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ASEAN STOCK WATCH Asean Affairs  19 December 2012

ASEAN Market Preview

The Dow Jones industrial average  .DJI rose 108.19 points, or 0.82 percent, to 13,343.58. The S&P 500  .SPX gained 14.40 points, or 1.01 percent, to 1,444.76. The Nasdaq Composite  .IXIC added 41.24 points, or 1.37 percent, to 3,051.85.

President Barack Obama's most recent offer to Republicans in the ongoing budget talks makes concessions on taxes and social programs spending. House Speaker John Boehner said the offer is "not there yet," though he remains hopeful about an agreement. Senate Democrats, however, have expressed concern about cuts to Social Security.

China will lower the tariffs on 784 imported products starting from January as part of a major effort to boost domestic consumption, the Ministry of Finance said on Monday.

The temporary adjustment will allow the products, grouped into five major categories, to be imported on a tax rate that is lower than the most-favored-nation tariff, according to a statement on the ministry's website.

Tariffs will also be lowered on raw materials and spare parts for the equipment manufacturing industry and strategic emerging industries, such as robots used for automobile production.

Resource products as well as energy-saving and emission-reduction products will also benefit from lower rates.

Products that support the development of the agriculture and textile industry are also included on the list.

The measure aims to boost imports and meet an increasing demand from domestic consumers, the ministry said.

"The measures are in line with the call of the new leadership to boost imports and domestic consumption," said Jin Baisong, deputy director of the Department of Chinese Trade and Studies at the Chinese Academy of International Trade and Economic Cooperation, a think tank of the Ministry of Commerce.

He said the lower tariffs will boost sales from consumer products such as milk powder and healthcare equipment.

"In the meantime, imports of high-tech equipment will facilitate the technical upgrade of domestic enterprises and pave the way for an economic transformation," he said.

He Weiwen, a professor with the University of International Business and Economics, recognized the measures could be positive but the desired effect is far from guaranteed.

"The major obstacle for domestic consumption remains the high cost of distribution. Thus lowering that cost should be a main priority if the government is aiming to boost domestic consumption," he said.


Thai tycoon Charoen Sirivadhanabhakdi's investment vehicle tried unsuccessfully over the weekend to pick up an additional 10 per cent of Fraser and Neave (F&N) from institutional shareholders at S$9.60 per share, market sources said.

That price represents an 8.1 per cent increase over Mr Charoen's current S$8.88 per share offer for F&N, and a 5.7 per cent increase over a rival bid of S$9.08 per share by a consortium led by Overseas Union Enterprise (OUE).

F&N shares opened at S$9.52 on Monday, but rose steadily to as high as S$9.62 in the morning.

Mr Charoen, who is his making his bid for F&N through privately held TCC Assets and in concert with listed brewer Thai Beverage Public Co, has until Jan 2 to decide if he wants to extend and raise his current offer.


Qatargas Operating Company Limited (Qatargas) yesterday announced the signing of a long-term LNG Sales and Purchase Agreement (SPA) between Qatar Liquefied Gas Company Limited 3 (Qatargas 3) and PTT Public Company Limited of Thailand.

The agreement was signed by the Minister of Energy and Industry and Chairman of the Board of Qatargas, H E Dr Mohammed bin Saleh Al  Sada, and  Pailin Chuchottaworn, Chief Executive Officer and President of PTT.

Under the terms of the agreement, Qatargas 3 will deliver two million tonnes per annum (MTA) of LNG for a period of 20 years beginning from 2015. The agreement marks PTT’s first long-term LNG SPA.

Dr Al Sada said: “Qatar is to provide reliable energy supplies to the world. I am proud to state that in line with this vision Qatargas, the largest LNG producing company in the world has committed to provide LNG to Thailand to meet its growing energy needs. This agreement underpins Qatar’s proven capability to meet the LNG requirement of the customers around the globe safely and reliably.”

Khalid bin Khalifa Al Thani, Chief Executive Officer of Qatargas Operating Company Limited, added:  “This is a momentous occasion for us as this is the first long-term agreement for Qatargas in South-East Asia and our first term contract with PTT. Qatari LNG continues to play a key role in helping countries around the world improve the diversity of their energy supplies. We are very happy that our discussions with PTT regarding a long term agreement have come to fruition. We look forward to a strong and enduring partnership with PTT.”

Pailin Chuchottaworn, Chief Executive Officer and President of PTT said:“Qatargas and PTT have consistently maintained cordial relations. In our initial preparation for LNG imports, Qatargas supported us and delivered LNG commissioning cargoes. In particular, its LNG delivery proved helpful last year when one of our transmission pipelines faced problems. Today, PTT is delighted to have concluded this long-term LNG agreement, the first for Thailand with Qatargas.

“Thanks to the support of both countries, the success today marks a milestone for continued cordial partnership between the two entities, together with LNG and natural gas cooperation in future years”

In 2011, Qatargas delivered the first commissioning cargo to Map Ta Phut LNG Receiving Terminal, Thailand’s first and only LNG receiving terminal. Since then, Qatargas has sold several spot cargoes to PTT.

The current capacity of Map Ta Phut LNG Receiving Terminal is five MTA and PTT has plans to increase this capacity to ten MTA. The terminal is currently compatible with Q-Flex vessels with plans to receive Q-max vessels in the future.

Qatargas sees the Kingdom of Thailand as an evolving LNG market and recognizes its potential within South East Asia to absorb significant quantities of LNG in the future.


Tenaga Nasional Bhd (TNB) will invest close to RM10bil in new capacity for the next five years in a bid to meet domestic electricity demand, which is forecast to grow by 3.5% to 4.6% a year during the period.

TNB president and CEO Datuk Wira Azman Mohd said in a statement on Tuesday that the New Economic Model and Economic Transformation Programme are expected to boost demand to 20,699MW from 15,826MW this year, necessitating an investment of RM9.7bil.

The power company is building two hydroelectric projects in Hulu Terengganu, Terengganu and Ulu Jelai, Pahang, a biomass plant in Jengka, Pahang with Felda and a coal-fired power plant in Manjung, Perak, which would collectively add 1,632MW to current capacity, he said.

On the gas shortage caused by the delay in the commissioning of Petronas Gas Bhd's regassification terminal in Malacca, Azman said fuel supply uncertainties would be "partly allayed" once the facility is operational by next year.

According to him, TNB, which is ranked one of the top three electricity utilities in Asia, is poised to become an energy conglomerate.

"Indeed, as we have conquered almost the entire local market in Peninsular Malaysia, the only place to grow is internationally," he said.

TNB serves an estimated 8.3 million customers in Peninsular Malaysia, Sabah and Labuan.


Sumalindo Lestari Jaya, a plywood manufacturer, is selling its forestry unit, Sumalindo Alam Lestari, to pay off debt as well as fund its business restructuring, the company said in a filing to the local stock exchange on Friday.

Mentari Makmur Pertiwi will buy SAL for Rp 330 billion ($34 million), pending approval from the Indonesian Forestry Ministry, Sumalindo Lestari said in statement sent to the Indonesia Stock Exchange (IDX).

Kalimantan-based SAL owns industrial forest plantations and holds management concessions consisting of 24,500 hectares land in East Kalimantan. SAL is owned by Sumalindo Lestari, according to Sumalindo’s website.

Sumalindo Lestari is one of a few Indonesian companies that has been in dire straits — the company has been suffering losses since last year.

The company posted a net loss of Rp 314.9 billion last year, compared with almost Rp 5 billion in 2010, according to data from the company. Revenue also fell to Rp 408 billion last year, from Rp 592 billion in 2010.

Sumalindo Lestari revealed plans in October to fire 700 employees at its plant in Samarinda due to high production costs. Eddy Haryadi, the head of industrial relations at the regional office of the Manpower Ministry in Samarinda, said then that his office had been notified of the layoff. The move has not been executed yet.

Eddy said in October that Sumalindo’s staff had recently staged a demonstration demanding an increase in wages. He noted that the company had imposed cost-cutting measures, such as firing some workers and sending others home early, as a result of soaring production costs. Rizal, the head of the labor union at Sumalindo, said that the fired employees were now waiting for the company to pay their severance.

Mugni Baharuddin, an official at the Manpower Ministry in Samarinda, said his office will compile a list of employees affected by the layoff. The company currently employs approximately 3,700 people, according to its website .

Sumalindo is 31 percent owned by Sumber Graha Sejahtera, 16.48 percent by Gem Treasury Investment, 13.7 percent by Deddy Hartawan Jamin and 33.48 percent by the investing public, according to the company’s website.


Ayala Land Inc. and the Gatchalian family have finalized a deal to develop 17 hectares of the latter’s “Plastic City” estate

in Valenzuela City, envisioned to be redeveloped into a mixed-use urban complex in northern Metro Manila.

Philippine Estates Corp. (PHES), the Gatchalians’ property development arm, disclosed to the Philippine Stock Exchange on Tuesday the signing of an agreement with ALI’s Avida Land to develop the company’s properties in Valenzuela.

This deal comes about a week after the signing by PHES of a memorandum of agreement with ALI’s low-cost residential unit, Amaia Land, to likewise develop the former’s property in Cavite into a residential or subdivision project.

PHES is one of the owners of the property that Avida proposes to develop in Valenzuela. “The agreement signed is an initial step to move forward planning and developing the area,” a spokesperson from ALI said.

The 17 hectares covered by the deal is part of the Gatchalian family’s 60-hectare former plastics manufacturing hub, but ALI president Antonino Aquino said the Ayala-controlled real estate firm was interested to develop the entire area under a mixed-use masterplan.

But Aquino said the plan would be to pursue the development in parcels.

The Gatchalian’s Plastic City Industrial Corp. (PCIC) has long ceased its plastics manufacturing and commercial operations due to continued losses, but its subsidiaries have leased out its warehouse and building facilities in the estate.

ALI had been in talks with the Gatchalians for over a year for the development of the property in Valenzuela, which has a lot of spending power especially because it has a number of large industrial manufacturers as locators.

Through these property deals with the Ayala group, the Gatchalian family, for its part, seeks to unlock more values from its real estate assets, taking advantage of the robust property market in the country.

It was earlier reported that the redevelopment planned by the Gatchalians for Plastic City would include an educational complex envisioned to be a smaller version of the UP technohub in Quezon City. It also aims to build office space that will attract business process outsourcing (BPO) companies, banking on expectations that more and more BPO locators will move outside the main central business districts in search of other hubs around Metro Manila.

Part of the proposed master plan is likewise to put up a new hospital to serve Valenzuela City. The residential portion is envisioned to offer townhouses and condominiums for different market segments.

Yesterday in Asia

Tokyo rose 0.96 percent, or 94.13 points, to 9,923.01, Seoul was up 0.51 percent, or 10.02 points, at 1,993.09, while Sydney added 0.48 percent, or 21.8 points, to 4,595.2.

Shanghai ended up 0.10 percent, or 2.12 points, at 2,162.46 while Hong Kong gave up earlier gains to end flat, dipping 18.88 points to 22,494.73.

– Taipei rose 0.16 percent, or 12.46 points, to 7,643.74.

Hon Hai Precision added 1.38 percent at Tw$88.4 while Taiwan Semiconductor Manufacturing Co. was 0.31 percent lower at Tw$96.7.

– Manila rose 0.23 percent, or 12.74 points, to 5,636.59.

Metropolitan Bank was off 0.9 percent at 97.40 pesos and SM Investments added 1.6 percent to 829 pesos.

– Wellington climbed 0.32 percent, or 12.77 points, to 3,979.25.

Telecom Corp. gained 4.4 percent to NZ$2.255, Fletcher Building added 0.49 percent to NZ$8.10 and The Warehouse slipped 1.01 percent to NZ$2.95.

– Singapore closed down 0.06 percent, or 1.91 points, at 3,156.79.

CapitaLand dipped 0.27 percent to Sg$3.67 and Singapore Telecommunications dropped 0.59 percent to Sg$3.37.

– Kuala Lumpur was up 0.66 percent, or 10.86 points, to close at 1,659.44.

Petronas Dagangan added 6.2 percent to 23.54 ringgit and UMW Holdings climbed 1.9 percent to 12 ringgit.

– Jakarta ended down 0.33 percent, or 14.42 points, at 4,301.44.

Cement maker Indocement Tunggal Prakarsa fell 0.44 percent to 22,500 rupiah, while cigarette maker Gudang Garam rose 1.35 percent to 59,950 rupiah.

– Bangkok added 0.28 percent, or 3.85 points, to 1,362.94.

Power giant Electricity Generating Public Co. lost 0.73 percent to 136 baht, while telecoms firm Advanced Info Service added 1.94 percent to 210 baht.

– Mumbai rose 0.63 percent, or 120.33 points, to 19,364.75.

Mobile phone giant Bharti Airtel rose 4.23 percent to 313.15 rupees while engineering giant BHEL rose 4.14 percent to 230.10 rupees.

Shayne Heffernan Ph.D.
Economist/Hedge Fund Manager

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This year in Thailand-what next?

AseanAffairs   04 January 2011
By David Swartzentruber      

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.

The first issue that can’t be answered is the health of Thailand’s beloved King Bhumibol, who is now 83 years old. He is the world's longest reigning monarch, but elaborate birthday celebrations in December failed to mask concern over his health. More






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