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ASEAN STOCK WATCH 18  August  2010

ASEAN Markets Head to Record Highs

Shayne Heffernan

A strong night of trading in the USA will remove most of the selling pressure today, expect markets tto head to new record highs.

Stocks in the Philippines closed higher on Tuesday, shrugging off a cautious overseas environment for the second day in a row, as bargain-hunters overpowered profit-takers to push up the index back to the 3,500 level.

The main-share Philippine Stock Exchange index added 22.62 points or 0.65 percent to close at 3,502.25.

Value turnover was heavy at P4.1 billion. Local sentiment was buoyant as there was a lot of liquidity seeking higher returns on expectations of a prolonged low-interest rate environment. There were 71 advancers, 60 decliners and 43 unchanged stocks.

The firm trading was supported by the counter for holding firms, which surged 1.4 percent. Most other counters rose modestly.

PLDT, the day’s most actively traded stock, was among those that benefited from bargain-hunting. Other gainers were EDC, Union Bank, Megaworld, Alliance Global, Lopez Holdings, DMCI, Banco de Oro, First Gen, SM Investments, PNB, Filinvest Land and First Holdings.

The relatively buoyant local stock market trading may have also been boosted by a prospective slight rebound by the closely watched Dow Jones Industrial Index in the next session, as suggested by a 19-point rise in the Dow stock futures.

The benchmark FBM KLCI closed at 1378.47 points on Tuesday, rose 7.89 points. The top gainer of the day, Nestle rose 34 sen to close at RM39.50,

Malaysian Airline System Bhd, which announced a net loss of RM534.7mil for the second quarter ended June 30, 2010, dropped 8 sen to RM2.20.

Meanwhile, YTL closed unchange at RM7.39; CIMB surged 6 sen to RM7.39; IOI was up 1 sen to RM5.16 and Maybank jumped 3 sen to RM7.97.

Ebeling Heffernan Strong buy Genting Bhd rose to its highest level in 34 months yesterday after Citigroup Inc raised its rating on the stock to “buy” from “hold”. Asia’s second-biggest listed casino operator saw its stock close up 6.7% to RM8.72 yesterday, its highest since Oct 29, 2007.

Genting, which holds a 52% stake in Genting Singapore PLC, has been re-rated to a ‘’buy’’ or ‘’outperform’’ call by most analysts based on the latter’s second-quarter profit of S$396.5mil from a loss previously.

Genting Malaysia (GENM) will spend $1.3 billion to invest in its video lottery project in New York, according to a report submitted to New York regulators.

Genting will pay a licensing fee of $380 million and $350 million to develop the site, according to an edited copy of the proposal posted on the New York lottery regulator’s website. A Genting official confirmed that a Memorandum of Understanding (MoU) was signed on Aug 13.

Earlier this month, the New York state lottery recommended a bid from Genting New York, a subsidiary of Genting Malaysia, to develop and operate a video lottery facility at the Aqueduct racetrack in Queens.

Genting New York said in a statement its proposal will offer “an enormous economic boost” to the New York economy, including creating more than 2,000 jobs and generating more than $500 million per year in state revenue.

The Stock Exchange of Thailand (SET) composite index went up 5.23 points or 0.61% to close at 865.78 points at the end of trading session on Tuesday afternoon. The trade value was 28.15 billion baht.

Top five most active values were as follows;

JAS closed at 1.29 baht, up 0.12 baht (10.26%)

IVL closed at 24.80 baht, up 2.00 baht (8.77%)

TRUE closed at 6.25 baht, up 0.20 baht (3.31%)

CPF closed at 25.00 baht, up 0.10 baht (0.40%)

TMB closed at 2.18 baht, up 0.12 baht (5.83%)

Foreign investors bought 46 million baht ($1.45 million) in Thai shares on Tuesday, adding to net purchases of $12.5 million on Monday. Net foreign outflows this year fell to 1.9 billion baht ($59.75 million), according to stock exchange data.

Hitachi Global Storage Technologies (HGST), the world’s third largest hard-disk drive manufacturer, is preparing to invest 15.53 billion baht in Thailand where the data-storage industry aims for continuous annual export growth of 10-15%.

The latest investment from HGST has been approved by the Board of Investment (BoI) for the production of HDD and components including head gimbal assembly (HGA) at its plant in Prachin Buri, according to the BoI.

HGST is among the world’s top four HDD players operating in Thailand. With the presence of Seagate Technology, Western Digital (WD) and Toshiba Storage Devices, the kingdom accounts for 90% of HDD production worldwide.

A substantial foreign exchange gain has helped Thai Airways International (THAI) to avert an expected loss in the second quarter. The period was plagued by a series of troubles including Thailand’s deadliest political unrest in recent times.

The flag carrier instead posted a net profit of 1.55 billion baht, or 91 satang a share, against a net loss of 5.4 billion baht, or 3.18 baht a share, in the same period last year, the airline said in a statement yesterday.

A forex gain of 4.39 billion baht eclipsed other positive factors contributing to the second-quarter results, including increased revenue, continued cost-cutting measures and greater cargo volume.

These factors softened adverse effects; namely, lower traffic during the volcanic eruption in Iceland, the domestic political unrest and the low travel season.

Piyasvasti Amranand, the president of THAI, earlier said the country’s political turmoil, which killed 90 and wounded nearly 2,000, had caused a six billion baht revenue shortfall that would be reflected in the airline’s second-quarter results.

As a result, the airline’s average cabin factor was 64.6%, down slightly from 66.2% in the same period last year.

However, cargo traffic benefited from the global economic recovery and healthy Thai exports, boosting the average freight load factor to 64.8% from only 48.5% in the same period last year.

Revenue rose by 14.5% year-on-year to 39.6 billion baht but expenses grew by 10% to 41.9 billion baht due mainly to a 46.6% increase in jet fuel prices.

The carrier’s cargo revenue soared 75% year-on-year to seven billion baht in the second quarter.

Singapore shares ended lower on Tuesday, with the benchmark Straits Times Index at 2,923.36, down 0.35 per cent, or 10.15 points.

About 1.5 billion shares exchanged hands.

Losers beat gainers 271 to 170 NOL finalized an order to build two new 10,700-TEU container ships for delivery in 2012.

NOL reported that its 4-week container volume rose 18% and its average revenue per FEU rose 39% from the same period a year ago.

Neptune Orient Lines has confirmed its commitment to slow steaming by signing a contract for two 10,700 teu boxship newbuildings that will add to a series of eight vessels of similar size already on order.

The Singapore line, which signed a letter of intent for the 10,700 teu pair last month, formally converted the option into a firm order with Daewoo Shipbuilding & Marine Engineering yesterday, for delivery in 2012.

The pair form part of a US$1.2bn, 12-ship order that includes a US$975m contract for 10 ships of 8400 teu capacity placed with DSME in July. The 10,700 teu vessels are costing US$112m each.

They will bring to 10 the number of ships in that size category that NOL has on order, underlining the fact that the line believes slowsteaming is here to stay and that more ships are needed for a standard Asia-Europe loop to compensate for reduced ship speeds.

The other eight, ordered in 2007, are also due to be completed in 2012.

The line’s return to the shipyards follows a three-year gap, with NOL one of the few carriers not to embark on a large fleet expansion program.

It has also resisted the move to very large boxships, arguing that 10,000 teu vessels have far greater flexibility since they can easily be deployed in both the Asia-Europe and trans-Pacific trades. Confirmation of the latest order coincided with NOL’s trading update for July that revealed a continued strong recovery in the container trades.

NOL’s liner shipping arm APL handled 18% more cargo in the four weeks to July 23 than in the corresponding period of last year, with liftings of 220,200 feu. That brought year-to-date growth to 35%, with volumes in the first seven months of the year reaching 1.6m teu.

Cosco’s subsidiary has delivered a bulk carrier of 57,000 dwt to its European buyer. Olam said it is in advanced stage of negotiation with the government of Gabon to develop a special economic zone at Nkok and plans to develop a palm oil plantation.
Olam said it will review NZ Farming Systems Uruguay’s (NZFSU) annual results before deciding on a future course of action on its NZ$0.55 for the company.

The Uruguayan based Union Agriculture Group has placed a rival takeover offer for NZFSU at NZ0.60 per share.
Commodities firm Olam said it will invest US$43.5 million to set up a greenfield cocoa processing facility, as well as a primary processing and warehousing facility in the Ivory Coast.

Olam said the investment will be fully funded by a combination of internal accruals and borrowings.

The cocoa processing plant in the city of Abidjan will process approximately 60,000 metric tonnes of cocoa beans into cocoa products, namely liquor, butter and cake.

It will be supplied with clean cocoa beans from Olam’s existing primary processing plant in Abidjan.

The primary processing facility in the town of San Pedro will be a modern drying, cleaning and sorting plant along with the necessary storage facilities to ensure that Olam continues to expand and develop its role in the bean export business in the African nation.

The Ivory Coast is the world’s largest cocoa producer accounting for 1.3 million metric tonnes or 40 per cent of global production.


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