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ASEAN STOCK WATCH Asean Affairs   8 August 2012

ASEAN Markets to Open Lower

By Shayne Heffernan Ph.D.

Trading was light on Wall St, which could distort the level of optimism investors truly have that Europe will follow through with adequate measures. ECB President Mario Draghi boosted hopes last week when he spoke of restoring calm to the euro zone's troubled bond markets.

Since then, good news from Greece and declines in borrowing costs for Spain and Italy from peaks above 7 percent have kept sentiment positive. The relative calm allowed the S&P to break through the psychologically important 1,400 level after trying unsuccessfully the past couple of sessions.


A Thai company Tuesday raised the stakes in a battle for control of a Singapore brewer about to be taken over by Dutch giant Heineken by offering a higher price for the makers of Tiger Beer.

Kindest Place, a firm owned by a son-in-law of Thai drinks tycoon Charoen Sirivadhanabhakdi, offered S$55 (US$44.34) for the 7.3 percent stake in Asia Pacific Breweries (APB) held directly by Singapore conglomerate Fraser and Neave (F&N).

This was 10 percent higher than the S$50 per share offered by Heineken for the 40 percent stake held directly and indirectly by F&N, a deal valued at S$5.1 billion (US$4.1 billion).

If successful, Kindest Place's S$1.03 billion offer would raise its APB stake to nearly 16 percent versus Heineken's current 42 percent equity.

F&N's board had recommended acceptance of Heineken's offer before the Thai proposal was announced.

Charoen's Thai Beverage owns around 24 percent of F&N. The other major stockholder of F&N is Japan's Kirin Holdings, which holds 15 percent but has flatly ruled out a bid for the Singapore brewer.

APB reported revenues of S$773.42 million in its second quarter ending March 31, up 15 percent from a year ago, with most sales generated in Southeast Asia.

Analysts said the Thai offer, valid until August 16, has put pressure on Heineken to sweeten its proposal.

But company spokesman John-Paul Schuirink said the Dutch firm was already offering "superior value for all shareholders," not just 7.3 percent of APB stock.

"We take note of this new offering," he told AFP, refusing to comment further.

Analysts had predicted that the Thai faction would make a counter-offer for APB before an extraordinary general meeting is called by F&N to consider Heineken's proposal. No date has been announced for the meeting.

The Thai offer represented a 12.6 percent premium over APB's closing share price of S$48.84 on Tuesday.

The Asia-Pacific region accounts for more than a third of global beer consumption and industry analysts expect demand to grow further as sales taper off in mature markets like North America and Europe.

Whoever buys APB would control 30 breweries in 14 countries: Singapore, Cambodia, China, Indonesia, Laos, Malaysia, Mongolia, New Caledonia, New Zealand, Papua New Guinea, Solomon Islands, Sri Lanka, Thailand and Vietnam.

F&N, which also has interests in non-alcoholic drinks, property and publishing, said the Thai offer lapses at the close of business on August 16.

"It will start a bidding war where the board of F&N will now have to go to the shareholders with the fact that they've had a higher offer," Justin Harper, a market strategist with IG Markets Singapore, said of the Thai move.

F&N shares closed at S$8.28 on Tuesday, up 0.73 percent from the day before, while APB fell 0.02 percent to S$48.84.

Heineken shares were trading lower on the NYSE Euronext Amsterdam exchange after Kindest Place's counter-offer.

"Now all the pressure will be on Heineken, who thought they'd won the day, to see if they can better the offer," Harper said.

"I think it could be a drawn-out battle."

Figures from global business consultancy Euromonitor showed that the Asia-Pacific region is the world's biggest beer market with 35.3 percent of the total volume consumed globally last year, up from 34.4 percent in 2010.

Total beer consumption in the region was estimated at 67 million litres in 2011, set to rise to nearly 85 million litres by 2016, thanks to the region's rapidly growing middle classes.

APB's flagship product Tiger Beer is popular across Southeast Asia and is positioned as an exotic premium brand in Europe.

The brewer also makes Bintang, the de facto national beer of economically booming Indonesia, Southeast Asia's largest economy.

Heineken's offer for APB came days after Thai Beverage began building up its stake in F&N, triggering rumours of a bid for APB.


The Bank of Thailand says the country’s tourism industry will continue to expand despite a financial crisis in Europe.

BoT’s Macroeconomic and Monetary Policy Department senior director, Mathee Supapongse, said travel and hotel sectors recorded constant growth in June, when about 160,000 foreign holiday-makers visited the country. The number represented a 10.1% year-on-year growth.

“Visitors to every region of Thailand have increased, with Chinese and Vietnamese visitors topping the list.”

Mr Mathee credited the continued growth of the Asian economy for the buoyant situation in the travel sector.

Concerning the country’s hotel occupancy rate, he said an average of 53.5% in June, up from 49.7% from the same month last year was an acceptable result.

For the second quarter of 2012, around 4.9 million overseas travellers visited Thailand, an on-year increase of 9.2%, with most visitors coming from within the Southeast Asia. This was  in spite of the bombings in Hat Yai and earthquake scares in the South, in March and April, respectively.

The BoT’s senior director has also affirmed that the debt crisis in Eurozone has not affected Thailand’s major money-spinner so far.


The FBM KLCI index lost 8.31 points or 0.51% on Tuesday. The Finance Index fell 0.30% to 14668.86 points, the Properties Index dropped 0.21% to 1055.61 points and the Plantation Index down 0.45% to 8661.89 points. The market traded within a range of 10.54 points between an intra-day high of 1641.66 and a low of 1631.12 during the session.

Actively traded stocks include IHH, GPRO, PATIMAS , NICORP, ESCERAM, MPAY, PERMAJU, MTRONIC, ASUPREM and SKPRES. Trading volume increased to 1414.23 mil shares worth RM2033.29 mil as compared to Monday’s 1077.59 mil shares worth RM1535.81 mil.
Leading Movers were IHH (+6 sen to RM3.25), AMMB (+1 sen to RM6.37) and ARMADA (+2 sen to RM3.76). Lagging Movers were BAT (-269 sen to RM59.38), TENAGA (-8 sen to RM6.90), PETCHEM (-10 sen to RM6.51), DIGI (-5 sen to RM4.63) and CIMB (-5 sen to RM7.83). Market breadth was negative with 317 gainers as compared to 444 losers.


The Philippine Stock Exchange announced before 6 a.m. Tuesday the suspension of stocks trading. This was followed by an advisory from the Bankers Association of the Philippines and the Bangko Sentral ng Pilipinas that there would be no trading at the spot foreign exchange floor of the Philippine Dealing System and the fixed income bourse Philippine Dealing and Exchange Corp.

“We are suspending trading since the PhilPASS [Philippine Payments and Settlements System] of the BSP [Bangko Sentral ng Pilipinas] is not clearing,” PSE president Hans Sicat said.

PhilPASS is the system name where both processing and final settlement of fund transfer instructions can take continuously in real time. The settlement process is based on real-time transfer of central bank money.

With the suspension of work at Philippine Clearing House Corp., the PSE said it was likewise unable to operate its Securities Clearing Corporation of the Philippines (SCCP), the clearing and settlement agency for all trades executed in the exchange.

Early in the morning, the influential Bankers Association of the Philippines had also recommended office suspension among banks, citing the safety of bank personnel and customers following the inclement weather. But the BAP said it would ultimately be up to each bank’s decision.

In an interview Tuesday morning, BAP president Alberto Villarosa, who is also president of Security Bank, said the association had recommended in a bulletin that member banks “consider suspending work in NCR [National Capital Region] and affected areas.”

“At the BAP, we realized that we have an obligation to serve the public so we can’t tell everybody unilaterally to shut down but also we are concerned about the safety of bank staff and personnel, so we leave it to the discretion of member banks,” Villarosa said.

The work suspension would only be in the NCR and flooded areas in Luzon, Villarosa said.

“We’d rather be safe than sorry,” he said.

As of 8:30 a.m., Villarosa said the following banks had made an early decision to suspend work: HSBC, Banco de Oro Unibank, Asia United Bank, Security Bank, and Philippine Savings Bank.

In a reply to an Inquirer inquiry, the following banks also announced work suspension in their respective offices: Citibank, Rizal Commercial Banking Corp., Philippine National Bank, Union Bank and Philippine Veterans Bank.

A Citibank spokesperson said clients were advised to instead conduct their banking transactions online or through the phone banking facilities.

East West Bank president Antonio Moncupa initially said there would be no blanket suspension as a skeletal force would be kept in key areas, but because Malacañang had announced the suspension of work, he would ask the few remaining people in the office to go home.

Bank of the Philippine Islands and Metropolitan Bank and Trust Co. had said they would remain open for business. But after Malacañang’s suspension order, BPI decided to hold banking operations only until 1 pm.

BPI said early on that employees living in flooded areas were advised not to report for work if they felt it unsafe to leave their homes but that it would keep a skeletal force in its Metro Manila branches.

BDO said in its advisory: “Due to flooding and inclement weather, greater Metro Manila branches including Pampanga, Tarlac, Pangasinan and some parts of Bulacan shall be closed. All other branches shall be open for business as usual.”

“BDO ATMs, meanwhile, are up except in selected areas heavily affected by floods. The bank will constantly monitor to assure continuous availability of ATMs,” the bank said.

PSBank said all branches in the National Capital Region and provinces were open except those affected by heavy flood. The bank said its ATMs were working except those in areas without electricity.

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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