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ASEAN STOCK WATCH 19  August  2010

ASEAN Sets the Pace for Global Rally

Shayne Heffernan

ASEAN markets are moving higher this week, and looks like they are going to go higher over the long and short term.

The Singapore Market looks very strong going forward, there is an excess of capital on the sidelines in Singapore according to Shayne Heffernan of Ebeling Heffernan pointing to Capitaland that yesterday sold $350 million worth of 10-year, Singapore-dollar bonds more cheaply than expected, in a debt issue that was heavily oversubscribed by investors hungry for returns.

The property firm, South-east Asia’s biggest developer, had planned to sell just $150 million worth of the senior, unsecured bonds, but it agreed to increase the size of the issue by $200 million in the face of overwhelming demand from investors.

The bond sale was announced at 10am and it took just 30 minutes to draw orders of $150 million, said Clifford Lee, head of fixed income at DBS Group, the sole manager of the sale. When the sale ended four hours later, it had attracted $1.2 billion worth of orders from 78 accounts – eight times the planned issue size.

The bond sale was mainly intended to establish a benchmark for CapitaLand’s 10-year borrowing costs, Mr Lee said.

Singapore investors bought 90 per cent of the bonds with the remaining 10 per cent sold to overseas investors, mainly in Hong Kong.

Singapore shares rebounded from two days of losses, rising 0.1 percent as investors were encouraged by strong U.S. corporate earnings which could further bolster Asian markets.

At the lunch break, the Straits Times Index (STI) was up 4.14 points at 2,927.50. More than 234 million shares had changed hands.

U.S. home building and industrial output both increased in July, and Wall Street rose overnight on higher-than-expected earnings from two U.S. retail giants and a $39 billion takeover bid in the farm sector. [ID:nN17118370] [ID:nN17211536]

“The markets overnight were bolstered by better-than-expected U.S. industrial production figures. I think the markets globally had been a bit overly focused on the negative news over the last few weeks,” said David Cohen, an economist at Action Economics.

“Although there is plenty of uncertainties clouding the outlook, but I think the global economy can escape a double dip, and in that context the Asian economies should be able to continue posting positive growth even if the pace is somewhat slowing,” he said.

Shares of the world’s largest listed palm oil plantation firm, Wilmar International (WLIL.SI), rose as much as 2.4 percent after index provider MSCI (MSCI.N) raised the weighting on the company on its Singapore index.

UBS said in a report Wilmar now accounts for 5.3 percent of MSCI Singapore index from 3.6 percent, ahead of the broker’s expectation of 5.1 percent.

The JCI climbed 19.49 points, or 0.6 percent, to 3072.09 on Wednesday. Volume was heavy, with 4.4 billion shares worth Rp 4.1 trillion ($455 million) changing hands. Gainers outnumbered decliners 111 to 93.

President Susilo Bambang Yudhoyono forecast higher growth and promised more development in his Independence Day address.

“The presidential speech on Monday that focused on infrastructure development provided local sentiment to boost the [Jakarta Composite Index.

“The JCI also received a boost from the regional market, especially after the Conference Board’s Tuesday report on China,” Janson said.

The board’s leading economic index on China climbed 0.8 percent for June, helping allay fears of slowing growth in the Asian giant.

Infrastructure stocks reaped immediate benefit from Yudhoyono’s plans to lift spending on development.

Toll-road operator Jasa Marga advanced 5.7 percent to Rp 2,800, while Indocement Tunggal Prakarsa, the nation’s second-biggest cement maker, surged 5.6 percent to Rp 17,050.

On the downside, the agriculture sector slipped as Astra Agro Lestari, the nation’s biggest listed palm oil plantation company, declined 1.5 percent to Rp 19,800.

Palm oil futures retreated to 2,621 ringgit on Wednesday after falling 1.1 percent to 2,646 ringgit ($837) a metric ton in Kuala Lumpur the day before.

The rupiah was stable at 8,968 against the dollar as of 4:25 p.m. The currency was little changed amid continued speculation the central bank would act to curb appreciation that may hurt the nation’s exports.

The government’s benchmark 10-year bonds fell, pushing their yield to a three-week high.

According to Bank Indonesia Governor-designate Darmin Nasution, the rupiah was expected to trade between 9,000 and 9,200 this year.

“The statement from the central bank has restricted the range in which the currency is likely to trade,” said Aris Setiawan, a foreign-exchange trader at Bank Chinatrust Indonesia in Jakarta.

“Still, there is room for the currency to strengthen as it has averaged 9,160 this year.”

The rupiah has gained 12 percent in the past year, matching Malaysia’s ringgit as Asia’s best performer, with overseas investors this year buying $1.43 billion more in Indonesian shares than they sold.

Yudhoyono on Monday predicted that economic growth would accelerate to 6.3 percent next year from an expected 6 percent in 2010. He also raised the growth target for 2014 from 7 percent to 7.7 percent, with 10.7 million new jobs to be created.

Malaysian based casino operator Genting Malaysia Bhd continued to be actively traded on news that its unit from New York had won the bid to operate a video lottery terminal facility in New York, and plans to invest US$1.3bil (RM4.9bil) in the project.

Thie evening, Bank Negara Malaysia will announce the country’s second quarter (Q2) gross domestic product. Based on consensus estimates, Q2 figures are expected to register at 8.1%.

Meanwhile, the preliminary Economic Transformation Programme roadmap which is a key component of the New Economic Model based in part on the now completed National Key Economic Areas Lab, has been delivered to the Government.

The Government will now review and finalise the proposed roadmap, which will serve as a key part of the implementation of NEM.

At 5pm, the FBM KLCI was up 7.04 points to 1,385.51. There were a total of 334 gainers and 377 losers with 312 stocks unchanged.

Tokyo’s Nikkei 225 was up 0.86% to 9240.54 and Hong Kong’s Hang Seng Index was down 0.54% to 21,022.73.

Shanghai’s A index was down 0.21% to 2,666.3 while Taiwan’s Taiex Index was down 0.09% to 7,924.10.

Seoul’s Kospi Index was up 0.40% to 1761.99, with Singapore’s Straits Times Index was up 0.13% to 2927.22.

Nymex crude oil lost 60 cents to US$76.33 per barrel.

Spot gold was down US$2.28 to US$1,222.57 per ounce.

The ringgit was quoted at 3.1558 to the US dollar.

Genting Malaysia Bhd’s unit Genting New York LLC, which has won the bid to operate a video lottery terminal facility in New York, plans to invest US$1.3bil (RM4.19bil) in the project.

It had earlier been speculated that Genting New York had won the bid, but the deal was “not fully in the bag” yet, pending approvals from the city’s top politicians.

A source close to the company said that Genting New York had signed the agreement last week but only made the announcement in New York yesterday.

According to a copy of the proposal submitted by Genting to the New York lottery authority, Genting New York will pay a licensing fee of US$380mil (RM1.22bil), above the minimum US$300mil (RM966mil) required by the state.

Genting New York intends to spend a further US$350mil to develop the facility, which upon full completion will span 413,000 sq ft and contain more than 4,500 video lottery terminals or electronic slot machines.

Dubbed Resorts World New York, the proposed three-storey facility will also contain several restaurants, water features, an outdoor terrace connected to the Aqueduct racetrack which will be able to accommodate up to 10,000 people and a 2,200-bay car park.

The main-share Philippine Stock Exchange index added 32.57 points or 0.93 percent to finish at 3,534.80.

The market was on an upswing throughout the session, still driven by a cash-rich financial market seeking higher yields in a prolonged low-interest rate environment. All counters were up, with the property and mining/oil sectors benefiting most from the day’s run-up, respectively rising by 1.6 and 1.37 percent.

Value turnover amounted to P4.77 billion compared to the average daily turnout of just slightly above P3 billion. There were 85 gainers and 46 decliners while 37 stocks were unchanged.

The day’s most actively traded stocks were PLDT, Filinvest Land, EDC, Metro Pacific Investments, Megaworld, Semirara, Metrobank and Lopez Holdings.

The Stock Exchange of Thailand (SET) composite index on Wednesday gained 14.24 points or 1.64 per cent to close at 880.02 points. The market value was 41.14 billion baht, with 12.34 billion shares traded. Shayne Heffernan predicted sometime ago the SET would break 1000 in March 2011.

Top five most active values were as follows;

TMB closed at 2.16 baht, down by 0.02 baht or 0.92 per cent.

JAS closed at 1.28 baht, down by 0.01 baht or 0.78 per cent.

CPF closed at 25.75 baht, up by 0.75 baht or 3.00 per cent.

PTTCH closed at 103.00 baht, up by 3.75 baht or 3.78 per cent.

TCAP closed at 32.75 baht, up by 1.00 baht or 3.15 per cent.

The baht’s recent appreciation was in line with other Asian currencies and had no impact on the country’s economic growth, Bank of Thailand governor Tarisa Watanagase said on Wednesday.

The strengthening of Thai baht was not worrying as the level of fluctuation was low and there were no signs of irregular speculation, Mrs Tarisa said.

“However, exporters and importers are advised to use hedging to avoid foreign exchange risk,” she said.

The baht strengthened because exporters were selling US dollars, as continual export expansion and stable politics increased people’s confidence and capital inflow, she said.


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