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ASEAN Markets to Open Lower

Asia will see a sell off today after a dismal day in world markets yesterday.

Spanish and Italian bond yields rose, renewing worries about the euro zone's sovereign debt crisis. Spain's prime minister faced calls to resign over a corruption scandal, while a probe of alleged misconduct involving an Italian bank was expected to widen three weeks before a national election.

Data from the Commerce Department showed overall factory orders for December were below economists' expectations.

China's non-manufacturing businesses strengthened for a fourth month in January, fueled by the accelerated consumption of retail goods and a growing number of construction projects.

The non-manufacturing purchasing managers' index last month climbed to 56.2 from 56.1 in December, reaching its highest level since September, the National Bureau of Statistics and the China Federation of Logistics and Purchasing reported on Sunday.

"Stable growth of the non-manufacturing sector is strengthening," said Cai Jin, vice-chairman of the CFLP.

The index surveys 1,200 randomly selected enterprises in 27 industries. A PMI of above 50 indicates expansion and below 50 indicates contraction.

The civil engineering construction industry saw its fastest growth in January since March, the data showed.

"Economic growth driven by infrastructure construction investment will be more important this year," said Cai, adding that the Ministry of Railways will invest 650 billion yuan ($104.39 billion) in 2013 — the third-largest amount in a decade.

The push for urbanization will increase demand for rail lines, roads and housing, he added.

According to the NBS, the retail industry developed at the fastest rate among the 19 consumer service industries, with a PMI reading that rose to 71.1, up from 66.6.

According to Thomson Reuters data, of the 256 companies in the S&P 500 that have reported earnings through Monday morning, 68.4 percent have reported earnings above analyst expectations compared with the 62 percent average since 1994 and the 65 percent average over the past four quarters.

S&P 500 fourth-quarter earnings are expected to rise 4.4 percent, according to the data. That estimate is above the 1.9 percent forecast at the start of earnings season, but well below the 9.9 percent fourth-quarter earnings forecast on October 1.

 China Securities Investor Protection Fund Corporation on Friday said the monthly index in January was the highest it has been since April 2011, based on a survey carried out among 4,483 investors from Jan 1-28.

Nearly 45 percent of those polled said they expect the benchmark Shanghai Composite Index to rise in February, and almost half forecast a bullish market performance in the coming three months.

The survey also shows that Chinese investors have confidence in the country's macroeconomic situation. Some 50 percent of those surveyed said favorable economic situations would buoy the stock market.

But investors were cautious about the international economic and financial situations, and only a quarter of respondents said international economic and financial situations would boost China's stock market.

The survey shows that nearly 32 percent of those surveyed said they might increase stock holdings in the next three months, while some 20 percent said they would likely cut holdings.

The benchmark Shanghai Composite Index rebounded in January and hit an eight-month high after a string of tumbles in 2012.

Tokyo closed 0.62 percent higher, adding 69.01 points to a 33-month high of 11,260.35, while Seoul slipped 0.23 percent, or 4.58 points, to 1,953.21, and Sydney fell 0.28 percent, or 13.6 points, to 4,907.5.

Hong Kong fell 0.16 percent as dealers cashed in profits after the index spent most of the day in positive territory and around 21-month highs. The Hang Seng Index fell 36.83 points to end at 23,685.01, while Shanghai rose 0.38 percent, or 9.13 points, to 2,428.15.

– Singapore’s Straits Times Index closed up 0.19 percent, or 6.23 points, to 3,297.37.

United Overseas Bank gained 2.12 percent to Sg$19.27 and Singapore Airlines advanced 1.80 percent to Sg$11.30.

– Kuala Lumpur shares gained 7.0 points, or 0.43 percent, to close at 1,634.55.

IHH Healthcare inched up 0.3 percent to 3.30 ringgit, while Malayan Banking added 1.0 percent to 8.97. AirAsia fell 1.1 percent to 2.75 ringgit.

– Jakarta ended up 8.93 points, at 0.20 percent, at 4,490.565.

Carmaker Astra International rose 2.01 percent to 7,600 rupiah, food manufacturer Indofood Sukses Makmur jumped 1.68 percent to 6,050 rupiah, and Telekomunikasi Indonesia increased 0.52 percent to 9,700 rupiah.

– Bangkok added 0.48 percent, or 7.15 points, to 1,506.37.

Telecoms company True Corp. lost 2.94 percent to 6.60 baht, while Kiatnakin Bank jumped 7.21 percent to 55.75 baht.

– Taipei rose 0.86 percent, or 67.19 points, to 7,923.16.

Taiwan Semiconductor Manufacturing Co. was 1.48 percent higher at Tw$103.0 while Fubon Financial Holding rallied 3.56 percent to Tw$39.3.

– Mumbai’s Sensex index slid 0.15 percent, or 30.0 points, to 19,751.19, its third straight day of declines, on weak earnings data from local firms.

India’s engineering giant Bharat Heavy Electricals fell 2.73 percent to 219.2 rupees while commercial bank State Bank of India fell 2.41 percent to 2,351.85.

– Manila rose 1.86 percent, or 117.37 points, to 6,435.98, a new record.

Philippine Long Distance Telephone Co. added 2.13 percent to 2,880 pesos and Ayala Corp. gained 4.8 percent to 574 pesos.

– Wellington ended flat, edging up 0.47 points to 4,246,40.

Air New Zealand was up 2.38 percent at NZ$1.29 and Fletcher Building slipped 2.23 percent to NZ$9.19.

Shayne Heffernan Ph.D.
Economist/Hedge Fund Manager

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