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ASEAN MArket Outlook

 By Shayne Heffernan Ph.D.

Today’s gain on Wall St extended this year’s advance in the S&P 500 to 11 percent and the benchmark gauge for American equities trimmed its monthly decline to 0.6 percent. If the S&P 500 erases its April drop, it will cap the fifth straight month of gains, the longest winning streak since 2009. Financials and energy shares had the biggest losses in April, while telephone companies rose.

By comparison ASEAN markets are exceptionally undervalued.

Singapore

Another hot IPO hit the Singapore Exchange yesterday, Global Premium Hotels Ltd. (GPHL), Singapore’s second-biggest budget hotel chain, rose 9.6 percent in its trading debut in the city-state on expectations it will benefit from a surge in travelers.

The shares climbed to 28.5 Singapore cents at the close, up from the 26 Singapore cents priced for its initial public offering. The Singapore benchmark Straits Times Index climbed less than 0.1 percent.

The U.S. dollar was quoted at S$1.2414 late in the Asian trading session, recovering from an intraday-low of S$1.2399--its lowest level since Oct. 31, 2011--and compared with S$1.2460 late Wednesday.

Domestic data showing manufacturing output in March contracted at a rate less severe than expected also helped the Singapore dollar extend its gains against the greenback.

Output fell 3.4% year-on-year in March, compared to the 6.0% fall expected in a Dow Jones poll of 11 economists. The data reaffirmed the view that Singapore's economy remains resilient, giving the central bank room to prioritize curbing inflation with tighter policy.

Analysts have said that the Monetary Authority of Singapore's policy tightening earlier this month could be repeated should inflation remain at current levels.

Thailand

Thailand should be in everyone's portfolio, the world’s largest exporter of rice and rubber, Thailand is also the 14th largest vehicle producer and the second-biggest source of computer hard drives. So like Japan’s earthquake and tsunami last March, Thailand’s October floods had a wider impact than expected, throwing its own economy into reverse and disrupting electronics and automotive shipments worldwide.

Thailand is likely to deliver GDP growth this year of at least 5.5 per cent. Auto makers have resumed full production, according to Moody’s, but electronics plants are running at less than half pre-flood levels. Restarting them should result in a sharp rebound. Repairing them boosted investment by 8 per cent in the first quarter.

Exports might appear the weak link. Gross exports are equivalent to 71 per cent of Thailand’s GDP, and they are sliding, particularly to Europe. But part of the slump is because factories were shut. Once they’re up and running, exports should rebound.

Rice and rubber exports have slumped too. That’s partly because Prime Minister Yingluck Shinawatra’s government is spending 400 billion baht ($13.5-billion) to support reconstruction and consumption in rural areas where her party draws most of its support. Paying farmers above-market prices for rice and rubber to build stockpiles means fewer exports.

An expected rise in Chevrolet Colorado demand overseas has prompted General Motors Thailand to step up pickup truck production as well as power train output to cater to increased automobile production.

The automaker declined to confirm the increased Colorado volume but said the maximum capacity of GM Thailand's plant in Rayong is 180,000 units per year including passenger cars and sport utility vehicles (SUV).

The power train plant, also in Rayong, has a maximum capacity of 130,000 units per year for the Colorado and the truck-based Trailblazer SUVs.

The automaker is preparing to export the Colorado to more international markets after the midsize pickup's launch in Thailand last October and recent local launches in Malaysia and Indonesia.

Shipments will begin in June to Australia, followed by the Middle East, and then to Russia next year.

Indonesia

Last year Indonesia grew 6.5 percent, the highest since 1996, — the year before the Asian financial crisis struck. Growth in private consumption, stronger investment, and rising exports all contributed. ADB expects the economy to expand 6.4 percent this year and 6.7 percent in 2013.

Foreign investors have closely monitored these accomplishments, as have credit rating agencies Moody’s Investors Service and Fitch Ratings, both recently boosting Indonesia’s sovereign credit rating to investment grade.

Foreigners own some 60 percent of the shares traded on Indonesia’s stock exchange. And they hold one-third of all local currency (LCY)-denominated government debt. The Jakarta Stock Exchange Composite Index gained 3.2 percent in 2011 and is up 8.8 percent so far this year. Yields on Indonesian government bonds are third highest in Asia — after India and Vietnam.

Continued accommodative monetary policy combined with low returns in mature markets will keep foreign portfolio investors investing in emerging markets like Indonesia — particularly those that have undergone significant capital market reforms and are strengthening macroeconomic fundamentals in support of domestic demand-led economic growth.

Last month, the Organization for Economic Cooperation and Development (OECD) upgraded its Country Risk Classification for Indonesia, which now stands alongside Brazil, India, Peru, Russia, South Africa, Thailand, and Uruguay.

Malaysia

The KLCI closed just 0.34 of a point up to 1,579.69. Turnover was 1.45 billion shares valued at RM1.46bil. There were 253 gainers, 453 losers and 321 stocks unchanged.


Crude palm oil futures for third-month delivery were unchanged at RM3,511. The ringgit strengthened against the US dollar to 3.0508, its highest since April 3.

At Bursa Malaysia, DiGi's 10 sen gain to RM4.06 lifted the KLCI up 1.84 points while AirAsia's seven sen gain to RM3.38 added 0.45 of a point to the index.

United Plantations was the top performer, up 44 sen to RM25.94, Panasonic 40 sen to RM23, Bat 38 sen to RM55.50 and Dutch Lady 20 sen to RM33.90.

Berjaya Corp-WB rose 21.5 sen to 22 sen but the loan stocks Bcorp-LD fell 18.5 sen to 81.5 sen.

Among the index linked stocks, Genting fell 10 sen to RM10.36, dragging the index down by 0.87 of a point while Public Bank's six sen decline to RM13.66 shaved 0.66 of a point from the index.

Country View was the top loser, down 24 sen to 66 sen but with only 800 shares done. Jaya Tiasa lost 17 sen to RM9.41 while SapuraCrest gave up 12 sen to RM5 and Kencana 10 sen to RM3.30. SEGi shed nine sen to RM1.72 following the following the unattractive offer made by Navis Capital Partners Ltd at RM1.714 cash.

Philippines

The main-share Philippine Stock Exchange index extended its winning streak for the fourth day, adding 14.13 points, or 0.27 percent, to finish at a record high of 5,218.97.

A new intraday record was all set at 5,247.14.

The PSEi so far has marked 17 record closings since the start of the year. In all, the local index has gained by 847.01

All counters were up except for property. Value turnover was heavy at P7.6 billion.

Despite the overall index gain, investors were becoming increasingly selective. Only 79 stocks advanced against the 102 that declined, while 32 stocks were unchanged.

The index advancers were led by Philex, still basking on the recent oil and gas finds at Recto Bank, which has been said to contain resources bigger than that of Malampaya project.

PLDT, SM Investments, Metrobank and ALI also aided the index.


Yesterday in Asia

Tokyo was flat, adding 0.82 percent to close at 9,561.83, Seoul gained 0.10 percent, or 2.06 points, to 1,964.04 and Sydney was 0.34 percent, or 14.8 points, higher at 4,375.2.

Hong Kong gained 0.79 percent, or 163.42 points, to 20,809.71 and Shanghai was flat, edging down 2.17 points to 2,404.70.

In other markets:

– Singapore ended flat, edging up 1.69 points to 2,981.47.

Fraser and Neave gained 2.62 percent to Sg$7.06 and DBS Group rose 0.15 percent to Sg$13.72.

– Taipei fell 0.55 percent, or 41.83 points, to 7,521.35.

Acer fell 1.33 percent to Tw$33.45 while UMC was 0.34 percent higher at Tw$14.95.

– Manila closed 0.27 percent, or 14.13 points, higher at 5,218.97 to a new record high.

Philex Mining was up 7.02 percent at 25.90 pesos while subsidiary Philex Petroleum gained 35.8 percent to 33 pesos. DMCI Holdings bucked the trend to fall 3.88 percent to 60.55 pesos.

– Wellington ended flat, edging 0.97 points up to 3,520.82.

Contact Energy rose 0.63 percent to NZ$4.76, Fletcher Building was 0.16 percent lower at NZ$6.18 and Telecom fell 1.90 percent to NZ$2.58.

– Kuala Lumpur was flat, nudging 0.34 points up to 1,579.69.

Property firm UEM Land Holdings slid 2.0 percent to 1.99 ringgit while Hong Leong Financial Group dropped 1.3 percent to 12.04 ringgit but mobile phone operator DiGi.com climbed 2.5 percent to 4.06 ringgit.

– Jakarta gained 0.40 percent, or 16.66 points, to 4,180.31.

Telekomunikasi Indonesia rose 1.27 percent to 8,000 rupiah, Timah added 0.56 percent to 1,810 rupiah, and Semen Gresik gained 3.35 percent to 12,350 rupiah.

– Bangkok ended 0.66 percent, or 7.91 points, higher at 1,209.27.

– Mumbai fell 0.12 percent, or 20.62 points, to 17,130.67, its second straight day of losses, as power and auto stocks fell.

India’s private Tata Power fell 3.26 percent to 102.3 rupees while Sterlite, the local arm of global resources firm Vedanta fell 2.6 percent to 105.

Shayne Heffernan Ph.D.  

Linda Johnson, Business Development Director - Private Client Group, Heffernan Capital Management
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