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ASEAN STOCK WATCH 3  August  2010

Asean Markets to Rally at Open

Shayne Heffernan

Thailand, the best performing ASEAN Exchange in July, has seen net foreign inflows for five sessions to Friday,finished 0.86 percent higher to 863.18 . Investors were hopeful for strong earnings for the rest of 2010 and next year because of the resilience in Thailand’s economic fundamentals.

Among outperformers, Thai Tap Water TTW.BK, the country’s largest private tap-water supplier, rose 1.6 percent after it posted a 36 percent rise in second-quarter net profit and analysts rated the stock a “buy” thanks to the positive outlook for demand.

Top five most active values were as follows;

TRUE closed at 4.58 baht, up 0.18 baht (4.09%)

TMB closed at 2.04 baht, up 0.08 baht (4.08%)

SCB closed at 90.00 baht, up 1.00 baht (1.12%)

TRUBB closed at 9.15 baht, up 0.85 baht (10.24%)

DTAC closed at 47.50 baht, up 0.25 baht (0.53%)

In Singapore the Straits Times Index jumped 1.3 percent to 3,025.04 at the close, its highest since June 18, 2008. Almost six stocks rose for each one that fell on the 30-member gauge.

Shares on the measure trade at 14.7 times estimated earnings, compared with about 17.5 times at the beginning of the year, according to Bloomberg data.

The following shares were among the most active in the market. Stock symbols are in parentheses after company names.

Developers: City Developments Ltd. (CIT SP), Singapore’s second-biggest homebuilder, advanced 4.6 percent to S$12.66, leading developers higher on speculation a slump in interbank borrowing costs will boost demand for homes. CapitaLand Ltd. (CAPL SP), Southeast Asia’s biggest developer, gained 2.3 percent to S$4.05. Keppel Land Ltd. (KPLD SP), the property unit of Keppel Corp., rose 2 percent to S$4.12.

“We expect a slight appreciation in prices for mass housing,” Kim Eng Securities analyst Wilson Liew said in a telephone interview. “The cost of borrowing is very attractive for home buyers.”

Jardine Matheson Holdings Ltd. (JM SP), which owns real estate, supermarkets and drugstores in Asia and run hotels worldwide, surged 5.1 percent to $41.60, the biggest advance on the benchmark index. The company said first-half net income quadrupled to $1.05 billion on a higher contribution from its property unit.

Jardine Strategic Holdings Ltd. (JS SP), the owner of half of Jardine Matheson, increased 3.5 percent to $24.30. The company said underlying earnings in the first half rose 66 percent to $698 million from a year earlier.

SMRT Corp. (MRT SP), Singapore’s biggest train operator, slumped 5.4 percent to S$2.10, the biggest decline on the Straits Times index. The stock was downgraded at brokerages including Deutsche Bank AG after first-quarter profit missed some analysts’ estimates.

Stats Chippac Ltd. (STAT SP) gained 1.7 percent to S$1.17. The provider of semiconductor test and assembly services plans to sell $600 million of 5-year senior notes to fund a tender offer, according to a person familiar with the transaction. The company said it has commenced a cash offer for its 6.75 percent notes due 2011.

Tiger Airways Holdings Ltd. (TGR SP), the budget carrier partly owned by Singapore Airlines Ltd. (SIA SP), climbed 5.4 percent to S$2.16. The company said it will ally with Thai Airways International Pcl (THAI TB) to form a new low-fare carrier amid rising demand for leisure travel in Asia.

In Kuala Lumpur, Malaysia’s main share index gained 0.2 percent. Tanjong (TJPL), which run utilities and gaming businesses, jumped 18.2 percent after a buyout offer from a vehicle of Malaysian billionaire Ananda Krishnan.

A group led by Malaysian billionaire T. Ananda Krishnan offered 4.7 billion ringgit ($1.48 billion) for full control of Tanjong, a power and gaming company, two days after he tried to take over a satellite operator.

Krishnan, Malaysia’s second-richest man, and associated parties offered 21.80 ringgit a share for the 53 percent of Tanjong they did not already own, according to a company statement.

That’s 22 percent higher than the last traded stock price of 17.88 ringgit before suspension of trading on Wednesday. The offer values Kuala Lumpur-based Tanjong at about 8.8 billion ringgit.

Taking Tanjong private will allow Krishnan greater flexibility to accelerate his power investments in markets including the Middle East, South and Southeast Asia and North Africa, without needing shareholder approval.

The company owns 13 power plants in Malaysia, United Arab Emirates, Egypt, Bangladesh and Pakistan.

The buyout group is “offering the minority shareholders of Tanjong the opportunity to exit at an attractive premium while not subjecting them to the associated risk of the company’s next growth phase,” the company said.

Tanjong “will need to be restructured and recapitalized in order to meet the prospective long term investments and debt profile which will result in higher borrowing costs and translate into medium term earnings volatility.”

On July 28, Krishnan made a 662 million ringgit bid for the rest of satellite operator Measat Global he did not already own.

Tanjong rose 0.8 percent to 17.88 ringgit on Tuesday before it was suspended. It has gained 6.2 percent this year, compared with a 6.8 percent gain in Malaysia’s benchmark stock index.

Tanjong’s power business accounted for 72 percent of revenue in the year ended Jan. 31. Its second-biggest earner is gaming.

Krishnan in March announced a 2.5 billion ringgit buyout bid with a group of investors for Astro All Asia Networks. He also privatized cellphone company Maxis Communications in 2007, before relisting its domestic operations last year.

Krishnan is Malaysia’s richest person after Robert Kuok, with wealth estimated at $8.1 billion, according to Forbes magazine.

Malaysia’s Pacific & Orient Bhd (6009.KU) said Monday it is seeking approval from the central bank to begin talks to sell a stake in its insurance unit, Pacific & Orient Insurance Co. Bhd., to Prudential Holdings Ltd., which is a part of U.K. insurer Prudential PLC (PRU.LN).

“Approval remains pending and discussions will only commence once approval has been obtained,” Pacific & Orient said in a stock exchange filing.

Pacific & Orient is the latest Malaysian insurer to seek a foreign partner as consolidation in the country’s crowded insurance industry gathers pace. Hong Leong Financial Group Bhd. (1082.KU), PacificMas Bhd. (4782.KU) and Jerneh Asia Bhd. (6394.KU) are among the companies that have, in recent months, either completed or are in the process of completing the sale of stakes in their insurance operations to larger foreign insurers.

Pacific & Orient Insurance, which was formed in 1972, is a major non-life insurance company in Malaysia.

The ringgit rose to its strongest level since April this morning as signs that Asian economic growth remains resilient boosted demand for higher-yielding assets.

At 9.41am, the ringgit was quoted at 3.1600/1630 to a US dollar compared with Friday’s close of 3.1790/1830.

The local unit was at a new high since April, said a senior dealer who believed that a stronger ringgit could bring investments into the local stock market.

The ringgit also appreciated against the Singapore dollar to 2.3337/3376 from 2.3358/3408 and increased against the yen to 3.6473/6520 from 3.6832/6896.

It eased against the British pound to 4.9694/9760 from 4.9666/9741 but advanced against the euro to 4.1349/1397 from 4.1476/1538.

The Jakarta Composite Index fell 10.30 points, or 0.3 percent, to close at 3,058.98, dropping for the second straight day.

Some 3.68 billion shares worth Rp 3.48 trillion ($389.76 million) changed hands. Losers were even with gainers, 96 to 96.

Since most Indonesian companies have issued their first-half earnings, the market lacks a strong incentive to move higher.

Financial stocks were the biggest drag on the JCI after the government released its inflation report, which was seen as adding pressure on the central bank to increase borrowing costs.

Inflation accelerated to 6.22 percent from a year earlier. Data showed July inflation accelerated to its highest level since April 2009, fueling market expectations that the central bank may raise interest rates later this year.

Bank Rakyat Indonesia, the country’s second-biggest bank by assets, fell 4.6 percent. Bank Mandiri, the largest, slipped 2.5 percent.

Adaro Energy, the country’s second-largest coal producer, advanced 2.5 percent. The company said coal-sales volume in the second quarter gained 13 percent to 10.29 million metric tons and sales volume in the first half rose 22 percent to 21.75 million tons.

International Nickel Indonesia, the nation’s biggest nickel producer, jumped 6.1 percent to 4,375, its highest close since May 14. The company’s first-half net income rose to $218.8 million from $34.58 million a year earlier. Sales in the period climbed to $619.2 million from $276.36 million a year ago, it said.

Pabrik Kertas Tjiwi Kimia, an Indonesian paper producer, surged 25 percent to Rp 2,450, its steepest increase since May 2007. The company reported its first-half net income rose more than fourfold from a year earlier to $74.4 million.

Meanwhile, the rupiah edged higher to trade at 8,943 to the dollar as of the stock market’s close.

Earlier, traders spotted dollar-buying intervention by state banks to cap the rupiah as it tries to break 8,940.

Investors have flocked to Indonesia’s stock and bond markets to cash in on the country’s solid economic growth and expectations of further currency gains.

US gross domestic product increased at a 2.4 percent annual pace last quarter, less than expected by most economists, data from the Department of Commerce showed on Friday.

A report from the Institute for Supply Management on Monday in the United States may show growth in July’s manufacturing cooled, according to a Bloomberg survey of economists.


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