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ASEAN STOCK WATCH Asean Affairs 16 January 2013

ASEAN Stock Market Preview

Investors continue to eye the looming debt ceiling debate. On Monday, President Barack Obama rejected any negotiations with Republicans over raising the U.S. debt ceiling. The United States could default on its debt if Congress does not increase the borrowing limit.

Resolving the debt ceiling debate is more a question of how than if. Investors don't expect a U.S. default, but they are also wary of another eleventh-hour agreement like the one in August 2011.

Retailer stocks advanced and helped to minimize the market's decline after a government report that retail sales rose more than expected in December was seen as a favorable sign for fourth-quarter growth. However, a separate report showed manufacturing activity in New York state contracted for the sixth month in a row in January.

China's foreign exchange regulator said a new unit will use the nation's $3.3 trillion in reserves to support Chinese companies' expansions overseas, signaling fresh outlets for the world's largest currency stockpile.

The State Administration of Foreign Exchange said on Monday that its co-financing office has been seeking an "innovative use" of the reserves and "supporting financial institutions in serving economic growth and their going-out strategy".

The Chinese government has been encouraging companies to buy assets overseas through a "going out" strategy to secure energy and commodity resources, buy technology and build internationally strong businesses.

"A larger portion of China's reserves is expected to be used to finance overseas investment deals," said Zhang Zhiwei, chief China economist at Nomura Holdings Inc in Hong Kong.

"Given the large size of China's reserves, a small percentage change will mean a big amount," Zhang added

Zhang said only a small part of China's reserves are expected to be used by the new office.


Siam Cement is in talks to buy building materials, petrochemical business in Europe, according to its chief executive Kan Trakulhoon.

Mr Trakulhoon told reporters that the company would invest about THB200bn (US$6.6bn) in five years from 2013, mainly in ASEAN countries. At least one fifth of that amount (THB40bn) will be spent in 2013, he added. Mr Trakulhoon, however, did not specify which companies Siam Cement will target.


Keppel Offshore & Marine subsidiaries have won three construction contracts for offshore vessels with a combined value of S$420 million ($343 million).

Hydro Marine Services, a subsidiary of McDermott International, has commissioned Keppel Singmarine's to build a deepwater pipelay (S-Lay) vessel.

Keppel's Marine Technology Development (MTD) designed the vessel to support operations in up to 10,000 ft (3,280 m) of water. It is also claimed to provide efficient layrates for long trunklines, to be operable in severe weather, and to provide high levels of thrust output and power distribution.

Work will start during 1Q 2013 and should be completed within two and a half years.


Fitch Ratings assigned Sime Darby Bhd's proposed US$1.5bil Sukuk issuance programme an 'A' rating.

The rating agency said on Tuesday the proposed Sukuk programme -- set up through its special purpose vehicle -- Sime Darby Global Bhd, was rated at the same level as Sime Darby's senior unsecured rating in accordance with Fitch's "Rating Sukuk" criteria.

"Sime Darby's obligations relating to the Sukuk programme rank equally with its senior unsecured debt obligations and the programme is exposed to low structural subordination risk on account of Sime Darby's majority stake in and management control of key operating entities," it said.

Fitch said the programme would be a sale and lease back transaction involving Sime Darby as the seller of Sukuk assets and lessee and Sime Darby Global Bhd as the purchaser of Sukuk assets and lessor.

The return on the Sukuk assets would be from lease rentals paid by Sime Darby in relation to the Sukuk assets.

Fitch said the debt repayment would be backed by a purchase undertaking clause. Sime Darby would repurchase the assets at an exercise price essentially equivalent to the nominal amount of the debt and any interest outstanding.

Sime Darby would use the proceeds of the Sukuk programme for Shariah-compliant capital expenditure, investment, working capital and other general corporate purposes.

Last Friday, Fitch assigned Sime Darby 'A' long-term foreign and local currency issuer default ratings (IDRs), with stable outlook.


Profit at property company Surya Semesta Internusa may have tripled last year given the period includes the sale of land on an industrial estate in Karawang, West Java.

The company said its industrial estate developer unit sold an estimated 123 hectares of land at the estate for $94 per square meter last year. Proceeds from the sales may reach Rp 1.1 trillion ($114 million), about a third of its total revenue in 2012.

The company sold 208 hectares of industrial land in 2011 at about half the price — $43 per square meter. It raised Rp 798 billion in proceeds from those sales.

The price of industrial land has risen rapidly in recent years on the back of strong growth in foreign direct investment into Indonesia’s manufacturing sector as well as the expansions of local businesses.

Surya Semesta says its 2012 net income was likely to have surpassed Rp 700 billion, well beyond its Rp 650 billion target. That upper figure is triple the Rp 252 billion net income it posted in 2011. Its revenue was forecast to jump 14 percent to an estimated Rp 3.3 trillion last year from Rp 2.9 trillion a year earlier.

“The rising income in 2012 was mostly backed by Surya Semesta Internusa’s subsidiary, Suryacipta Swadaya, a developer and manager of 1,400-hectare industrial estate Suryacipta City of Industry in Karawang,” the statement said.

The company’s revenue also came from its construction services business, rent of its office buildings Graha Surya Internusa and Glodok Plaza, and its hotel operator, which manages the Gran Melia in Jakarta and Banyan Tree Ungasan Resort in Bali.


The peso inched up on Tuesday amid projections dollar inflows to the country would remain strong in 2013.

The local currency closed at 40.57 against the US dollar, up by 9 centavos from the previous day’s finish of 40.66:$1.

Intraday high hit 40.55:$1, while intraday low settled at 40.61:$1.

Volume of trade amounted to $1.05 billion from $554.6 million previously.

The Bangko Sentral ng Pilipinas has reported that the country registered an $8.9-billion surplus in its balance of payments in 2012 given robust inflows of remittances, foreign portfolio investments, and foreign investments in the country’s services sector.

The BSP saw the likelihood for the Philippines to again post a BOP surplus this year, citing favorable projections on remittances and foreign investments in the domestic business process outsourcing industry.

Expectation that dollar inflows would remain significant in 2013 fueled speculations that the peso would appreciate some more this year, traders said. Such an outlook on the peso has been supporting demand for peso-denominated securities, they said.

Yesterday in Asia

Tokyo put on 0.72 percent, or 77.51 points, to 10,879.08—its highest level since April 30, 2010—and Shanghai added 0.60 percent to 2,325.68, as environmental firms rose on hopes they will benefit from recent bad pollution.

But Seoul was off 1.16 percent, or 23.30 points, to 1,983.74, led by falls in technology stocks due to a stronger won, and Hong Kong shed 0.14 percent, or 31.75 points, to 23,381.15.

Sydney closed flat, edging down 3.1 points to 4,716.6.

– Singapore closed down 0.33 percent, or 10.52 points, to 3,196.07.

City Developments fell 2.75 percent to Sg$11.33 and Keppel Land was unchanged at Sg$3.97 as property stocks continued to languish after the government introduced new measures to cool the housing market.

– Kuala Lumpur closed flat, edging up 1.26 points to 1,685.89.

UEM Land Holdings added 2.3 percent to 2.20 ringgit, while UMW Holdings rose 2.1 percent to 12.70. Telekom Malaysia dropped 0.9 percent to 5.74 ringgit.

– Bangkok fell 0.16 percent, or 2.21 points, to 1,422.86.

Coal producer Banpu dropped 1.47 percent to 402 baht, while Siam Cement lost 0.93 percent to 428.00 baht.

– Jakarta gained 0.42 percent, or 18.33 points, to 4,400.82.

Telecoms firm Telekomunikasi Indonesia jumped 3.28 percent to 9,450 rupiah and Bank Negara Indonesia rose 2.01 percent to 3,800 rupiah, while cement producer Semen Indonesia slid 0.32 percent to 15,700 rupiah.

– Taipei fell 0.75 percent, or 58.95 points, to 7,765.02.

Taiwan Semiconductor Manufacturing Co. shed 1.47 percent to Tw$100.5 while leading smartphone maker HTC was 1.20 percent lower at Tw$287.5.

– Wellington rose 0.41 percent, or 17.04 points, to 4,170.96.

Fletcher Building gained 0.23 percent to NZ$8.88, Mainfreight added 1.02 percent to NZ$11.92 and Telecom Corp. was down 0.21 percent at NZ$2.33.

– Manila lost 0.10, or 6.23 points, to 6,087.67.

Top-traded Ayala Corp fell 1.85 percent to 530 pesos while Metropolitan Bank and Trust Co. dropped 0.56 percent to 107 pesos.

– Mumbai rose 0.40 percent, or 80.41 points, to 19,986.82 on hopes of a rate cut as inflation eased.

Mobile phone firm Bharti Airtel climbed 4.81 percent to 345.25 rupees and Idea Cellular advanced 8.27 percent to 122.4 on a possible hike in call tariffs.

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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