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ASEAN STOCK WATCH Asean Affairs  31 August 2012

ASEAN Market to Fall

By Shayne Heffernan Ph.D.

Pascal Lamy, head of the World Trade Organization, confirmed on Thursday that growth in global trade would remain below four percent this year and urged governments against protectionism. Annual growth in world trade has averaged six percent over the past 15 years, but this year “we will be below four percent,” Lamy told France’s BFM radio, blaming the slowdown on a sluggish world economy.
But Lamy said the rough patch should not be an excuse for political leaders to give in to protectionism “which makes no sense.” “The world has crossed this crisis without a protectionist tsunami, but there are preoccupying signs that the WTO is watching over closely,” Lamy said. In April, the WTO warned that world trade growth, which slowed in 2011 after a big rebound in 2010, would weaken again this year and grow by 5.6 percent in 2013.

Bernanke is due to speak at a symposium of central bankers in Jackson Hole, Wyoming, at 10 a.m. (1400 GMT) and is expected to stoke expectations of a third round of quantitative easing, though he may not detail the timing of the Fed's action.

U.S. economic data over the past two weeks have been a little stronger than expected, and Reuters polls show investors and economists were more skeptical the Fed will announce a new round of bond buying at its September meeting.

The daily trading volume, which has been at 2012 lows this week in a reflection of investors' reluctance to place big bets before Bernanke's speech, could weigh on profits at exchanges and brokerages.

Fueling further caution among investors was the European Central Bank meeting on September 6 and a host of U.S. economic data scheduled for next week, including the Labor Department's payrolls report for August.

The S&P had barely budged over the prior three sessions - resulting in a decline of merely 0.05 percent - and hasn't closed with a 1 percent move in either direction since August 3.


Siam Cement PCL (SCC.TH), Thailand's largest industrial conglomerate by sales, is looking to buy around a third of building materials distributor Siam Global House PCL (GLOBAL.TH) for 10 billion baht ($320.5 million) in a bid to strengthen its hand in the retail segment.

The deal will give Siam Cement access to Siam Global's 15 building material and home improvement stores nationwide, analysts said.

Siam Cement is pursuing the purchase through its wholly owned unit SCG Distribution, the company said in a statement to the Stock Exchange of Thailand.

The investment includes the purchase of 224 million Siam Global shares via a private placement at THB14 a unit, a tender offer for 391.1 million-457.4 million shares at THB14 apiece, and a tender offer to purchase 47.6 million-55.6 million warrants at THB9.30 per unit, the statement said.

At 0918 GMT, shares of Siam Global House were up 1.5% at THB13.70.

Executives at the two companies couldn't be reached for comment.

"Siam Cement has been looking to expand its distribution business...The company can sell its products, including cement and building materials, via the expanded distribution channel [after the deal]," said Songklod Wongchai, an analyst at Finansia Syrus Securities.

"The investment will also be beneficial to Siam Cement in the long term because it will transform Siam Global House from a competitor into a strategic partner."

In a separate statement, Siam Cement said it plans to issue up to THB25 billion worth of four-year bonds to its existing bond holders and individual investors, with a subscription period scheduled for Oct. 1-Oct. 31.

It will use the proceeds from issue to refinance maturing bonds and for business expansion, it said.


 Keppel FELS Limited (Keppel FELS) is on track to deliver Seafox 5, one of the largest and most advanced multi-purpose offshore wind turbine installers of its kind to the Seafox Group, ahead of time and with an impressive safety record.

The vessel was named on 18 August 2012 at Keppel FELS with Singapore's Acting Minister for Manpower and Senior Minister of State for National Development, Mr Tan Chuan-Jin, as the Guest of Honour.

He said, "As the first offshore wind turbine installation vessel built in Singapore, Seafox 5 marks a significant milestone in the capabilities and innovation by a Singaporean shipyard. I am glad to learn that, in line with Singapore's push for increasing productivity, Keppel has been able to deliver this vessel more than a month ahead of schedule and with an excellent safety record. This reflects a goal that every company should aim towards: a productive workplace where the job is not only completed well and fast, but also enables every worker to return home to his family safely at the end of the day."

Built to Keppel's proprietary Multi-Purpose Self-Elevating Platform (MPSEP) design, Seafox 5 is a new-generation offshore wind turbine installation vessel that can withstand harsh offshore environmental conditions all year round in the deeper waters of the North Sea.

It has been chartered to the joint-venture company of Aarsleff Bilfinger Berger (ABJV) Dan Tysk to install offshore wind foundations in the 288 megawatt (MW) Dan Tysk wind farm in the German Sector of the North Sea.

Mr Wong Kok Seng, Managing Director, Keppel FELS said, "This achievement demonstrates our ability to leverage our R&D and execution capabilities to participate and add value effectively in a segment of the market which is relatively new to Keppel. Together with our other investments, we believe we are well-poised to take on a larger slice of the global offshore wind market.

"We will continue to use our market knowledge, rig technology and construction expertise to offer prime solutions that enhances the productivity of installing and maintaining offshore wind farms at various phases."

The global offshore wind market is expected to reach nearly 95 gigawatts of installed wind energy capacity by 2025, according to IHS' Global Offshore Wind Energy Markets and Strategies: 2012-2025 report. The report forecasts that global offshore wind investment between 2011 and 2025 is set to climb nine-fold from US$6 billion to US$52 billion.

Mr Keesjan Cordia, CEO of Seafox said, "The fact that Seafox 5 has already received a charter for immediate work speaks of the strength of the MPSEP design, the reputation of Keppel-made products and Seafox's track record in multi-support service jackups across the world.

"We see that demand for such vessels will continue to rise with the commercialisation of 5MW wind turbines over the next few years. Seafox 5 is a new generation vessel which will be able to out-perform existing marine assets both on cost and efficiency in wind installation. In addition, this state-of-the-art vessel has been specifically designed to meet all the requirements of both the offshore wind and the oil & gas industries in harsh environments."

Measuring 50m wide and 151m end-to-end, Seafox 5 will be among a handful of purpose-built jackups with a 1200-tonne heavy lift capacity and capable of installing both turbines and large foundations exceeding 800 tonnes in weight.

Together with its environmental capabilities, stability coverage, deck space of 3,600m2 and a variable load of 7,000 MT, it is able to outperform most other jackups and be competitive with the floating heavy lift vessels.

Designed by Keppel's research and development arm, Offshore Technology Development (OTD), Seafox 5 is a self-propelled installation jackup vessel utilising Keppel FELS' proven jacking technology. Equipped with Dynamic Positioning 2 (DP-2) capabilities, the vessel is elevated above sea level by four legs which provide 30m of clearance between the legs & crane for easy cargo access.

Seafox 5 has a large carrying capacity of up to 12 3.6MW turbines, three jackets or four tripods at a time, which enhances the efficiency of constructing offshore wind farms.

In addition to being well-suited for servicing offshore wind farms, it also meets the stringent operating regulations of the offshore oil and gas industry and can support a wide range of related activities such as accommodation, hook-up, commissioning, well intervention, maintenance, construction and decommissioning.


Indonesia Infrastructure Finance is considering an initial public offering to raise funds to finance infrastructure projects.

Kartika Wirjoatmodjo, the president director of the private non-bank financial institution, which is partly owned by the Finance Ministry, said an IPO would likely take place in the next three to four years.

IIF was established in 2010 by state-owned Sarana Multi Infrastruktur, the Asian Development Bank, the International Finance Corporation, which is the investment unit of the World Bank, and the German Investment Corporation, an arm of the government of Germany.

Sarana invested Rp 600 billion ($62.8 million) in the venture, the ADB $40 million, the IFC $40 million and the GIC Rp200 billion.

Earlier this year, Sumitomo Mitsui Banking Corporation joined the shareholders board by investing 14.9 percent of IFF’s initial capital.

The company was established to stimulate infrastructure financing from the private sector, with the state budget unable to cover the massive investment needed in the sector.

“Unlike other state-controlled enterprises, the IFF was designed to be a private firm so the government will have no problem seeing its shares diluted,” Kartika said of the potential IPO.


PAL president Ramon S. Ang said investments in infrastructure was part of the company’s aggressive expansion program, which could include rehiring some of the 2,600 employees PAL retrenched in October of last year. “We have a plan for our own terminal and runway. We still have to clear this with the government but we are hoping they will support us,” Ang told reporters at the sidelines of the firm’s annual shareholders’ meeting.

He said the new airport would be closer to Manila than the Clark International Airport in Pampanga, which the government is grooming to replace Naia. Ang, who also serves as president of PAL’s controlling shareholder San Miguel Corp., declined to disclose the prospective location for the new facility, but said the company would need at least 2,000 hectares of land for the project.

The new airport, which will be exclusive to PAL and sister firm PAL Express (formerly Air Philippines), would have two parallel runways when it opens, with the option of having two more. Parallel runways mean two planes can take off and land at the same time—now impossible at Naia’s perpendicular runways. Ang said the government’s plan to turn Clark into the country’s premier gateway might be ill-advised, given the facility’s distance from Manila. “If you want to fly [from] Clark, how long will it take you to get to the airport? Two hours if you are coming from Makati. Then you have to wait two more hours for your flight,” Ang said.

He said plans to build a new high-speed railway between Metro Manila and Clark—at an estimated cost of $10 billion—would be too heavy a burden for the government to carry.

Ang said the company would shell out about $500 million in equity for the airport project. The rest of the project cost would be financed using loans from foreign or local banks.


KLCI index gained 0.53 points or 0.03% on Thursday. The Finance Index fell 0.18% to 14745.68 points, the Properties Index dropped 0.20% to 1054.06 points and the Plantation Index down 0.04% to 8606.59 points. The market traded within a range of 7.37 points between an intra-day high of 1650.85 and a low of 1643.48 during the session.

Actively traded stocks include INGENS, INGENS-WA, PASUKGB, NEXTNAT, ASIABIO, MAXIS, GLOTEC, IPOWER, INSBIO and UTOPIA. Trading volume increased to 1375.66 mil shares worth RM1721.29 mil as compared to Wednesday’s 1262.74 mil shares worth RM1295.65 mil.

Leading Movers were GENM (+23 sen to RM3.53), TM (+9 sen to RM6.08), MAXIS (+5 sen to RM7.04), IOICORP (+2 sen to RM5.14) and IHH (+3 sen to RM3.20). Lagging Movers were CIMB (-4 sen to RM7.79), DIGI (-3 sen to RM4.81), YTL (-3 sen to RM1.81), PETDAG (-42 sen to RM22.40) and PETGAS (-14 sen to RM19.38). Market breadth was negative with 280 gainers as compared to 453 losers.

Yesterday in Asia

Tokyo fell 0.95 percent, or 86.03 points, to 8,983.78, Seoul lost 1.15 percent, or 22.16 points, to 1,906.38, while Sydney was off 0.94 percent, or 40.7 points, to close at 4,315.7.Hong Kong fell 1.19 percent, or 235.60 points, to 19,552.91 and Shanghai ended flat, dipping 0.65 points to 2,052.59.

In its closely watched Beige Book, the Fed said the US economy continued to grow at a tepid pace in the past two months, with slight improvements in retail sales and the housing market. However, the report, prepared ahead of the central bank’s policy meeting next month, said many districts saw a softening in manufacturing, the sector that has been a key driver of the recovery from a deep 2008-2009 recession.

– Wellington was flat, edging up 0.03 percent, or 1.18 points, to 3.629.56.

Air New Zealand rose 13.41 percent to NZ$1.01.

– Manila closed 0.89 percent, or 46.41 points, lower at 5,149.31.

Philippine Long Distance Telephone Co. fell 1.39 percent to 2,682 pesos while Metropolitan Bank and Trust Co. dropped 1.42 percent to 93.50 pesos.

– Taipei fell 0.27 percent, or 19.71 points, to 7,371.44.

Hon Hai Precision added 1.79 percent at Tw$85.5 while Taiwan Semiconductor Manufacturing Co. was unchanged at Tw$82.7.

– Singapore closed 0.98 percent, or 29.75 points, lower at 3,011.82.

Singapore Airlines fell 0.19 percent to Sg$10.70 and DBS Group Holdings eased 1.03 percent to Sg$14.47.

– Kuala Lumpur was flat, gaining 0.03 percent, or 0.53 points to 1,646.11.

Telekom Malaysia rose 1.5 percent to 6.08 ringgit, while Maxis gained 0.7 percent to 7.04. AirAsia lost 1.4 percent to 3.45 ringgit.

– Jakarta lost 1.65 percent, or 67.59 points, to 4,025.58.

Car maker Astra fell 2.9 percent to 6,800 rupiah and Bank Mandiri fell 4.5 percent to 7,450 rupiah.

– Bangkok fell 0.46 percent, or 5.61 points, to 1,214.55.
Retailer Siam Makro lost 2.99 percent to 357 baht while Siam Commercial Bank dropped 2.32 percent to 147.50 baht.

– Mumbai rose 0.29 percent, or 50.83 points, to 17,541.64.


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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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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