ASEAN KEY DESTINATIONS
Asean Stock Watch- August 22
Major US stock indices shed well over 1 percent on Friday, but the decline stopped short of the hefty 3-and-4-percent plunges on the previous day.
World share markets ended another turbulent trading week with stocks in Europe clawing back some of the steep losses run up in action earlier during Friday's trading session.
Taking the lead from a marginally more assured Wall Street, Europe's benchmark Eurostoxx 600 share index closed down 1.41 percent at 223.51 points after slumping by 2 percent during the late morning.
The faltering performance of world share markets came amid renewed fears about the global growth outlook and the risks to the financial sector caused by the debt crisis gripping parts of the 17-member eurozone.
Citigroup Inc and JPMorgan Chase & Co lowered their growth forecasts for the US economy.
On Wall Street, the blue chip Dow Jones Index shed 172.93 points, or 1.57 per- cent, to 10,817.65. The broader S&P 500 Index dropped 17.12 points, or 1.50 per- cent, to 1,123.53. The technology-heavy Nasdaq Composite Index dropped 38.59 points, or 1.62 percent, to 2,341.84.
The broad-based Standard and Poor's 500 stopped short of becoming a bear market, having fallen 18 percent from its three-year high in April. A 20-per-cent decline is considered a bear market.
The US currency lost against the euro to 69.46 euro cents from 69.76 euro cents on Thursday.
The dollar also lost against the Japanese currency to 76.55 yen from 76.61 yen. The yen hovered at its strongest postwar level as investors sought refuge in the currency.
Commodity stocks declined Friday on concern that economic growth in the United States and Europe will stall, slowing demand for Indonesian shipments of goods such as crude palm oil and rubber.
The benchmark Jakarta Composite Index fell 178.25 points, or 4.4 percent, to close on Friday at 3842.75, its biggest one-day slide since Aug. 6, when it lost 4.9 percent.
Decliners far outnumbered gainers by 275 to 18. Almost 6 billion shares worth more than Rp 7.5 trillion were traded on the Indonesia Stock Exchange. Foreign investors sold Rp 1.76 trillion more in shares than they bought and accounted for two-thirds of the day’s total trading.
“The movement in the global market caused the market’s decline here,” said Praska Putrantyo, an analyst at Infovesta Utama. “The economic data released by the US on Thursday night showed that the US economy continues to weaken.”
Soon after the morning session started in Jakarta on Friday, the JCI lost 2.1 percent, which wiped out the previous day’s 1.7 percent advance. Stocks followed regional stock markets’ declines after banks such as Morgan Stanley reduced their forecasts on global economic growth overnight.
The fear was also triggered by some economic reports in the United States showing that fuel and food continued to rise in July, while existing home sales in the property sector were below expectations and the unemployment rate remained high.
“The rebound yesterday [Thursday] was like an anomaly, so the possibility is that investors are making huge bets of profit-taking on Friday,” said Praska.
The JCI’s decline was mainly dragged down by shares in three of the biggest companies listed on the exchange: Astra International, Bank Mandiri and Bank Rakyat Indonesia.
Astra International, which has interests in automobile distribution and agriculture, tumbled 9.1 percent to Rp 66,100. Bank Mandiri, Indonesia’s biggest lender by asset, lost 5.4 percent to Rp 6,950. Bank Rakyat Indonesia, the second biggest, slumped 6.6 percent to Rp 6,400.
Commodity and export-reliant companies dropped on concern they would be badly affected by the global crisis as demand declines, Praska said.
Prices for crude palm oil, rubber and crude oil at various exchanges around the world declined.
Plantation company Astra Agro Lestari, a producer of crude palm oil and rubber, fell 3.4 percent to Rp 21,600. State-controlled miner Aneka Tambang lost 3 percent to Rp 1,940. Coal miner Borneo Lumbung Energi plunged 7 percent to Rp 1,190.
The rupiah weakened 0.14 percent to Rp 8,545, from Thursday’s Rp 8,533.
That sinking feeling is back, as shares on Bursa Malaysia took a heavy beating yesterday in tandem with regional markets, following the dramatic plunge on Wall Street overnight.
Amid growing concerns that the global economic recovery is faltering and the European debt debacle may degenerate into a major crisis, market analysts are of the view that the global sell-off in stocks will likely last for a prolonged period, and that the Malaysian stock market will not be spared from this global rout.
The benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) yesterday ended 19.32 points, or 1.29 percent, lower at 1,483.98. On a regional basis, it was considered the better performing ones.
In a tone that made him sound like Malaysia's own version of Dr. Doom, Lee said the stock market slump would likely last for a while.
“Upward catalyst? Is there any? Where?” he quipped. “The Western economies are in a dire state. The European debt crisis is not something that can be solved easily. It's going to be a great, great problem looming over global financial markets for a while.”
MIDF Research shared the same sentiment. It explained in its recent report that the severe retracement in the local market was clearly a contagion effect from the turmoil on Wall Street.
Philippine share prices and the peso fell on Friday amid concerns that the global economy would once again slip into recession.
At the Philippine Stock Exchange, the composite index fell 63.64 points, or 1.45 percent to 4,339.90, while the broader all-shares index dropped to 40.60 points, or 1.33 percent to 3,017.44
All sub-indices finished in the red with all counters losing at least 0.89 percent led by the property sub-index.
Decliners dominated advancers, 115 to 44, while 26 stocks were unchanged. A total of 3.70-billion shares worth P4.62 billion changed hands.
“After breaching 4,400 mark from prior session, the intra-day profit taking dominated Friday. This was also dragged by Wall Street anemic overnight results,” said Freya Natividad, investment analyst at 2TradeAsia.com.
Jun Calaycay of Accord Capital Equities Corp. said the sell-off briefly put the main index below the 3,300-support line before some stability entered to cushion the market.
Just when the market seemed to stabilize, the Dow Jones Industrial Average suffered another steep fall, losing 419.63 points, or 3.7 percent, to 10,990.58, emulating the wild swings that US equities experienced last week.
Reports of weak manufacturing, higher unemployment claims, lower previously occupied homes sale in July as well as rising consumer inflation triggered the sell-off in Wall Street.
Concerns about the European debt continue to weigh investor sentiment with Morgan Stanley economists saying in a report that the US and Europe are “dangerously close to recession.”
“Obviously, recession fears will not go away easily notwithstanding a pledge from the US Fed to keep rates low for an extended time while Europe continues to search for answers to stem a possible contagion of the fiscal crisis that befell Greece and company,” Calaycay said.|
At the Philippine Dealing System, the peso shed 13 centavos to close at 42.640 against the US dollar from 42.510 the previous trading day.
The dollar-peso pair opened high at 42.660 and tested a low of 42.560, with total trading volume surging to $841.58 million from the previous day’s $648.37 million. Singapore
Local bank stocks were dumped on Friday as investors feared a looming crisis in Europe's banking system would drag down institutions globally.
Analysts say caution is warranted but note that Singapore banks do not lend much to European institutions, so they would not be greatly affected in a euro zone meltdown.
They added that capital from Europe and the United States will likely begin flowing into Asia as a safe haven soon, and when this happens it might be a good idea to invest in local lenders again. But caution is the watchword for the time being.
DBS fell 2.7 percent, UOB dropped 2.2 percent and OCBC lost 1.1 percent but they still outperformed the broader market, down 3.23 percent.
The Stock Exchange of Thailand main index went down 19.89 points or 1.83 percent to close at 1,069.20 points at the end of trading session on Friday. The trade value was 39.22 billion baht, with 5.38 billion shares traded.
The SET50 index ended at 742.86 points, down 15.97 points or 2.10 percent, with a total trade value of 27.95 billion baht.
The SET100 index fell 33.77 points or 2.04 percent to stand at 1,621.09 points, with a total turnover of 32.72 billion baht.
The SETHD went down 21.21 points, or 2.03 percent, to 1,021.88 points, with the total trade value of 9.15 billion baht.
The MAI index dropped 0.58 points or 0.19 percent to close at 306.47 points, with total transaction value of 467.09 million baht.
Top five most active values were as follows;
PTT closed at 318.00 baht, down 11.00 baht (3.34 percent)
KBANK closed at 131.00 baht, down 4.50 baht (3.32 percent)
BANPU closed at 658.00 baht, down 22.00 baht (3.24 percent)
TOP closed at 68.25 baht, down 2.25 baht (3.19 percent)
BBL closed at 159.00 baht, down 3.00 baht (1.85 percent)
Shares tracked plunging global markets and dropped on both national stock exchanges Friday.
With stock exchanges in the US and Europe plummeting overnight on fears of a second global recession, the price of gold – a safe haven in times of crisis – hit a new record high of US$1,844.50 per ounce. Gold on the domestic market yesterday morning also soared to over VND46.7 million ($2,234) per tael. (One tael is equivalent to 1.2 ounces.)
"Surging gold prices, along with investor expectations of a stock market correction, overwhelmed trades yesterday, sending stocks plunging," said an analyst with a Ha Noi-based securities company who asked to remain anonymous.
This week's uptrend was not stable and investors decided to sell to realise profits on fears that the global slump would drag the domestic market down further, he said.
On the HCM City Stock Exchange, the VN-Index closed off for the first time this week, losing 0.53 percent to finish the session at 400.76 points. The value of trades declined to VND432 billion (US$20.8 million) on a volume of 26.9 million shares, with losers outnumbering gainers by three-to-one.
Among the blue chips, only food producer Masan Group and Sacombank (STB) went against the market trend, posting gains of 4.1 percent and 0.7 percent, respectively, and cushioning the fall of the Index.
Sai Gon Securities Inc (SSI), with a volume of over 2 million shares, was the most-active stock on the southern exchange, closing down 1.6 percent to VND18,200 per share.
On the Ha Noi Stock Exchange, the HNX-Index lost a more substantial 1.14 per- cent to close yesterday at 67.53 points. Decliners overwhelmed advancers by 213-54, with the day's trades falling to 39.3 million shares, worth just VND409.7 billion ($19.7 million).
Notably yesterday, PetroVietnam Nghe An Construction (PVA) soared to its ceiling price after the sudden release of information late on Thursday that the company would cancel its ex-date yesterday in order to buy time to explain some issues with its registration to the State Securities Commission.
The rapid turnaround in the price of PVA drew fire from investors who had sold PVA shares in prior sessions at depressed prices. Prices of PVA shares had been plunging since early in the month in response to the company's plan for a stock split at a high 1:4.45 ratio to raise capital.
Kim Long Securities (KLS), with 7.34 million shares changing hands, was the most-active stock nationwide.
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