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ASEAN STOCK WATCH Asean Affairs   25 July 2012

ASEAN Market Outlook

By Shayne Heffernan Ph.D.

 As of Tuesday morning, of the 145 companies in the S&P 500 that have reported earnings to date for the second quarter, 66.9 percent have reported earnings above analyst expectations. Over the past four quarters, 68 percent of companies beat estimates.

Concerns about Europe focused on Spain's high borrowing costs as the country paid the second highest yield on short-term debt since the birth of the euro and EU officials said Greece had little hope of meeting the terms of its bailout.


Singapore’s central bank said on Monday full-year inflation was expected to be in the upper half of the official forecast range, indicating monetary policy may stay tight even as the economy slows.

The Monetary Authority of Singapore’s (MAS) comments came as the city-state’s consumer prices rose 5.3 percent from a year earlier, beating the 5.2 percent median forecast of economists polled by Reuters and exceeding May’s 5.0 percent pace.

For the first six months of 2012, inflation averaged 5.1 percent from a year earlier. Price rises were led by accommodation, which rose 10.5 percent, and private road transport, up 7.5 percent, over this period.

The MAS and most private sector economists, however, expect the pace to moderate in the second half.

“Accommodation cost inflation, while moderating, has been stronger than expected, as leasing contracts continue to be renewed at rentals that are considerably higher,” the Ministry of Trade and Industry and the MAS said in a joint statement.

“For the whole year, CPI-All Items inflation is likely to come in at the upper half of the 3.5-4.5 percent forecast range,” they added.


The FBM KLCI index lost 3.60 points or 0.22% on Tuesday. The Finance Index fell 0.09% to 14657.88 points, the Properties Index dropped 0.54% to 1041.62 points and the Plantation Index down 0.23% to 8779.97 points. The market traded within a range of 10.53 points between an intra-day high of 1639.71 and a low of 1629.18 during the session.

Actively traded stocks include CYBERT, MTRONIC, TGOFFS, AXIATA, AT, NICORP, SKPETRO, AMEDIA, TM and TGOFFS-WB. Trading volume decreased to 845.75 mil shares worth RM1513.75 mil as compared to Monday’s 1220.60 mil shares worth RM1718.45 mil.

Leading Movers were BAT (+258 sen to RM61.00), CIMB (+1 sen to RM7.85), MMCCORP (+2 sen to RM2.52) and HLBANK (+2 sen to RM13.32). Lagging Movers were MAXIS (-9 sen to RM6.56), PPB (-30 sen to RM15.20), KLK (-28 sen to RM23.70), IOICORP (-3 sen to RM5.30) and TENAGA (-3 sen to RM6.69). Market breadth was negative with 294 gainers as compared to 413 losers.


PTT Exploration & Production PCL said Tuesday that its second-quarter net profit fell 31% from a year earlier due mainly to higher expenses and income tax.

Net profit for the three month ended June 30 was 7.73 billion baht ($243 million), compared with THB11.17 billion a year earlier, the company said in a filing to the Stock Exchange of Thailand.

The result was significantly lower than the THB14.35 billion average forecast of seven analysts polled by Dow Jones Newswires.

Sales rose 16% to THB52.16 billion from THB45.01 billion, but expenses increased at a faster pace of 32% to THB30.79 billion from THB23.30 billion. Income tax also surged 30% to THB13.69 billion from THB10.56 billion a year earlier.


The country’s trade balance is poised to narrow sharply this year. Indonesia has seen strong growth relative to its trade partners over the past few years, and this has translated into more robust demand for imports than exports.

Concerns about the global economy have also reduced commodity prices over the last four or five quarters, exacerbating the drop in the merchandise trade balance.

In the immediate term, Indonesia must contend with considerable resource policy headwinds. Two factors, commodity prices and import growth, will be critical to improve the trade balance.

We expect selective monetary tightening to dampen import growth starting in the second half and have factored in a tentative recovery in commodity prices in 2013.

Commodity prices have not been favorable for the past several quarters. Coal prices have dropped by about 30 percent since the first quarter of 2011, while palm oil prices are down by about 16 percent.

Meanwhile, the broader Commodity Research Bureau index is down by 20 percent. This has a large effect on net commodity exporters, or countries such as Indonesia whose commodities make up about 50 percent of exports.

The non-oil commodity trade balance narrowed from a peak of $8.7 billion in May 2011 to $6.8 billion in April this year, as price effects drove non-oil commodity exports down from $9.0 billion to $7.7 billion.

The Philippines

The Bangko Sentral ng Pilipinas hinted it might further cut its key policy rates, which were already at their record lows, to prevent inflation from falling below target range.

BSP Governor Amando Tetangco Jr. said an inflation rate that was too low was as bad for the economy as an excessively high inflation rate.

He said the central bank’s job was to prevent inflation not only from exceeding the target but also from falling below the target.

Tetangco on Tuesday said the BSP had room to tweak policy as he projected the annual inflation in July to hit between 2.6 percent and 3.5 percent, reinforcing the bank’s view that inflation would average near the lower end of its 3-5 percent target this year.

In June, the inflation rate hit 2.8 percent, bringing the first semester average to 3 percent.

“The inflation average over the policy horizon is still expected to fall closer to the lower end of our target range,” he told reporters in a mobile text message.

“Our current view is that there is some scope to adjust monetary policy settings to protect the inflation target on the downside,” he said.

He added that the BSP would continue to monitor global developments, like movements in international commodity prices and shifts in investor appetite, that might affect capital flows to assess their potential impact on domestic inflation and growth.

The BSP’s inflation projection for July will bring the average rate for the first seven months of the year to between 2.9 and 3.1 percent.

Tokyo ended 0.24 percent, or 20.23 points, lower at 8,488.09, but Seoul added 0.25 percent, or 4.49 points, to 1,793.93 and Sydney climbed 0.10 percent, or 4.3 points, to 4,133.2.
Hong Kong, which opened at 1 p.m. (0500 GMT) after a severe typhoon hit the southern Chinese business hub, closed 0.79 percent, or 150.27 points, lower at 18,903.20, while Shanghai advanced 0.24 percent, or 5.19 points, to 2,146.59.

Yesterday in Asia

– Singapore climbed 0.53 percent, or 15.95 points, to 2,998.44.
Singapore Telecom gained 0.29 percent to Sg$3.46 and Keppel Corp added 1.18 percent to Sg$11.19.

– Taipei fell 0.29 percent, or 20.38 points, to 7,008.35.
Leading smartphone maker HTC shed 2.26 percent to close at Tw$280.5 while Taiwan Semiconductor Manufacturing Co. was 0.67 percent higher at Tw$74.8.

– Manila closed 0.40 percent, or 20.34 points, higher at 5,159.74.
Ayala Corp. added 1.17 percent to 415 pesos, while unit Ayala Land gained 0.20 percent to 19.94 pesos.
Metropolitan Bank climbed 2.47 percent to 95.30 pesos.

– Wellington eased 0.13 percent, or 4.66 points, to 3,460.70.
Telecom lost 0.6 percent to NZ$2.525, Air New Zealand was up 0.55 percent at NZ$0.91 and Fletcher Building was steady at NZ$5.81.

– Kuala Lumpur eased 0.22 percent, or 3.60 points, to 1,632.57.
Gaming giant Genting Malaysia fell 1.1 percent to 3.46 ringgit, while utility Tenaga Nasional slipped 0.5 percent to 6.69 ringgit. Hong Leong Bank added 0.2 percent to 13.32 ringgit.

– Jakarta fell 0.44 percent, or 17.68 points, to 3,992.11.
Car maker Astra fell 0.8 percent to 6,350 rupiah, Telkom slid 2.2 percent to 8,750 rupiah and nickel and gold miner Antam decreased 2.3 percent to 1,270 rupiah.

– Bangkok rose 0.21 percent, or 2.53 points, to 1,187.64.
Banpu was unchanged at 440 baht, while PTT lost 1.53 percent to 321 baht.

– Mumbai rose 0.24 percent or 40.73 points to 16,918.08.
Hindustan Unilever rose 7.5 percent to a record 476.05 rupees. Software firm Wipro slid 2.93 percent to 346 rupees.


Shayne Heffernan Ph.D.  

Linda Johnson, Business Development Director - Private Client Group, Heffernan Capital Management
3 Raffles Place #07-01
Bharat Building Singapore 048617
Tel: +65 6329 6408 Fax: +65 6329 9699
Email :
Suite 53 Athenee Tower
63 Wireless Road, Lumpini, Pathumwan, Bangkok 10330
New York 347 5th Avenue, Suite 1402-508 NY, NY 10016


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