ASEAN KEY DESTINATIONS
Asean Stock Watch- August 11
The Dow Jones Industrial Average dived 519.83 points, or 4.62 percent, to finish at 10,719.94, while S&P 500 lost 51.77 points, or 4.42 percent, to close at 1,120.76.
The Nasdaq composite fell 101.47 points, or 4.09 percent, to end at 2,381.05.
European shares tumbled sharply, led by steep declines in French banks amid rumors that France might lose its AAA rating. Meanwhile, Moody's confirmed its AAA rating on France and maintained its stable outlook for France.
Indonesian stocks could still be affected by volatility in the global market despite Wednesday’s rebound that halted a six-day slide, analysts said.
Wall Street stocks slumped on Wednesday as investors turned attention back to possible weak US economic growth, Euro debt crisis to get worst and price pressure in China, the second biggest economy in the world.
“Indonesian stocks will continue to be affected and dragged down until the selling pressure [in the global market] recedes,” said Wilianto Le, the Jakarta-based head of equity research at Nomura Indonesia, the local unit of Japan’s largest brokerage.
Investors on Wednesday saw a sign of hope for the global economic recovery after the Fed’s comment.
The Jakarta Composite Index rose 128.46 points, or 3.4 percent, to close at 3,863.58, rebounding from its lowest point since April 13.
The gain ended six straight days of declines in which the benchmark plunged 11 percent, putting the market into a technical correction.
Nearly 8 billion shares worth Rp 7.65 trillion ($895 million) were traded at the Indonesia Stock Exchange (IDX) on Aug. 10. Gainers far outnumbered decliners, 247 to 23.
Pardomuan Sihombing, head of research at Recapital Securities. “Investors have started to selectively buy blue-chip stocks.” He forecast the JCI could be back above the 4,000 mark before the end of August.
Reuters reported on Wednesday that Indonesia’s Vice President Boediono said it was evident since the 2008 financial crisis that the United States and Europe could no longer be the main engines of growth for the world.
Boediono was addressing trade ministers from the Association of Southeast Asian Nations (ASEAN) in Manado.
Ito Warsito, president director of the IDX, said on Wednesday that the market need not panic because the Capital Market and Financial Institution Supervisory Agency (Bapepam LK) and Self Regulatory Organization had crisis management protocol in place to use when necessary.
Even though net selling by foreigners was Rp 3 trillion over the past three days, total net inflow since the start of year had been Rp 19 trillion, he told reporters at breaking of the fast gathering.
Foreign investors sold some Rp 208 billion in shares on Wednesday, accounting for 62 percent of total transactions by value.
“Indonesian stocks will continue to be affected and dragged down until the selling pressure [in the global market] recedes,” said Wilianto Le, the Jakarta-based head of equity research at Nomura, a global investment bank.
“But we expect Indonesia will become one of the markets that will rebound early once the global market stabilizes. So for long-term investors, this moment is the chance to buy.”
The rupiah rose 0.2 percent against the dollar to 8,525 on Wednesday.
The FBM KLCI was down 6.74 points, or 0.46 percent at 1,473.78 in early trade on Thursday, as local investors took profit following the overnight tumble seen on Wall Street.
Turnover was 329.72 million shares done valued at RM578.35 million. There were 131 gainers, 465 losers and 172 stocks unchanged.
HwangDBS Vickers Research said in a report issued today that the market rebound seen yesterday may be short-lived as the local bourse is likely to surrender all its gains and more following Wall Street's overnight collapse.
The benchmark FBM KLCI could tumble towards the support zone of 1,415 to 1,435. “Investors will be looking to dump shares across the region today after major US equity indices plunged between 4.1 percent and 4.6 percent last night,” HwangDBS said.
Essentially, market sentiment was hit hard amid mounting worries that there would be spillover effects from possible fallout from the prevailing European debt crisis.
“With the number of declining stocks set to overwhelm advancing ones back home, hoping to buck the bearish trend is Malaysia Airports. The stock may react to a media report that airport taxes could be raised from next month,” it added.
Meanwhile, regional peers were mixed in their early trade with Shanghai SE Composite gained 0.24 percent to 2,555.31, Kopsi increased 0.81 percent to 1,820.92 and Singapore's STI down 1.45 percent to 2,780.26.
The ringgit against the US dollar was quoted at 3.0104 against yesterday's close at 3.0071.
Crude oil was down at US$82.83, from yesterday's close of $82.89. Palm oil futures on the Malaysia Derivatives Exchange was up RM9 at RM2,946 per ton.
Philippine share prices on Wednesday snapped a three-day losing streak while the peso firmed up, as investors cheered the decision of the US Federal Reserve to keep key interest rates at low levels until 2013.
At the Philippine Stock Exchange, the composite index soared 133.11 points, or 3.20 percent to 4,290.14, its biggest point and percentage gains since December 2, 2010 when it rose by 146.02 points, or 3.65 percent.
The broader all-shares index rallied 81.90 points, or 2.82 percent to 2,988.08 with all sub-indices recording gains across the board.
Advancers led decliners, 149 to 17, while 17 stocks were unchanged. A total of 7.83 billion shares worth P7.62 billion changed hands.
“The US market was able to push for an advance of almost 4 percent as Fed announced it will be keeping rates close to zero,” said Maria Arlysa Narciso of AB Capital Securities Inc.
Wall Street roared in approval of the Fed move, finishing with gains of 429 points, or 4 percent to 11,239.77.
Despite Wednesday’s rebound, volatility is still in the cards since investors are still wary of US spending cuts and weak employment data, said Freya Natividad, investment analyst at 2TradeAsia.com.
Natividad said the Fed has also been silent on the next round of quantitative easing measures, a source of monetary stimulus for the US government.
The PSE index is seen to retest the 4,250 to 4,300 levels and then gradually the 4,500-mark. Support is at 4,000.
“With all the roll and tumble of the US markets, the PSEi will remain volatile and vulnerable to the direction and sentiments abroad. It must make its way past 4,340 again but backed with strong, positive and sustainable developments,” said Narciso, adding that the three-day decline brought the PSEi to oversold levels.
“The weight hanging over the US markets poses a heavy burden on Asian markets. In the Philippines, even if the country is still fundamentally sound, a review on targets is imminent given the weakness of its major economic partners,” Narciso added.
Asian currencies, including the peso, were mostly up Wednesday after the Fed offered to keep interest rates on hold for at least two years, thus weakening the US dollar.
At the Philippine Dealing System, the local unit gained 4.5 centavos to close at 42.475 against the greenback from 42.52 the previous trading day.
Market players said anything other than direct intervention by the Philippine central bank or a complete turnaround in market sentiment was unlikely to stem further gains in the currency.
The dollar-peso pair opened at 42.39 and moved to a high of 42.56 and a low of 42.35.
Total trading volume eased to $950.98 million from $1.297 billion the previous day.
Expect the currency pair to trade within 42.10 to 43.10 this week, with the Bangko Sentral ng Pilipinas present to smoothen volatility.
Singapore shares opened lower on Thursday, with the benchmark Straits Times Index at 2,746.69 in early trade, down 2.46 percent, or 74.4 points. Around 229.8 million shares exchanged hands. Losers beat gainers 315 to 19
The Stock Exchange of Thailand yesterday rebounded after an overnight rally on Wall Street as the US Federal Reserve pledged to keep its interest rate at a record low to revive the flagging economic recovery in the United States.
Gold for immediate delivery rose to US$1,764 an ounce while Thailand's Gold Traders Association adjusted the price of domestic gold bar eight times for an aggregate decline of Bt200 per baht weight to Bt24,900.
Oil rebounded from a 10-month low in the New York Mercantile Exchange, with crude for September delivery advancing 4 per cent to $82.43 a barrel.
After two days of sharp falls on a downgrading of the US sovereign debt by Standard & Poor's, the SET Index bounced back 1.69 percent, or 17.67 points, to close at 1,060.21 points. Trading turnover was Bt35.3 billion. Combining with net sellers of Thai stocks worth Bt1.79 billion yesterday, foreign investors' selling totalled Bt13.75 billion from the beginning of this month.
The Federal Open Market Committee's decision represents the biggest effort since last November to jolt the US economy and revive confidence after S&P lowered the US credit rating last week.
The dollar continued its weakening versus the majority of its most traded peers as the Fed said growth was "considerably slower" than it expected, according to Bloomberg.
The baht was trading at 29.90 per US dollar as of 5:33pm, with the strongest level of 29.81/29.83 per dollar.
"The baht is still volatile from external factors. Despite the Fed's low-rate pledge, investors think the measure is not aggressive enough and does not give a big surprise to the market," said a currency trader at CIMB Thai Bank.
"We saw a Tuesday rally on Wall Street as investors are expecting a better return on equities," the trader said.
Trades on the HCM City Stock Exchange failed to sustain an early rally yesterday, with shares falling in the closing minutes and the VN-Index ending the session at 385.96, a decline of 0.45 per cent from the previous day's close.
The value of trades reached VND485.4 billion ($23.6 million) on a volume of 27.1 million shares. Weak demand and the decline in the volume and value of Sacombank (STB) caused yesterday's market plunge, said analysts of financial information website vietstock.vn. STB plunged 12.6 per cent yesterday on a volume of just 99,000 shares, as the ex-date passed for shareholders to participate in the bank's dividend payout.
Of the 10 leading shares by capitalisation, those of real estate developer Vincom (VIC) dropped to floor price, while insurer Bao Viet Holdings (BVH) fell by 3.4 per cent and PetroVietnam Finance (PVF) dropped by 2.5 per cent.
Four others managed gains of 0.7-2.1 per cent, including Eximbank (EIB), real estate developer Hoang Anh Gia Lai (HAG), software giant FPT (FPT) and food processor Masan Group. Property trader Tan Tao (ITA) was the most-active share with over 1.1 million shares traded.
After several days of soaring as shares plunged, gold prices eased yesterday. Tuesday's decision by the State Bank of Viet Nam to allow the importation of 5 tonnes of gold helped ease the domestic price to VND44.4 million (US2,200) per tael.
"However, we can only soothe the gold fever if world gold prices also decline," said Bao Viet Securities Co analyst Tran Hai Yen.
On the Ha Noi Stock Exchange, the HNX-Index recovered 1.5 per cent of its value on mixed trading to conclude the session at 66.62 points. Value fell by 31.5 per cent from Tuesday's session to VND264.3 billion ($12.8 million) on a volume of 26.75 million shares.
Kim Long Securities Co (KLS) was the most-active share nationwide, with 3.5 million changing hands.
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