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ASEAN STOCK WATCH Asean Affairs   21  December  2010

ASEAN Market Outlook

Shayne Heffernan

ASEAN stock markets fell on Monday on low volume, Singapore shares to a one-month low, with tensions on the Korean peninsula spooking the market.

US stocks drifted on Monday as investors were reluctant to push stocks higher after briefly touching another high for the year.

The US dollar rose against other major currencies while the euro fell, hitting a record low against the Swiss franc and a two-week low versus the greenback as investors fretted over euro zone debt problems.

Best Buy

Asia’s largest commodities trader, Shayne Heffernan Strong Buy Noble Group, has signed a deal to take over two mills owned by Brazilian sugar and ethanol group Cerradinho. “This continued focus on the acquisition of large scale BRIC production will see Noble Outperform over the next 5 years” Shayne Heffernan said today.

The Singapore-listed firm would pay nearly 1 billion reais ($590 million), including cash and debt, O Estado de S.Paulo said, without specifying where the information came from. It added the deal would still need to be formally approved by Cerradinho’s board of directors, which is expected to happen early next week.

A Cerradinho spokeswoman told Reuters that the company could not confirm the deal. Executives at Noble offices in Sao Paulo were not immediately available to comment. Cerradinho was seeking a minority shareholder as part of a broader corporate restructuring.

Cerradinho, which has for decades operated in Brazil’s sugar industry, has three mills that will crush about 10 million tonnes of cane in the current season. Under the accord with Noble, one of the three mills and cane fields would still be owned by Cerradinho’s current owners.

Mergers and acquisitions have accelerated since the 2008 global credit crisis caught many mills in Brazil too indebted in the middle of ambitious expansion programs. The situation left a handful of distressed players that had previously been considered overvalued.

Earlier this month, commodities trader Glencore bought a stake in Brazilian ethanol plant Rio Vermelho, its first ever investment in the cane sector. Noble has two cane mills in Sao Paulo state, a coffee processing plant in Minas Gerais and warehouses. In October, it inaugurated a grain terminal in the port of Santos.

JCI declined 12.76 points to close at 3,568.81 on Monday. About 5.7 billion shares valued at Rp 8.1 trillion ($900 million) changed hands.

Decliners outnumbered gainers 143 to 64.

Banking stocks slipped, with state-owned Bank Mandiri dropping 2.3 percent to Rp 6,250. Finance shares fell on concerns that a debt crisis in Europe would prompt investors to sell shares in high-yielding markets, and that this year’s rally was excessive relative to profit outlooks.

State-owned Krakatau Steel fell 0.9 percent to Rp 1,160. Nickel futures dropped for the first time in four days, falling 0.6 percent to $24,860 per metric ton as the market closed in London. Gainers included agriculture stocks, with Astra Agro Lestari, Indonesia’s largest listed plantation company, rising 2.4 percent to Rp 23,650.

Palm oil March-delivery futures gained 1.7 percent to 3,562 ringgit ($1,131) per metric ton as the market closed in Kuala Lumpur.

The rupiah inched down to 9,033 against the dollar on Monday.

It weakened by 1 point from last week’s market closing amid investor concerns over whether heating tensions on the Korean peninsula would damage the stability of the region’s emerging markets. Speculation that US bond yields will rise further, narrowing the premium over Indonesian debt, also weighed on the currency.

“The rupiah’s decline is in line with the region due to concern over the Korean tensions,” said Sim Moh Siong, a foreign-exchange strategist at the Bank of Singapore. “An additional concern is rising US yields. A lot of flows into Indonesia have been into bonds.”

Philippine Stock Exchange index added 19.73 points, or 0.49 percent, to 4,077.06, even as the geo-political tension in the Korean peninsula spooked bourses in neighboring countries.

The day's recovery was led by the services and mining/oil counters, which rallied by 1.7 percent and 1.3 percent, respectively. Only the holding firm counters traded in the red. There were 83 advancers as against 48 decliners. Forty-five stocks were unchanged. Value turnover was still meek at P4.26 billion.

While many fund managers have pocketed gains seen since the mid-September run-up, some have started to pick up stocks that have fallen to attractive levels.

The day's buying benefited Cebu Air Inc., Metropolitan Bank & Trust Co., Alliance Global Group Inc., San Miguel Corp., Semirara Mining Corp., Philippine Long Distance Telephone Co., Manila Electric Co., First Philippine Holdings Corp., Megaworld Corp., Petron Corp., Nickel Asia Corp., DMCI Holdings Inc., First Gen Corp., Ayala Corp., Bank of the Philippine Islands and Ayala Land Inc.

On the other hand, Aboitiz Power Corp., Security Bank Corp. and Robinsons Land Corp. succumbed to profit-taking.

In Kuala Lumpur the Bursa Malaysia fell 0.27% to close at 1495.88 points

Actively traded stocks include DRBHCOM, OLYMPIA, DRBHCOM-CC, GAMUDA-CI, RAMUNIA, KNM-CE, COMPUGT, SLP, KNM and HUBLINE. Trading volume declined to 1045.87 mil shares worth RM1591.16 mil as compared to Friday's 1139.33 mil shares worth RM1805.37 mil.

Losers were GENTING (-16 sen to RM10.34), GENM (-9 sen to RM3.28), PPB (-40 sen to RM16.74), SIME (-5 sen to RM8.70) and GAMUDA (-5 sen to RM3.78).

Winners were CIMB (+4 sen to RM8.55), IOI (+4 sen to RM5.80), AXIATA (+1 sen to RM4.68), DIGI (+10 sen to RM24.70) and AMMB (+2 sen to RM6.77). Market breadth was negative with 251 gainers as compared to 503 losers.

The Finance Index eased 0.09% to 13770.34 points, the Properties Index lost 0.20% to 1011.97 points and the Plantation Index fell 0.22% to 7856.98 points. The market traded within a range of 6.85 points between an intra-day high of 1500.07 and a low of 1493.22 during the session.


Shayne Heffernan brings more than 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over US$500m and 1 that reach a peak market cap of US$15billion. He has managed and overseen start-ups in Mining, Shipping, Technology and Financial Services.


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