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ASEAN STOCK WATCH Asean Affairs   1 August 2012

ASEAN Markets to Open Lower

By Shayne Heffernan Ph.D.

  On Wall St over night Equities fell on bets the Fed may forgo announcing a third round of large-scale asset purchases this week, and is more likely to wait until September to unveil plans to buy $600 billion in housing and government debt. Policy makers meeting today and tomorrow may wait for more employment data before deciding whether action is needed to boost an economy that’s slowed for two straight quarters.

Consumer spending in the U.S. stagnated in June as labor- market weakness prompted Americans to use the biggest gain in incomes in three months to build savings. Yet Americans may be growing less pessimistic about job prospects later in the year, with another report today showing consumer confidence rose unexpectedly for the first time in five months.

The S&P 500 has rallied 10 percent this year amid speculation that worse-than-expected economic data will prompt the Fed to take more actions to spur growth.

The Fed has carried out two rounds of so-called quantitative easing since Lehman Brothers Holdings Inc. collapsed in 2008, buying $2.3 trillion in bonds to boost the economy. The S&P 500 jumped 59 percent during the 913 trading days from December 2008 through yesterday.


The three local banks will be unveiling their second quarter (Q2) earnings season soon.

OCBC Bank will fire the first salvo and is expected to report its Q2 results on 2 August. This is followed by DBS on 3 August, and UOB on 7 August.

Net profit for DBS is forecast to drop 14 per cent on quarter to S$804 million.
OCBC Bank falling 29 per cent on quarter to S$591 million
UOB could see profit fall 9 per cent on quarter to S$628 million.

Economist Shayne Heffernan is not expecting any major surprises and expects earnings to a be somewhat the same as in the previous quarter.

The earnings outlook for the three Singapore banks this second quarter is rather downbeat.

Analysts are expecting earnings to be hurt largely due to lower trading income.


Thailand's top coal miner, Banup Plc, slashed half a billion dollars from its five-year investment plan, issued a profit warning and cut its 2012 coal sales target on Tuesday after international coal prices slumped this year due to the global economic slowdown.

Global coal markets have taken a hit in the last two months from a slowdown in China, which is also the world's largest coal producer. Coal prices have dropped some 30 percent since the start of the year to their lowest in two years.

"Due to the crisis in Europe and U.S. coal exports to Asian countries, coupled with weak coal prices, we have to cut costs and slow down our five-year investments," CEO Chanin Vongkusolkij said.

He said the company has cut its five-year investment budget by $500-600 million from the $1.75 billion announced earlier, but said he was still looking to buy assets overseas to boost output and earnings growth. The company previously said it was interested in buying additional Indonesian mines.


The Government Service Insurance System and three investor partners on Tuesday launched the largest-ever infrastructure fund set up for the Philippines at $625 million, or P25 billion.

The fund, dubbed Pinai, or Philippine Investment Alliance for Infrastructure, also drew the participation of the Asian Development Bank, Dutch pension fund asset manager Algemene Pension Groep (APG) and Macquarie Infrastructure and Real Asset (MIRA).

MIRA is part of the Macquarie Group and was also appointed as the Pinai fund manager.

Robert G. Vergara, GSIS president and general manager, said in a briefing that the state pension fund—being the lead investor—accounted for $400 million of the Pinai fund.

Philip Erquiaga, ADB director general for private sector operations, said the bank chipped in “a nominal $25 million” but APG and Mira declined to disclose their respective investments.

Erquiaga noted that under the Philippine Development Plan, 12 percent, or $14.3 billion, of the country’s $120-billion infrastructure investment needs for 2011-2016 must come from the private sector.

“It is with this intention of helping close the gap in infrastructure financing that the ADB has collaborated with (GSIS, APG and MIRA) to establish the Pinai fund,” he said.

Mira senior managing director Francis Kwok said the Pinai fund was meant for directly investing equity and equity-like instruments in infrastructure businesses and projects.

“It will invest in a mix of both brownfield and greenfield projects across the infrastructure sector, including transport, power, renewable energy, water and telecommunications infrastructure,” Kwok said.

The four partners wanted a diversified portfolio of five to 10 projects at $50 million to $125 million each.

“As the largest infrastructure fund ever assembled for the Philippines at P25 billion, this fund is envisioned to create more jobs for our people and put the country on the path of sustained and higher levels of inclusive economic growth,” Vergara said.

Vergara added that the GSIS, through the Pinai fund, was diversifying its income sources toward achieving bigger returns that would enable “enhanced services and benefit programs for [the agency’s] 1.7 million members and pensioners.”
Vergara added that the GSIS was still ready to put in P50 billion in a planned P200-billion infrastructure bond fund meant to finance the government’s public-private partnership (PPP) infrastructure program, “although there is no call yet for such funds.”
MIRA’s Kwok said that with the Pinai fund having been launched, the group’s thrust was for the fund to be deployed particularly for brownfield projects—those that were already existing and needed expansion or rehabilitation.

Kwok said such projects could include PPP projects, but clarified that the Pinai fund was not solely for the benefit of the PPP initiative.

“It is also possible that we may be investing in purely private-sector projects,” he added.


Property developers Bumi Serpong Damai and Agung Podomoro reported higher profit in the first half of this year on rising revenue.

Net income at Bumi Serpong rose 31 percent to Rp 507.2 billion ($53.8 million) in the January-June period compared to the same six months a year earlier.

Revenue at Bumi Serpong, which is controlled by Sinar Mas Group, rose 33 percent to Rp 1.6 trillion, the company said in a brief prospectus published in Investor Daily on Monday.

Bumi Serpong has expanded to capitalize on rising purchasing power among Indonesians. Agung Podomoro, one the country’s biggest property companies, has hinted that it could spend as much Rp 11 trillion this year to acquire new land.

Bumi Serpong is studying an option to buy control of Kota Deltamas, a satellite township in Cikarang, about 75 kilometers east of Jakarta, the company said last week. Kota Deltamas, which occupies about 3,000 hectares of land, is 50 percent controlled by Sinar Mas Land, another unit of Sinar Mas Group.

Sojitz Corporation, a Tokyo-based trading company, owns 25 percent of Kota Deltamas, with the remaining 25 percent held by Fame Bridge Investment. Cikarang, in West Java, is home to big industrial manufacturers, including automotive and shoe factories.

In the first half, Agung Podomoro’s net income increased 97 percent to Rp 437.8 billion compared to the same period a year earlier. Revenue at Agung Podomoro rose 47 percent to Rp 2.32 trillion in the first half of this year, the company said in a brief prospectus published in a local newspaper on Monday.

Bumi Serpong’s main asset is a massive property development in Banten that boasts it is half the size of Paris. Agung Podomoro has dozens of residential and commercial sites across Jakarta.

Shares in Bumi Serpong fell 3.9 percent to Rp 1,130 while shares of Agung Podomoro rose 2.9 percent to Rp 3,55 on the Indonesia Stock Exchange on Monday, a day on which the main stock gauge gained 0.4 percent.

Yesterday in Asia

 Tokyo stocks closed up 0.69, or 59.62 points, at 8,695.06, amid hopes for a firm recovery by Japanese high-tech manufacturers before their release of quarterly earnings.

 Sydney gained 0.55 percent, or 23.5 points, to 4,269.2, Seoul finished 2.07 percent, or 38.20 points, higher at 1,881.99, and Hong Kong rose 1.08 percent, or 211.41 points, to end at 19,796.81.
 But Shanghai was down 0.30 percent, or 6.28 points, to 2,103.63, on fears the slowing domestic economy may hurt corporate earnings.

– Taipei was up 1.56 percent, or 111.61 points, at 7,270.49.
Taiwan Semiconductor Manufacturing Co. added 2.53 percent at Tw$81.0, while leading smartphone maker HTC was 2.64 percent higher at Tw$292.0.
– Manila closed 0.56 percent, or 29.76 points, higher at 5,307.66.
Philippine Long Distance Telephone Co. was up 1.10 percent at 2,734 pesos, while Philex Mining Corp. shed 0.22 percent to 22.40 pesos.
– Wellington was up 0.74 percent, or 26.12 points, to 3,545.01.
Telecom Corp. was up 1.92 percent at NZ$2.66, with Fletcher Building lifting 1.5 percent to NZ$6.11 and Chorus down 0.32 percent at NZ$3.11.
– Jakarta was up 1.05 percent, or 43.22 points, at 4,142.34.
Bank Mandiri rose 5.7 percent to 8,300 rupiah, car maker Astra increased 4.5 percent to 7,000 rupiah, while Indosat fell 2.0 percent to 4,850 rupiah.
– Bangkok added 0.50 percent, or 5.98 points, to 1,199.30.
Banpu dropped 1.48 percent to 400 baht, while PTT lost 0.31 percent to 326 baht.
– Kuala Lumpur closed flat, edging down 0.05 percent, or 0.75 points, to 1,631.60.
Utility Tenaga Nasional lost 0.59 percent to 6.75 ringgit, while Public Bank shed 0.14 percent to 14.36. IHH Healthcare gained 1.59 percent to 3.20 ringgit.
– Singapore closed up 0.12 percent, or 3.60 points, at 3,036.40.

DBS Bank was steady at Sg$14.74 and Singapore Telecom closed 0.85 percent higher at Sg$3.58.

– Mumbai rose 0.54 percent, or 92.5 points, to 17,236.18.

State-run oil explorer Oil and Natural Gas Corp. (ONGC) rose 3.34 percent to 285.8 rupees while Sterlite Industries, the local arm of global resources group Vedanta, rose 2.64 percent to 106.95 rupees.


Shayne Heffernan Ph.D.  

Linda Johnson, Business Development Director - Private Client Group, Heffernan Capital Management
3 Raffles Place #07-01
Bharat Building Singapore 048617
Tel: +65 6329 6408 Fax: +65 6329 9699
Email :
Suite 53 Athenee Tower
63 Wireless Road, Lumpini, Pathumwan, Bangkok 10330
New York 347 5th Avenue, Suite 1402-508 NY, NY 10016


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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.

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