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ASEAN STOCK WATCH Asean Affairs  21 December 2012

ASEAN Market Preview

Washington talks highlight 'importance of relationship'

Chinese and US officials agreed on a number of measures, including export controls and investment, during trade talks in Washington.

The US pledged to address concerns over fair treatment for Chinese investment in the US, and China vowed to strengthen protection of intellectual property rights, at a meeting of the China-US Joint Commission on Commerce and Trade in the US capital on Wednesday.

The US also agreed to further relax technology export controls.

China vowed to pursue a more open government procurement process and not require foreign companies to transfer technology as a precondition for market access.

Wang Qishan, the vice-premier who headed the Chinese delegation, said the economies of China and the US have become "interdependent and inseparable".

Wang described the two economies as "highly complementary and neither can thrive without the other''.

Global economic recovery will be sluggish over the next five years, Wang said, and this means that ties will be of greater significance.

China has made tangible progress in addressing US concerns over IPR protection, technology transfer, government procurement and market access, he said.

Washington has started to address Chinese concerns on FDI in the US, export controls and visa issues.

Wang described the talks as "effective and fruitful''.

The Dow Jones industrial average  .DJI gained 59.75 points, or 0.45 percent, to 13,311.72 at the close. The S&P 500  .SPX rose 7.88 points, or 0.55 percent, to 1,443.69. The Nasdaq Composite  .IXIC climbed 6.02 points, or 0.20 percent, to 3,050.39.
Stocks rallied earlier in the week on signs of progress in the fiscal cliff negotiations. But with the S&P 500 up 14.8 percent so far this year, investors are taking the opportunity to engage in some hedging as 2012 comes to a close.


Thailand's Board of Investment (BOI) has stated that the Dawei Deep Sea Port and Industrial Estate in Myanmar will become an important drive for economic growth in this region, offering a shortcut for logistics and bringing new business opportunities and foreign investment to Thailand.

After conclusion on signing of Memorandum of Understand between Thailand and Myanmar to construct Dawei Deep Sea Port, Chanvit Ammatamatuchat, Deputy Secretary of General Office of the National Economic and Social Development Board (NESDB) said that the industrial zone and the deep sea port in Dawei will be a new drive for the economic growth in the region, serving as new logistic shortcut connecting trading market between western and eastern side of Indochina region. The project will serve as economic land bridge connecting Andaman Sea on the Myanmar side through Thailand and out to South China Sea creating great opportunities for expanding up-stream industries and linking supply chain in Thailand and in the region.

BOI is offering assistance in terms of consultation on the investment and upstart of the business related to this new mega project for both local and international investors. Dawei Deep Sea Port and Industrial Estate project will generate major investment and help drive the growth of the economy in Southeast Asia and the surrounding regions. Investors who are interested in investing in Thailand to take advantage of this development can consult and ask for assistance and tax privileges from the BOI.


Singapore property magnate Simon Cheong, best known for selling luxury units at record prices, may have to fork out more money to appease his company’s key shareholder and take SC Global Developments Ltd private in a planned S$745 million (RM1.8 billion) deal.

Cheong, who controls 60 per cent of the company and is chief executive and chairman, faces resistance from Wheelock Properties (Singapore) Ltd, which owns 16 per cent of the firm and recently bought shares just above the tycoon’s offer price.

Wheelock has also hired Goldman Sachs to advise on its stake, but sources with direct knowledge of the matter said the company, controlled by Hong Kong-based group Wheelock and Company Ltd, believes a much higher price for SC Global is warranted.

Bankers and analysts believe a counterbid for SC Global is unlikely because Cheong owns a controlling stake in the company.

Wheelock sees the revised net asset value (RNAV) of SC Global at S$3 a share or more, one of the sources said, about 50 per cent above SC Global’s share price. RNAV is the estimated breakup value of a property firm based on its assets.

The sources declined to be identified as they were not authorised to speak to the media. A spokeswoman for SC Global declined comment.


Total industry vehicle sales in the country are on track to meet year-end targets, as distributors offer rebates and other goodies to boost sales with sales staying above the 50,000-mark in November.

Maybank Investment Bank Bhd research head Wong Chew Hann said besides aggressive pricing campaigns that were expected to persist this month and into January, momentum would also come from new model launches.

“Barring all unforeseen circumstances, 2013 vehicle sales should grow 2% to 3% year-on-year, based on our in-house 2013 real gross domestic product growth estimate of 4.8%.

“We believe that auto players will continue to expand capacity and raise production efficiency in 2013, leading to lower car prices. Key developments from this capacity expansion would position Malaysia as a viable alternative regional automotive hub,” he said.

Vehicle sales in November declined 3.6% month-on-month but grew 10.5% year-on-year to 53,365 units.

On sales expectations for this month, Maybank Kim Eng in a report yesterday noted that December was typically a low season for auto sales, given the shorter work weeks due to the Christmas and New Year holidays.

“But with higher car prices looming in 2013 and only one month left in 2012, we anticipate that there will be a rush by customers to make purchases, and this will provide much-needed support to sales volume. While it will not dramatically lift month-on-month sales volume growth in December, a correction, however limited, cannot be ruled out.

“Thus, we expect sales volume in the fourth quarter of 2012 to remain flat, if not slightly higher vis-vis the third-quarter 2012 sales volume realisation of 281,000 units.”

Hong Leong Investment Bank, however, said that with the auto companies offering huge discounts and complimentaries to boost sales towards year-end, their sales margins could be affected.

The research house noted that the combined market share of Proton and Perodua slid to 47.1% from over 50%, as foreign original equipment manufacturers offered huge discounts (lowering the price advantage of national cars), as well as lowered prices of newly launched cars, namely, the Nissan Almera and Mitsubishi Mirage.

Hong Leong said potential risks to the local automotive sector would include prolonged tightening of banks' higher purchase rules, a slowdown in the Malaysian economy, a global automotive supply chain disruption, a sudden jump in fuel prices and interest rates and a depreciation of the ringgit.

MIDF Research, meanwhile, said its 2012 total industry volume (TIV) forecast of 611,140 units was within reach.

“The 11-month year-to-date estimated vehicle sales of 567,170 units are largely in line with both our full-year TIV and the Malaysian Automotive Association (MAA)'s forecast of 615,000 units that constitute 92% of total TIV forecast.

“However, we concur with MAA's expectations on December figures to be lower due to the aversion to year-end deliveries among prospective buyers.”


Indonesia is expected to grow 6.3 percent in 2013 after expanding this year by 6.1 percent, the World Bank said on Tuesday.

The World Bank, in a statement, projected that inflation next year will be 4.9 percent, compared with 4.3 percent in 2012. For the fourth quarter of this year, it sees inflation at 4.4 percent, and it projects 5.4 percent for the last quarter of 2013.

The bank sees exports growing 1.1 percent this year and 3.8 percent in 2013, while imports are seen increasing 3.9 percent in 2012 and 3.1 percent next year.

Indonesia's budget deficit is seen at 1.7 percent of gross domestic product next year compared with 2.5 percent this year while investment growth was forecast at 11.2 percent in 2013 compared with this year's 10.3 percent.

The World Bank statement said the GDP projection for 2013 assumes that domestic consumption and investment growth remain strong, with gradually improving growth in Indonesia's major trading partners supporting a modest recovery in exports.

"The global economic outlook remain relatively uncertain and vulnerable to shocks, so it is not a time to be complacent," said Stefan Koeberle, World Bank country director for Indonesia.


Standard & Poor’s has upgraded its outlook on the credit rating of the Philippines from “stable” to “positive,” further triggering expectations that the country will finally be rewarded an investment grade in 2013.

A positive outlook indicates that a country’s credit rating will likely be upgraded within the short term if existing favorable conditions continue.

S&P currently assigns the Philippines a rating of BB+, which is just a notch below investment grade.

The country’s economic officials are pitching for an investment grade, which they believe will help boost job-generating foreign direct investments (FDIs) that the country sorely lacks.

In a statement released Thursday, S&P said the decision to improve the outlook on the rating of the Philippines was based on the assessment of a favorable political situation in the country as evidenced by the ability of the Aquino administration to push for and implement vital reforms.

The announcement of the upgraded outlook came hours after President Aquino signed the Sin Tax Reform Act of 2012, which was 16 years in the making due to tough debates for and against it in Congress. In its first year of implementation alone, the law raising excise tax rates on cigarettes and alcohol is estimated to generate P34 billion in additional revenues for the government.

“We revised the outlook to positive to reflect our reappraisal of the political and institutional factors underlying the ratings,” Agost Benard, credit analyst of S&P for the Philippines, said in the statement.

“In our view, the current administration possesses a level of legitimacy, support and stability that reduces political uncertainty and allows for improved legislative efficiency. This conducive political setting enables the administration to focus on its key policy objectives of fiscal consolidation, increased infrastructure provision, and poverty reduction,” he added.

S&P said it may decide to raise the country’s credit rating to investment status next year if favorable indicators are sustained. These include improving revenue collection, declining reliance on borrowings from foreign creditors, and falling debt burden of the government.

The government’s outstanding debt is now estimated to be nearing 50 percent of the county’s gross domestic product (GDP) from a high of over 70 percent in the mid-2000s.

In a statement, Finance Secretary Cesar V. Purisima thanked the credit rating firm “for recognizing the continued improvement of the country’s fundamentals.”

With this action, he said, “we are now only half a step towards formally gaining investment grade, which the market has already given us by rating the Philippines at least two notches above investment grade.”

Yesterday in Asia

Tokyo fell 1.19 percent on profit-taking after surging to an eight-month high on Wednesday. The index lost 121.07 points to 10,039.33 – a day after breaking the 10,000 barrier for the first time since early April.

Seoul closed 0.32 percent higher, adding 6.41 points to 1999.50, with the election of conservative Park Geun-hye seeming to have little effect, although dealers were broadly happy as she favors stability over big change.

Sydney was up 0.35 percent, or 16.3 points, at 4,634.1 and Hong Kong staged a late rally to end 0.16 percent higher, adding 36.41 points to 22,659.78 while Shanghai gained 0.28 percent, or 6.11 points, to 2,168.35.

– Singapore closed up 0.54 percent, or 16.95 points, at 3,175.52.

Singapore Telecom rose 0.60 percent to Sg$3.37 and DBS Group gained 0.54 percent to Sg$14.99.

– Taipei fell 1.07 percent, or 82.01 points, to 7,596.46.

Taiwan Semiconductor Manufacturing Co. was 1.34 percent lower at Tw$96.0 while leading smartphone maker HTC rose 0.36 percent to Tw$275.5.

– Manila added 0.79 percent, or 45.35 points, to 5,797.74.

– Wellington ended 1.30 percent higher, adding 52.45 points to 4,075.45.

Chorus surged 4.4 percent to NZ$2.84, Fletcher Building rose 2.2 percent to NZ$8.45 and Telecom gained 0.74 percent to NZ$2.32 but Xero shed 1.3 percent to NZ$7.60.

– Bangkok shed 0.07 percent, or 1 point, to close at 1,377.40.

Coal producer Banpu fell 1.42 percent, or 6 baht, to 418 baht while PTT Plc was unchanged at 333 baht.

– Jakarta ended down 21.04 points, or 0.49 percent, at 4,254.82.

Carmaker Astra International fell 2.60 percent to 7,500 rupiah, cigarette maker Gudang Garam lost 2.73 percent to 57,000 rupiah, while palm oil producer Astra Agro Lestari decreased 1.62 percent to 18,250 rupiah.

– Kuala Lumpur shares gained 4.96 points, or 0.30 percent, to close at 1,670.60.

British American Tobacco added 1.7 percent to 60.50 ringgit, rose 1.5 percent to 5.36 and Axiata climbed 1.2 percent to 6.68.

India’s Sensex index slid 0.11 percent, or 22.08 points, at 19,453.92 points, snapping two straight days of gains, on profit-taking in index heavyweights.

Shayne Heffernan Ph.D.
Economist/Hedge Fund Manager

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ASEAN NEWS UPDATES      Updated: 04 January 2011

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• Bursa Malaysia to revamp business rules
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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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