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ASEAN STOCK WATCH 31  August  2010

ASEAN Markets to Trade Lower Today

Shayne Heffernan

ASEAN Stocks will come under pressure today, many are sitting at multi year highs and the USA is showing weakness, this will be a great day for buying.

At the close, the Bursa Malaysia benchmark index rose 11.44 points, or 0.8% to 1,422.49 points – the highest since February 2008.

In total, 17 out of the top 30 stocks that made up the FBM KLCI advanced, while 13 counters declined.

Overall market breadth was also mixed, with 377 losing stocks leading 334 gainers.

The broader FBM Emas index rose 0.7% to 9,482 points, but the FBM SmallCap index declined 0.3% to 11,141 points.

Shares in Genting jumped 41 sen, or 4.5% to RM9.45 on volume of 16.68 million shares.

Genting attracted strong attention from foreign investors following the stellar performance of its Singapore unit, and it is likely that the counter will breach the RM10.00 mark soon.

Genting closed 41 sen higher at RM9.45.

Maybank, the country’s largest lender, continued to surge as investors reacted positively to its financial results. It ended 1.57 per cent or 13 sen higher at RM8.39.

Sime Darby added 25 sen, or 3% to RM8.35 with 12.66 million shares transacted as the stock extended its unbeaten run to third day in a row.

Meanwhile, the ringgit snapped out of two-day losing streak to close 0.2% higher at 3.1379 against the US dollar.

In the commodity market, crude plam oil (CPO) futures rose RM18, or 0.7% to RM2,560 a tonne ahead of teh closing bell, while crude oil in New York was little change at US$74.78 a barrel in Asian trading.

The local market will be closed tomorrow for National Day holiday.

The Stock Exchange of Thailand (SET) composite index on Monday gained 9.28 points or 1.03 per cent to close at 909.65 points. The market value was 40.12 billion baht, with 10.70 billion shares traded.

Top five most active values were as follows;

TMB closed at 2.62 baht, up by 0.06 or 2.34 per cent.

KTB closed at 13.20 baht, up by 0.30 or 2.33% per cent.

DTAC closed at 48.75 baht, down by 0.75 or 1.52 per cent.

SSI closed at 2.00 baht, down by 0.06 or 2.91 per cent.

BTS closed at 0.90 baht, up by 0.01 or 1.12 per cent.

Exchange News

The Stock Exchange of Thailand (SET) announces that the selection criteria for SET50 and SET100 indices is amended in terms of the size screening rule from using their past 12 months record to 3 months of average daily market capitalization.

To ensure that the SET50 Index and SET100 Index mostly reflect the market value, SET revises the selection criteria for stocks in SET50 and SET100 with the main issues regarding to the size selection. From the previous rule, the size of eligible stocks is screened from the last 12 months of market capitalization; however, the new rule will draw only last 3-month record to represent the most recent and reasonable market size of the constituents, Ms. Kesara Manchusree, SET Group Head, Markets Division, said .

Due to the volatility of stock market, the 12-month historical period of data has not represented the current market size of the securities. The criteria is only adjusted the period of historical market capitalization data while others remain unchanged.

The amendment will help reduce the gap between data variation and the most updated status of the company. Moreover, the shorter historical period of market capitalization is applied in accordance with other international index providers as well as some market comments.

Besides, the SET50 and SET100 indices will be more attractive and efficient to use as benchmarks. The revision will be effective on the first half of 2011 periodic review onward. The SET will announce the list of components selected under the new criteria in December 2010, and every six months thereafter.

Thai Fund

The Thai Capital Fund, Inc. (the “Fund”) , a closed-end management investment company seeking long-term capital appreciation through investment primarily in equity securities of Thai companies, today announced its results for the quarter ended June 30, 2010 and commented on the economic outlook for Thailand.

The Fund’s investments in Thailand are made through a wholly owned investment plan (the “Investment Plan”) established under an agreement between SCB Asset Management Co., Limited (”SCBAM”), the Fund’s investment manager, and the Fund.

The Fund’s investments through the Investment Plan are managed by SCBAM, located in Bangkok, Thailand. Daiwa SB Investments (Singapore) Limited, the Fund’s investment adviser, provides SCBAM with advice regarding investments through the Investment Plan and manages the Fund’s assets held outside the Investment Plan.

Second Quarter Earnings Results

For the quarter ended June 30, 2010, the Fund earned net investment income of U.S. $506,000 (equivalent to income of U.S. $0.16 per share), resulting in net investment income for the six months ended June 30, 2010 of approximately U.S. $628,000 (equivalent to income of U.S. $0.20 per share).

Net realized and unrealized gains from investment activities and foreign currency transactions for the quarter ended June 30, 2010 were approximately U.S. $506,000 (equivalent to a gain of U.S. $0.16 per share). As a result, the net realized and unrealized gains for the six months ended June 30, 2010 were approximately U.S. $4,241,000 (equivalent to a gain of U.S. $1.34 per share).

In comparison, for the quarter ended June 30, 2008, the Fund earned net investment income of U.S. $326,000 (equivalent to income of U.S. $0.10 per share), resulting in net investment income for the six months ended June 30, 2009 of approximately U.S. $392,000 (equivalent to income of U.S. $0.12 per share).

Net realized and unrealized gains from investment activities and foreign currency transactions for the quarter ended June 30, 2009 were approximately U.S. $8,444,000 (equivalent to a gain of U.S. $2.67 per share). As a result, the net realized and unrealized gains for the six months ended June 30, 2009 were approximately U.S. $7,469,000 (equivalent to a gain of U.S. $2.36 per share).

On June 30, 2010, the total net assets of the Fund were approximately U.S. $41.7 million. The net asset value (”NAV”) per share on that date was U.S. $13.16, based on 3,172,313 shares outstanding. In comparison, on June 30, 2009,

total net assets were approximately U.S. $31.1 million. The NAV per share on that date was U.S. $9.80, based on 3,167,316 shares outstanding. The Fund generated an investment return of 13.25% for the six months ended June 30, 2010, when measured against the NAV per share of U.S. $11.62 calculated on December 31, 2009. In comparison, the Stock Exchange of Thailand (”SET”) Index increased 11.64% during the same period, in U.S. dollar terms.

As of June 30, 2010, the Fund had 96.34% of its net assets invested in Thai equities and 5.81% in Thai cash instruments. The remaining assets were made up of 0.69% in short-term U.S. dollar time deposits and liabilities in excess of other assets of (2.84)%.

As of August 26, 2010, the Fund had total net assets of approximately U.S. $48.9 million, equivalent to a NAV per share of U.S. $15.42. On that same date, the Fund’s shares on the NYSE Amex closed at U.S. $12.90, representing a trading discount of 16.34% to its NAV per share.

The key Straits Times Index gained 18.32 points to close at 2,957.06. Overall volume traded was 1.38 billion shares. In the broader market, gainers outnumbered losers 255 to 188.

But weakness in domestic property stocks tempered gains in the broader market, after Singapore government’s new curbs on property market speculation weighed on local property developers.

Among the property stocks, Allgreen Properties tumbled 7.0% to S$1.06, CapitaLand gave up 0.5% to end at S$3.98 and City Developments shed 4.2% to S$11.46.

The JCI slid 5.2 points, or 0.2 percent, to close at 3,099.57, the second day of losses. About 5.3 billion shares worth Rp 3.2 trillion ($355 million) changing hands. Decliners outnumbered gainers by 97 to 87.

Finance stocks took a hit, with Bank Mandiri, the country’s biggest lender by assets, falling 1.7 percent, and Bank Bukopin down 2.8 percent. Telekomunikasi Indonesia, the nation’s largest telecommunications company, dropped 0.6 percent.

The rupiah posted its biggest gain in two weeks on optimism that global funds would lift buying of Indonesian assets after the Fed indicated it was willing to do more to lift the US economy.

Energy stocks gained as crude oil prices rose. Medco Energi Internasional, the country’s biggest listed oil company, gained 1.6 percent. Energi Mega Persada advanced 1.1 percent.

Crude oil for October delivery rose 2.5 percent to $75.17 a barrel on Friday, posting its best weekly gain since July 23. The contract was at $74.70 in after-hours trading in New York.

Bumi Resources, Asia’s largest exporter of power-station coal, rose 1.2 percent. Director Dileep Srivastava said the miner planned to cut debt by $800 million in the fourth quarter and refinance “immediate maturities.”

Indofood Sukses Makmur, the nation’s biggest maker of instant noodles, jumped 5.5 percent to Rp 4,825, a record close, after it was raised to “overweight” by Morgan Stanley, which cited a shift in profitability at its consumer-branded products business.

Purbaya Yudhi Sadewa, an analyst at Danareksa Research Institute, said the upcoming holiday season had prompted some investors to bank gains.

“The drop is short-term. There’s no need to be concerned about Indonesian stocks because the economy has strong fundamentals,” he said.

The rupiah climbed 0.3 percent, the most since Aug. 13, to 9,016 per dollar as of the stock market’s close.

US Federal Reserve chairman Ben Bernanke said on Friday that the central bank “will do all that it can” to ensure a continuation of the US economic recovery.”

The US bought more than 10 percent of all goods shipped out of Indonesia in the first half of the year, according to central bank data.

“The sentiment on equities is buoyant after Bernanke’s comments downplayed concerns of an economic recovery,” said Joanna Tan, a regional economist at Forecast Singapore. “The rupiah is consolidating very well.”

The MSCI Asia-Pacific Index of regional shares rose 1.2 percent, the highest gain in four weeks, on the Fed’s announcement.

“The US will very likely introduce additional stimulus measures to prevent a double-dip for its economy,” said Wei Wei, an analyst at West China Securities. “To some extent, that will alleviate lingering concern about a faltering global economic recovery.”

According to economists’ estimates, annualized inflation in Indonesia rose to 6.7 percent in August from a year earlier, after gaining 6.22 percent the month before.

The inflation report is due today. Bank Indonesia is expected to keep its key rate at 6.5 percent when it meets of Friday, a separate survey said.

“We are seeing consumer prices under pressure in the month of Ramadan,” Tan said. “The central bank may hike the benchmark interest rate by 25 basis points before the end of the year.”

The Muslim fasting month of Ramadan will end next week.


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