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ASEAN STOCK WATCH Asean Affairs   27 July 2012

ASEAN Markets Outlook

By Shayne Heffernan Ph.D.

 Europe's main stock markets rallied yesterday after the head of the European Central Bank pledged full support for the euro, easing tensions over the eurozone's long running sovereign debt crisis.

Investors also digested a string of company earnings from major bluechip companies including Anglo-Dutch oil major Shell and Spanish bank giant Santander.

London's benchmark FTSE 100 index jumped 1.08 percent to 5,557.46 points, the Paris CAC 40 leapt 2.08 percent to 3,145.83 points and Frankfurt's DAX 30 rose 1.18 percent to 6,481.82.

Italian shares surged by 4.06 percent as a successful government bond auction also eased bailout concerns, while the Spanish market soared 2.39 percent in value.

The number of Americans filing new claims for jobless benefits fell last week to near a four-year low, although the figures have been volatile of late due to summer factory shutdowns. Durable goods orders for June were better than expected, but a slip in pending home sales underscored the fragility of the economy.

Hopes that the Federal Reserve will boost efforts to stimulate a flagging economy, maybe with a decision to do so as early as at its rate-setting meeting next week, soothed concerns about the economy and offset the impact of what investors describe as a "mixed" corporate earnings season.


Thailand’s central bank signalled it has room to cut interest rates to protect the economy from a global slowdown as it lowered the country’s growth and inflation forecasts after keeping borrowing costs unchanged.

The Bank of Thailand is ready to do more to support growth if risks escalate, Assistant Governor Paiboon Kittisrikangwan said today, after the monetary authority held its benchmark one-day bond repurchase rate at 3 per cent. It cut its growth forecast for the year to 5.7 per cent from 6 per cent.

The Southeast Asian country has refrained from joining nations from Brazil to China in easing monetary policy as the economy recovers from floods last year that disrupted the supply chains of companies including Toyota Motor Corp. Europe’s sovereign-debt crisis has hurt demand for exports from Thailand, which this month marks 15 years since its baht devaluation sparked the Asian financial crisis.

“If Europe’s situation worsens further, it’s possible Thailand will cut interest rates,” said Satoshi Ushijima, the Bangkok-based vice president of the treasury division at Mizuho Corporate Bank Ltd. “If the BOT moves before the end of this year, rather than holding rates, it will be a cut, as they lowered the growth forecast.”

The Thai baht rose 0.2 per cent to 31.72 per dollar as of 3:29 p.m. in Bangkok. The benchmark SET index was little changed, having gained about 15 per cent this year. The currency has declined 0.6 per cent.

Thai Prime Minister Yingluck Shinawatra has raised minimum wages and will spend as much as 2 trillion baht ($63 billion) over seven years on infrastructure projects to boost growth after last year’s floods. The $346 billion economy unexpectedly expanded 0.3 per cent from a year earlier in the first quarter, after contracting 8.9 per cent in the previous three months.

The Bank of Thailand today cut its growth forecast for 2013 to 5 per cent from 5.4 percent. Inflation this year will be 2.9 per cent from an earlier estimate of 3.3 percent, it said, while keeping the core inflation forecast at 2.2 per cent.

Consumer prices climbed 2.56 per cent from a year earlier in June, after rising 2.53 percent in May.

The central bank also cut its export growth forecast for the year to 7 per cent from 8.3 per cent. Overseas sales in June fell 4.2 per cent from a year earlier, a report today showed.


Singapore's manufacturing output on a year-on-year basis grew 7.6 per cent in June 2012, boosted by its biomedical manufacturing.

Excluding biomedical manufacturing, output fell 1.5 per cent, said the Economic Development Board (EDB) in a statement today.

On a three-month moving average basis, it said manufacturing output increased 4.5 per cent in June 2012, compared to a year ago.

On a seasonally adjusted month-on-month basis, manufacturing output rose 3.9 per cent in June 2012. Excluding biomedical manufacturing, output declined 3.8 per cent.

It said output of the biomedical manufacturing cluster expanded 54.4 per cent on a year-on-year basis in June 2012.

Output of the transport engineering cluster in the first six months of 2012 increased 21.9 per cent, compared to the same period in 2011.

Output of the general manufacturing cluster increased 0.6 per cent in June 2012 compared to the same period a year ago. Higher output in the miscellaneous industries and food, beverages & tobacco segments were partially offset by lower printing output in books, magazines, labels and organisers.

The decline in the electronics cluster moderated, with output falling 4.5 per cent in June 2012 compared to a year ago, it said.

The chemicals cluster fell 5.7 per cent year-on-year in June 2012, with all segments recording lower output.

The petroleum segment's output fell 7.4 per cent on the back of weak refining margins while the specialty chemicals segment declined 8.5 per cent.


Foreign Minister Marty Natalegawa has expressed optimism that the target of Indonesia-Vietnam trade of US$5 billion in 2015 will be achieved earlier than expected, Indonesia's ANTARA news agency reported.

The bilateral trade between Indonesia and Vietnam rose significantly by 53 per cent to US$4.7 billion last year from a year earlier, he said in a press statement issued on Wednesday.

"The achievement showed that comprehensive partnership between the two nations has increasingly become more strategic," he added.

Marty is in Hanoi to attend the Indonesia-Vietnam Joint Commission meeting on Wednesday and Thursday.

At the two-day meeting, Marty and his Vietnamese counterpart Pham Binh Minh discussed various areas of cooperation including trade, investment, agricultural, political, maritime and socio-cultural.

With the presence of the joint commission, the two nations have agreed to review the status of bilateral cooperation in various sectors to find new steps in favour of the bilateral cooperation.


Myanmar lawmakers are scrutinising the qualifications of a retired general nominated to become vice president, officials said Wednesday, amid uncertainty about whether he meets the rules.

Yangon chief minister Myint Swe was selected two weeks ago by the soldiers who hold one quarter of the seats in Myanmar's parliament to replace another hardline army vice president.

"We are examining his qualifications. We cannot give details yet," Htay Oo, the head of the ruling Union Solidarity and Development Party and a member of an electoral college that will elect the vice president, told AFP.

Officials declined to comment on reports that Myint Swe's son-in-law is an Australian citizen, which under the constitution would appear to disqualify him from becoming a vice president.

The same provision is a barrier to opposition leader Aung San Suu Kyi taking a top leadership role in the country, and her party has vowed to campaign to completely redraw the charter, which was written by the former junta.

Myanmar's army is standing by its nominee, according to one of the military representatives.

"He's the only one we nominated. We haven't changed the name or person yet. The result will come out in the coming days," he said.

The nomination of a new vice president followed the announcement that the previous incumbent Tin Aung Myint Oo, a renowned hardliner closely linked to former junta chief Than Shwe, had retired because of health reasons.

Myint Swe, who is an MP for the army-backed ruling party in Yangon, is seen as a marginally more moderate figure than his predecessor, although he also has close links to Myanmar's former strongman.

Since taking office last year, Myanmar's President Thein Sein, also a former general, has overseen a series of dramatic reforms such as the release of hundreds of political prisoners and the election of Suu Kyi to parliament.


The FBM KLCI index lost 11.18 points or 0.68% on Thursday. The Finance Index fell 0.20% to 14638.74 points, the Properties Index dropped 0.23% to 1041.63 points and the Plantation Index down 0.97% to 8715.21 points. The market traded within a range of 17.34 points between an intra-day high of 1638.65 and a low of 1621.31 during the session.

Actively traded stocks include IHH, MTRONIC, NICE-OR, BIOSIS-WA, AGLOBAL, MKLAND, INGENS, AYS, INGENS-WA and LUSTER. Trading volume decreased to 1151.17 mil shares worth RM1815.43 mil as compared to Wednesday’s 1320.94 mil shares worth RM2487.45 mil.

Leading Movers were PETCHEM (+2 sen to RM6.57), TENAGA (+1 sen to RM6.80), PETGAS (+4 sen to RM18.00), HLBANK (+2 sen to RM13.42) and ARMADA (+1 sen to RM3.96). Lagging Movers were SIME (-15 sen to RM9.80), GENTING (-16 sen to RM9.11), GENM (-13 sen to RM3.30), KLK (-66 sen to RM23.50) and AXIATA (-5 sen to RM5.76). Market breadth was negative with 274 gainers as compared to 448 losers.


Indonesian automotive giant Astra International posted a 13 percent rise in net profit in the first half of 2012, up to Rp 9.7 trillion ($1 billion).

In a written statement, the company said the stronger net profit was supported by rising company revenues, increasing by about 26 percent over the same period last year, to Rp 95.9 trillion.

“The Astra Group has shown a good performance in the first half of 2012, especially in car sales, that benefited from the strengthening domestic demand and the rising supply that is backed by stepped up capacity as well as a reduction in supply disturbances as took place last year,” Astra president Prijono Sugiarto said.

Prijono said the improved performance was achieved despite a new regulation requiring higher down payments for vehicle purchases, which came into effect on June 15.

The contribution of the automotive division in the first six months rose by 25 percent to reach Rp 4.9 trillion, including Rp 2.5 trillion from the corporation and its subsidiaries, and Rp 2.4 trillion from associate companies and jointly controlled entities.

Nationwide, car sales rose by 28 percent in the first half of 2012 to reach 535,000 units, with Astra Group car sales showing a 32 percent increase to 302,000 units that included the Toyota, Daihatsu, Isuzu, UD trucks and Peugeot brands.


The government posted a budget deficit of P34.5 billion in the first semester as the growth of expenses and of revenues remained at double digits, although still far short of targets.

In the six months to June, the government deficit—defined as its spending level beyond revenue collections—was just about a third of the programmed P109.3 billion. It was, however, twice the P17.23 billion recorded in the same period last year.

The January-June expenses reached P795.4 billion, which was just 90 percent of the program but 13.8 percent higher year on year.

In a briefing, Budget Secretary Florencio B. Abad said this was largely due to disbursements for infrastructure and other capital outlays, which grew by 66.1 percent year on year, as well as maintenance and other operating expenses, which rose by 41.1 percent.

“We are committed not only to sustain our current disbursement performance but also to further accelerate public spending and the delivery of urgent social and economic services,” Abad said.

“With government disbursements in the second quarter growing a bit faster than in the first quarter, we are confident that government spending will again make a significant contribution to economic growth,” he said.

The budget chief said public spending was a significant contributor to the 6.4-percent gross domestic product growth in the first quarter.

Also, six-month revenues reached P760.9 billion, which was 2 percent short of the goal but 11.6 percent higher than the actual take in the same period last year.

In June alone, the budget deficit hit P11.7 billion, or 52 percent higher than that of the same month in 2011.

June expenditures reached P127 billion, 17.8 percent higher than the P107.8 billion spent in the same month last year. Revenues reached P115.3 billion, up by 15.2 percent from P100.1 billion a year ago.

In the same briefing, Finance Secretary Cesar V. Purisima said the fiscal situation as of June gave the government ample space to pump-prime the economy—if necessary—by further accelerating expenditure. However, this would depend on the capacity of various agencies to absorb additional funds.

Yesterday in Asia

Tokyo closed 0.92 percent, or 77.20 points, higher at 8,443.10, Seoul was up 0.74 percent, or 13.16 points, at 1,782.47, and Sydney gained 0.58 percent, or 23.8 points, to 4,147.7.

Hong Kong ended flat, edging up 0.08 percent, or 15.46 points, to 18,892.79, while Shanghai eased 0.48 percent, or 10.15 points, to 2,126.00.

– Singapore closed up 0.46 percent, or 13.65 points, at 3,004.57.

Wilmar International fell 3.38 percent to Sg$3.43 while DBS Group added 1.03 percent to Sg$14.66.

– Taipei was down 0.12 percent, or 8.44 points, at 6,970.69.

Hon Hai Precision lost 1.71 percent to Tw$80.5 and Taiwan Semiconductor Manufacturing Co. rose 2.28 percent to Tw$76.3.

– Manila closed 0.18 percent, or 9.24 points, lower at 5,152.56.

Philippine Long Distance Telephone slipped 0.22 percent to 2,674 pesos but Ayala Corp. 0 rose 0.39 percent to 412.60 pesos.

– Wellington rose 0.77 percent, or 26.77 points, to 3,485.74.

Fletcher Building was up 2.3 percent at NZ$5.90, Air New Zealand gained 0.6 percent to close at NZ$0.90 and Telecom Corp lifted 0.2 percent to NZ$2.57.

– Kuala Lumpur fell 0.68 percent, or 11.18 points, to 1,623.91.

IHH Healthcare gained 1.9 percent to 3.15 ringgit but Axiata Group Bhd was down 0.9 percent at 5.76 ringgit while Genting shed 1.7 percent to close at 9.11 ringgit.

– Jakarta closed up 0.1 percent, or 3.93 points, at 4,000.77.

Astra Agro Lestari gained 1.37 percent to 22,200 rupiah, Astra International rose 1.57 percent to 6,450 rupiah, and Timah lost 1.47 percent to 1,340 rupiah.

– Bangkok fell 1.32 percent, or 15.70 points, to 1,172.92.

Banpu dropped 5.58 percent to 406 baht, while PTT lost 0.63 percent to 316 baht.

– Mumbai fell 1.22 percent, or 206.23 points, to 16,639.82.

India’s leading vehicle maker Tata Motors fell 3.8 percent to 204.85 rupees while Sterlite Industries, the local arm of global resources Vedanta group, fell 2.64 percent to 97.75 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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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.

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