.20 percent to 2,988 pesos and Ayala Land lost 1.59 percent to close at 31 pesos.

– Wellington ended 0.50 percent, or 22.48 points, higher at 4,538.98.

Air New Zealand climbed 5.6 percent to NZ$1.52 and Fletcher Building was up 2.36 percent at NZ$8.71 but Telecom shed 1.5 percent to NZ$2.61.

– Jakarta gained up 0.73 percent, or 36.28 points, at 5,011.61.

Ramayana Lestari Sentosa jumped 7.69 percent to 1,540 rupiah, while Pabrik Kertas Tjiwi Kimia dropped 2 percent to 1,960 rupiah.

– Kuala Lumpur added 0.41 percent, or 6.96 points, to 1,707.35.

– Bangkok added 0.29 percent, or 4.50 points, to 1,553.85.

CP All dropped 10.34 percent to 39 baht, while Siam Makro jumped 10.56 percent to 754 baht.

– Mumbai was closed for a public holiday



Shayne Heffernan Ph.D.
Economist/Hedge Fund Manager


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ASEAN  ANALYSIS

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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