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ASEAN STOCK WATCH Asean Affairs   10  February 2011

ASEAN Markets Struggle

Shayne Heffernan

Asean Markets are responding to local pressures and apart from Jakarta and Bangkok,most are worth buying short term and long term.

Jakarta has developed some serious internal security issues with the Govt. unable to deal with Muslim rioters, while in Bangkok the Cambodian border issue and the "coming soon: elections make them long term buys, but short term there maybe more downside.

In Singapore Stocks ended the day down 1.09 per cent on Wednesday, following yet another interest rate shift in China. Given the falls this week bargain hunters should be active again today.

Shayne Heffernan’s Best Buys today are Overseas-Chinese Banking Corp, SingTel,CapitaLand, Wilmar International

Overseas-Chinese Banking Corp fell 1.13 percent to S$9.64, while SingTel fell 0.96 percent to S$3.09.

CapitaLand fell 2.8 per cent to S$3.48 while City Developments declined 2.7 percent to S$10.90.

Wilmar International was down 1.6 percent at S$5.39, Noble Group slipped 1.3 percent to S$2.23 while Olam International fell 0.3 per cent to S$3.08.

Asian markets are very concerned that a rate rise in China will lead to a slowdown in the regional economy, and this in turn will have an adverse effect on trade, with damaging knock-on effects for the global economic recovery.

The Straits Times Index fell 34.80 points to end at 3,150.56.

Volume was 1.42 billion shares.

Losers led gainers 355 to 128.

Thailand sold off again today, elections and Cambodia featured in local news and the market is now looking very oversold.

The Stock Exchange of Thailand (SET) composite index went down 13.64 points or 1.39 percent to close at 969.89 points at the end of trading session on Wednesday afternoon. The trade value was 28.76 billion baht.

Shayne Heffernan’s best buys today are Central Pattana PCL BAK:CPN

Central Pattana PCL BAK:CPN said today new projects to be developed this year include Central Embassy and Central complexes in Chiang Rai, Phitsanulok and Surat Thani provinces and on Rama IX Road in Bangkok. The group will renovate stores in Bangkok including Central World, Zen Department Store and Central Plaza Lad Prao,along with Udon Thani province.

The company also plans to open Zen and Central department store branches in Shenyang, China. Each requires an investment of 500 million baht.

As well, it plans to provide management services to eight to 10 hotels in Thailand. It will also invest in new food brands such as The Terrace, Cold Stone Creamery and Chabuton.

With these strategies, sales of the group will rise by 12 percent to 133.5 billion baht by the end of this year, said Mr. Sudhitham.

Despite the weak global economy and domestic political problems, sales of the group last year increased by 8 percent to 119 billion baht with a 15% rise in net profit.

Top five most active values were as follows;

PTT closed at 330.00 baht, down 7.00 baht (2.08%)

BANPU closed at 722.00 baht down 18.00 baht (2.43%)

TOP closed at 71.25 baht, down 1.75 baht (2.40%)

KBANK closed at 108.00 baht, down 3.50 baht (3.14%)

PTTEP closed at 172.00 baht, down 2.50 baht (1.43%)

Although being reported as a definite date, Thai Prime Minister Abhisit Vejjajiva has actually said he may call an election based on certain conditions.

Those conditions are:

Economic recovery

Constitutional amendments

No Violence

Even though Prime Minister Abhisit Vejjajiva insisted that he will not stay in office until the end of the government term and will call a general election in the first half of the year, provided these three conditions are met, the conditions are very subjective and the chance of a peaceful election in 2011 seem somewhat remote.

In his keynote speech at the Asean-CLSA Forum on Wednesday morning, Mr Abhisit said if his three targets are met, he will dissolve the House of Representatives and call elections.

He believed Thailand will remain an attractive option for foreign investors.

In Jakarta the JCI lost 42.46 points to close at 3,417.47. Jakarta will remain the least favorite of the Asean nations after internal religious issues have led to the deaths of people in the last few days.

4.21 billion shares worth Rp 4.48 trillion ($501.8 million) changed hands, with losers leading winners 183 to 51.

Chinese Rates, Inflationary Pressure and Religious Riots helped lower the exchange.

A Muslim mob burned churches and clashed with police in Indonesia on Tuesday as they demanded the death penalty for a Christian man convicted of blaspheming against Islam, police said.

Two days after a Muslim lynch mob killed three members of a minority Islamic sect,crowds of furious Muslims set two churches alight as they rampaged in anger over the prison sentence imposed on defendant Antonius Bawengan, 58.

Nearly all sectors were down on Wednesday. Agriculture stocks slid 1.79 percent, led by Astra Agro Lestari, the country’s largest plantation firm, which fell 2.48 percent to Rp 21,650.

Bumi Resources, Indonesia’s largest coal miner, fell 2.75 percent to Rp 2,650 as mining stocks were down 1.23 percent overall.

Bank Central Asia, Indonesia’s largest bank by market share, fell 1.67 percent to Rp5,900, while Bank Mandiri, the nation’s largest bank by assets, lost 4.2 percent to Rp 5,700. Also, cigarette maker Gudang Garam fell 2.94 percent to Rp 34,650.

The rupiah slid 0.16 percent to trade at 8,930 to the US dollar from 8,915 on Tuesday.

Palm Oil hits 3-year high.

Around the world the consumption of vegetable oils is poised to exceed production for the first time in 17 years, draining inventories of cooking fats such as soy and palm and boosting prices already nearing records set during the 2008 food crisis.

Palm oil advanced to the highest level in almost three years on concern that output in Malaysia, the world’s second-largest producer, may decline after adverse weather affected crops.

April-delivery futures on the Malaysia Derivatives Exchange climbed as much as 1 percent to RM3,929 a metric ton, the highest since March 2008, and were at RM3,919 aton at midday in Kuala Lumpur.

Asean companies are the world’s leading suppliers of these oils making them very strong buys.

The United Nations’ World Food oils index surged to a 29-month high in December as vegetable-oil stockpiles fell. Heffernan Capital Management is estimating demand will exceed output this year for the first time since 1994.

Economic growth in China, India and Indonesia, with a combined 40 per cent of the global population, has spurred demand for cooking oils, as spreading wealth prompts the switch from grains to meat and higher spending on flavour-enhancing fats.

Edible oils represented 13 percent of the calorie intake in developing Asia, according to a 2006 Asian Development Bank study. That was about half the proportion in the US.

China, attempting to slow inflation, ordered four cooking oil suppliers including Wilmar International and COFCO not to lift product prices, the National Business Daily reported last month.

Sarawak Oil Palms Berhad is a Malaysia-based company engaged in the cultivation ofoil palms and the operations of palm oil mills in Malaysia.

During the year ended December 31, 2009, the Company planted a total of 54,252 hectares of oil palms, of which 31,766 hectares were mature and 22,486 hectares were immature. In 2009, the Company produced 663,50 tons, 225,056 tons, 45,562 tons of fresh fruit bunches (FFB), crude palm oil (CPO) and palm kernels, respectively.

In August 2009, the Company completed the acquisition of the entire issued share capital of SOP Properties Sdn Bhd., which owned 11.454 hectares of land in Miri for property development.

Ebeling Heffernan has upgraded the 2011 growth target for Palm Oil.

So far Palm oil has rallied 36 percent this year, headed for its second straight annual advance, on optimism that rising demand in China may strain global supplies curbed by rain and drought in producing nations.

Global demand for eight vegetable oils will exceed output for the first time in eight years in 2010- 2011 and China’s import reliance is at “an alarming level,” Oil World said in a November 19 report.

Heavy rains caused by a La Nina weather event have reduced oil-palm yields in Indonesia and Malaysia, the top producers.

La Nina has also caused drought that curbed South American planting of soybeans, the rival edible oil, threatening global edible oil supplies and driving prices higher.

Malaysia’s production dropped 1 percent to 14.3 million tons in the first 10 months of the year, according to data from the nation’s palm oil board.

February-delivery futures rose as much as 1.3 percent to 3,640 ringgit, a 29-month high, and traded at 3,617 ringgit at 12:13 p.m. on the Malaysia Derivatives Exchange.

China, the biggest user of commodities, has pledged to control prices by cracking down on the use of bank credit to speculate in agricultural markets and by selling soybeans and vegetable oil from state reserves.

The biggest buyer of soybeans is expected to import 57 million tons in the year from October 1, up 13 percent from a year ago, the U.S. Department of Agriculture data show.

Imports may exceed 14.2 million tons from October through December, up 4 million tons from a year earlier, Oil World said.

In Manila the Philippine Stock Exchange index lost 35.11 points or 0.9 percent to 3,843.37.

The market was hammered by the highly rate-sensitive financial and property sectors, which fell by 1.86 percent and 2.1 percent, respectively.

All other sectors likewise traded in the red but on a smaller magnitude.

Volume was very heavy at P5.99 billion compared to the P3-billion levels in the past few days as a fresh quarter-percentage hike in China led to more profit-taking.

There were only 38 winners as against 91 losers while 41 stocks were unchanged.

The Losers PLDT, Metrobank, Aboitiz Power, Ayala Corp., Banco de Oro, Ayala Land, EDC, Security Bank, SM Investments, BPI, Megaworld and Nickel Asia.

The Winners, AGI, Semirara Mining, San Miguel, DMCI Holdings and Globe Telecom.


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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04 January 2011
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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.

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