ASEAN KEY DESTINATIONS
Asean Stock Watch- July 26
The Washington deadlock over raising the US debt ceiling sent stocks tumbling on Monday, as the August 2 date to avoid a government debt default grew closer with no deal in sight.
The Dow Jones Industrial Average closed down 88.36 points (0.70 percent) at 12,592.80.
The broader S&P 500 lost 7.59 points (0.56 percent) at 1,337.43, while the tech-heavy Nasdaq Composite shed 16.03 points (0.56 percent) to stand at 2,842.80.
'US stocks back-pedalled right out of the gate today, as heightened debt concerns on both sides of the Atlantic sent buyers to the sidelines,' said Andrea Kramer of Schaeffer's Investment Research.
'In Europe, Moody's downgrade of Greek debt reminded traders of the potential ramifications of an extended stalemate on Capitol Hill, as a failure to up the federal debt ceiling by August 2 could result in a debt downgrade - or worse, a default - for Uncle Sam.' Democrats and Republicans battled over the weekend and again throughout Monday over whose debt-and-deficit reduction plan was better, while investors and economists urged a deal to prevent, at least, a downgrade of the country's AAA standing as a borrower, and at worst, Washington being forced to pare 40 percent of its spending and defaulting on its debt.
The benchmark index dropped for the first time in four days on Monday as a political deadlock in the United States raised the specter of a debt default by the world’s biggest economy.
The Jakarta Composite Index lost 19.73 points, or 0.5 percent, to close at 4,087.09. The index had advanced 2.1 percent over the previous three trading days, closing at record highs on all three days.
More than 8.9 billion shares valued at Rp 5.16 trillion ($603.7 million) were traded on Monday. Decliners outnumbered gainers 151 to 99. Foreign investors sold Rp 103 billion more in shares than they bought.
US President Barack Obama and congressional leaders failed to reach an agreement over the weekend on raising the country’s debt ceiling before it runs out of money to pay its bills on Aug. 2.
Obama wants to raise the debt limit above the $14.3 trillion cap, but Republicans, who control the House of Representatives, have resisted calls for tax increases.
Ratings agencies have warned that they could downgrade the US if it fails to reach a deal on the debt ceiling. A downgrade would increase borrowing costs and hurt the economy.
Shares also fell on concern that stock prices may be expensive relative to profit potential. The index has an estimated price-to-earnings ratio of 14.4, according to Indonesia Stock Exchange data. That is higher than the multiple of 13 for China and 14.1 for India, AmCapital Indonesia analyst Janson Nasrial said.
“Trading was mostly affected by profit-taking, as the index valuation has become one of the highest in the region,” he said.
Among the biggest losers was cigarette maker Gudang Garam, which fell 2.9 percent to Rp 52,400 after gaining 5.8 percent over the past two weeks.
Among sectors, mining led the decline, shedding 1 percent, followed by infrastructure, which lost 0.8 percent, and consumer goods, down 0.7 percent.
Coal-mining stocks tracked declines in the price of crude oil, which dropped by 0.9 percent on Monday to $99 a barrel. Bumi Resources, the country’s largest coal producer, dropped 0.8 percent to Rp 3,100. Medco Energi International, the largest listed oil producer, fell 1.03 percent to Rp 2,400.
Among crude palm oil producers, London Sumatra Plantation shed 1.1 percent to Rp 2,350, and Salim Ivomas Pratama declined by 0.8 percent to Rp 1,260, matching the commodity’s lower price.
Palm oil futures for October delivery fell 1.3 percent on Bursa Malaysia Derivatives, curbing the companies’ outlook on revenue.
Bucking the downward trend, Bank Negara, the country’s fourth-largest lender, rose 1.3 percent to Rp 4,025 after reporting a 41 percent surge in second-quarter profit.
The rupiah edged down 0.1 percent to 8,528 against the dollar on Monday.
The FTSE Bursa Malaysia KLCI (FBM KLCI) slipped below the 1,560-point level today as regional markets were pulled down by the US debt impasse which may trigger the first-ever US debt default.
The key Bursa Malaysia barometer which opened 0.4 points better at 1,565.46, hit a low of 1,558.51 before ending at 1,559.6 or 5.46 points easier compared with last week's closing.
Affin Investment Bank's head of retail, Dr Nazri Khan, said that the US deadlock was temporary as the lawmakers eventually would come out with a last minute consensus.
"Although, the debt ceiling talks have no fresh direction or progress so far, market players are still hopeful there will be an agreement before August 2," he said.
"On the local front, we lack catalysts and leads," he told Bernama.
The Finance Index lost 73.52 points to 14,737.61 but the Industrial Index gained 0.15 points to 2,868.05 and the Plantation Index rose 22.81 points to 7,720.92.
The FTSE Bursa Malaysia Emas Index dropped 47.359 points to 10,719.07, the FTSE Bursa Malaysia Mid 70 Index decreased 79.396 points to 11,749.23 and the FTSE Bursa Malaysia Ace Index shed 50.75 points to 4,119.36.
Volume leader Ingenuity Solutions-WA slipped one sen to 3.5 sen.
Ingenuity Solutions eased one sen to 7.5 sen, Wijaya Baru Global-WA earned four sen to 15.5 sen and Bumi Armada inched down nine sen to RM4.08.
Debutante Hibiscus Petroleum was also among the active counters, dropping 9.5 sen to 53 sen but its warrants rose one sen to 13.5 sen.
Among heavyweights, Maybank was unchanged at RM8.83, CIMB dipped eight sen to RM8.45, Petronas Chemicals eased three sen to RM7.01 and Sime Darby dwindled one sen to RM9.19.
The overall market breadth was negative with losers outnumbering gainers 505 to 203 while 291 counters were unchanged, 500 untraded and 27 others suspended.
A total of 857.415 million shares valued at RM1.361 billion changed hands compared with 1.166 billion shares worth RM1.993 billion last Friday.
Volume on the Main Market decreased to 605.085 million shares worth RM1.329 billion from 711.469 million shares valued at RM1.925 billion.
Turnover on the ACE Market dropped to 186.364 million shares valued at RM18.554 million from 322.553 million shares worth RM46.021 million.
Warrants fell to 61.623 million units worth RM10.612 million from 130.109 million units valued at RM20.656 million.
Consumer products accounted for 23 million shares traded on the Main Market, industrial product 169.829 million, construction 36.937 million, trade and services 150.773 million, technology 14.501 million, infrastructure 3.995 million, finance 58.928 million, hotels 350,800 million, properties 56.694 million, plantations 10.595 million, mining 26,000 REITs 3.544 million and closed/fund 119,000.
After scaling new heights in less than a year, Philippine stocks have become expensive, according to an expert on emerging markets.
In a briefing, Dr. Mark Mobius, executive chairman of Templeton Emerging Markets Group, said the local market has outperformed the MSCI Emerging Markets Index over a five-year horizon, anchored on the strength of remittances and the outsourcing industry.
“We’d like to put money here if the stocks were cheaper, but that does not mean we would not invest here,” Mobius said.
Growth opportunities, however, remain in the services and mining sectors, he said.
“We are not looking at the valuations today but we’re looking at future valuations,” he said.
“The Philippines is a great market, but it won’t be the greatest market every year. You must take a global perspective,” he said.
Mobius hopes to see more companies go public to spur activity in the Philippine market, which is considered one of the smallest among emerging markets.
On Monday, Philippine share prices closed flat after US lawmakers failed to reach an agreement to raise Washington’s debt limit and prevent a default.
At the Philippine Stock Exchange, the composite index inched up 2.14 points, or 0.05 percent to 4,480.50, while the broader all-shares index dipped 2.51 points, or 0.08 percent to 3,104.22.
Decliners beat advancers, 80 to 75, while 39 stocks were unchanged. A total of 6.26 billion stocks worth P4.32 billion changed hands.
“The PSEi was lifeless today as blue chips were weaker. Same with previous sessions, investors shifted towards more speculative stocks to look for bargains or take some profits,” said Maria Arlysa Narciso of AB Capital Securities Inc.
She said a crucial driver for Tuesday’s trades is the market’s reaction to the State of the Nation Address of President Benigno Aquino 3rd.
“It was said that the focus would be on the transformation of the society. However, business groups have already expressed that their interest is on the government’s plans on various industries and how to address the lack of infrastructure to let those businesses grow,” Narciso said.
Astro del Castillo, managing director at First Grade Finance Inc. said the local market “closed flat because of the jitters of potential debt crisis” in the US.
“If the US will not be able to fix its house, there will be a domino effect and we may have another financial crisis,” he said, adding that the market also needs to consolidate following the run up in the previous days.
Local stocks tracked the weakness in Asian markets because of the failure of US lawmakers to reach a deal to raise the Federal debt ceiling.
“Asian indexes declined on growing risks of a possible US debt default aside from China’s tightening measures, the region’s largest economy. These two, along with the euro zone’s own struggles, have been holding down the markets for a long time now,” said Narciso.
Mobius, however, said Asia has the most to gain should the US fail to raise its debt ceiling.
He said this would result in an upward movement in the region’s currencies, as American investors diversify their investment portfolio. Stronger currencies would benefit the import of food and raw materials, keeping inflation down.
“A possible default can only be good for Asia because people will retreat to the currencies and people will want to diversify into emerging markets,” he added.
Asian currencies moved sideways on Monday as investors were on a wait-and-see position after a political impasse in the US reduced hopes of an agreement to cut the Federal budget deficit.
At the Philippine Dealing System, the peso gained a centavo to close at 42.39 against the US dollar on Monday from 42.40 on Friday.
The dollar-peso pair opened at 42.38 and moved to a high of 42.48 and a low of 42.36.
Total trading volume eased to $727.24 million from last Friday’s $1.038 billion.
The currency pair is expected to trade at a range of 42.30 to 42.50 within the week. Singapore
The Washington deadlock over raising the US debt ceiling sent stocks tumbling on Monday, as the August 2 date to avoid a government debt default grew closer with no deal in sight. The Dow Jones Industrial Average closed down 88.36 points (0.70 percent) at 12,592.80.
The Stock Exchange of Thailand (SET) composite index on Monday gained 6.54 points or 0.58 percent to close at 1,127.58 points. The market value was 29.57 billion baht, with 4.87 billion shares traded.
The SET50 index ended the session at 791.57 points, up 4.58 points or 0.58 percent, with a total trade value of 20.97 billion baht.
The SET100 index rose 10.00 points or 0.58 percent to stay at 1,723.95 points, with a total transaction value of 24.70 billion baht.
The SETHD index stood at 1,074.56 points, up 8.18 points or 0.77 percent, with a total market value of 7.36 billion baht.
The Market for Alternative Investment (mai) index moved up 3.21 points or 1.03 percent to close at 313.70 points, with a total turnover of 1.05 billion baht.
Top five most active values were as follows;
SCB closed at 126.50 baht, up by4.50 baht or 3.69 percent.
PTT closed at 350.00 baht, down by 2.00 baht or 0.57 percent.
CPF closed at 30.75 baht, up by0.75 baht or 2.50 percent.
BBL closed at 173.50 baht, up by1.50 baht or 0.87 percent.
KBANK closed at 142.50 baht, down by 1.50 baht or 1.04 percent.
The benchmark VN-Index closed today's session with a tiny gain of 0.04 percent to close at 409.36 points, despite decliners outnumbering advancers by 140-65.
On the HCM City Stock Exchange, the market value remained bleak, totaling just VND252.5 billion (US$12.3 million) on a volume of over 14.9 million shares.
The fourth largest listed bank by charter capital, Sacombank, was again the most active stock on the southern bourse but with just over 900,000 shares changing hands. STB lost 0.7 percent to close at VND13,800 ($0.67).
Blue chip performances were distinct. Software producer FPT (FPT), financial conglomerate Masan Group (MSN), dairy producer Vinamilk (VNM), property developer Vincom (VIC) and steelmaker Hoa Phat Group (HPG) all posted gains of around 1 percent.
Others declined, including Eximbank (EIB), real estate developer Hoang Anh Gia Lai (HAG), Phu My Fertilisers (DPM) and PetroVietnam Finance (PVF).
On the Hanoi Stock Exchange, the HNX-Index slid another 0.92 percent from Friday's close to 70.23 points.
Today's trading value was sluggish with just 16.4 million shares worth VND204 billion ($9.9 million) changing hands.
Losers outnumbered gainers by 170-60.
Kim Long Securities (KLS) was the most active stock nationwide with 1.38 million shares exchanged, closing down 0.9 per cent at VND10,500 ($0.52).
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