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ASEAN Markets continue Strong Growth

Shayne Heffernan

Thailand’s strong earnings growth may help equities overcome political pressures. Earnings of companies on the SET are forecast to rise 52 percent next year.

Bangkok Bank Pcl and Kasikornbank Pcl, the nation’s biggest and third-largest lenders, this month posted earnings that beat analyst forecasts, while Siam Cement Pcl said June 30 the start up of a new $1.2 billion petrochemical plant will help it maintain profit growth this year.

The benchmark SET Index climbed 1.6 percent to 853.68 at the close in Bangkok, the biggest advance in Asia today. The increase extended this year’s gain to 16 percent, the most among the region’s 10 biggest stock markets after Indonesia.

Since the protests ended May 19, Thailand’s SET Index has rallied 12 percent, and the baht climbed 0.5 percent.

The central bank said July 23 it expects the economy to expand the most in at least seven years in 2010 as an export rebound limited the impact from deadly political protests. Gross domestic product may expand 6.5 percent to 7.5 percent, compared with an April forecast for growth of 4.3 percent to 5.8 percent.

Exports climbed to a record $18.04 billion in June, helped by the end of the riots and a recovery in the global economy. Automakers Ford Motor Co., General Motors Co. and Mitsubishi Motors Corp. all announced plans to build factories in Thailand in the past month.

Thailand Stock Exchange trades at very low valuations compared to the rest of the world, and one of the largest contributing issues to that problem, ease of access is being corrected.

The Stock Exchange of Thailand (SET) is developing a trading system in close cooperation with brokerages that will support all securities products and smoothly connect with foreign exchanges. This new system will support the needs of domestic and foreign investors, increasing business opportunities for securities companies, and enhancing the Thai capital market competitiveness in the global arena, according to the SET IT Master Plan.

This new trading system will allow more investors to invest in Thailand, this increased demand alone will take the market over 1000 before March 2011.

“SET has proposed its IT Master Plan to top executives from securities companies so that we can work together prepare our operations and personnel to reach a higher level of compliance with international standards,” revealed SET President Charamporn Jotikasthira.

“At present, global exchanges emphasize developing their trading systems to reach higher levels of efficiency, meeting international standards and able to readily connect to the trading systems of foreign markets. In addition, exchanges tend to adjust their rules to facilitate quick transmission of orders.

Competition in reducing costs and time of operation processes has intensified, partly because of a more advanced technology with lower costs. New trading systems being introduced, e.g., Alternative Trading System (ATS), are receiving great attention from investors due to its higher speed, lower cost, and less rules than other exchanges,” said Mr. Charamporn.

“SET began developing its IT Master Plan in 2009, and plans to complete it this year. SET will take about six months from now to choose a vendor to develop and test the system. SET and brokerages will set up a working group to implement the IT Master Plan and achieve our joint goals,” he continued.

The IT Master Plan is one of SET major strategies to build a solid foundation for development, by enhancing the trading system’s efficiency to be advanced and able to support the trading of all products, i.e., equities, futures, and bonds, on a single platform.

The Jakarta Composite Index of shares has climbed 19 percent so far this year as overseas investors pumped $1.2 billion into the nation’s stocks as of Monday.

Inflation may pick up through the end of this year, Indonesia’s central bank said on Monday. Still, Bank Indonesia did not change its 2010 price-increase target of between 4 percent and 6 percent. Consumer prices advanced 5.05 percent in June from a year earlier, according to data from the central statistics bureau.

The Jakarta Composite Index on Tuesday, meanwhile, gained 31.46 points, or 1 percent, to 3,055.16 as of 9:47 a.m. local time, set for another record close.

PT International Nickel Indonesia, the nation’s largest producer of the metal, climbed 1.2 percent to Rp 4,125 rupiah. PT Aneka Tambang, the second biggest, gained 1.2 percent to Rp 2,075. Nickel for three-month delivery rose 2.2 percent to $20,800 a metric ton in London yesterday, climbing for a fifth straight day.

PT Bank Negara Indonesia, the nation’s third-biggest state-owned bank, rose 1.7 percent to Rp 2,925 rupiah. Bank Negara’s first-half net income expanded 61 percent from a year earlier to Rp 1.94 trillion ($215 million), the lender said.

PT Jasa Marga, an Indonesian toll-road operator, increased 5.8 percent to Rp 2,300 rupiah, set for the steepest gain since May 26. Jasa Marga said first-half net income rose 63 percent from a year earlier to Rp 647.6 billion as sales gained 24 percent to Rp 2.1 trillion rupiah.

PT Telekomunikasi Indonesia, the nation’s largest telephone company, advanced 1.2 percent to 8,150 rupiah. The company was rated “overweight” in a new coverage by JPMorgan Chase and Co. analysts James R. Sullivan and Vishesh Gupta.

Most Asian stock markets were moderately higher Tuesday as a rebound in United States new home sales helped ease lingering worries over the strength of the global economic recovery.

Share prices on Bursa Malaysia closed mixed Tuesday with the key index finishing in positive territory, supported by late buying of select heavyweights, dealers said.

At 5pm, the FBM KLCI inched up 0.41 of a point or 0.03 per cent to close at 1,352.23, after opening 0.65 of a point higher at 1,352.47.

The key index traded within a range of 8.94 points between an intra-day high of 1357.23 and a low of 1348.29 during the trading session.

The dealers said the market started the day in positive territory on steady buying as investors took the cue from positive performance in the regional market following the overnight higher closing on Wall Street.

However, the key index slipped into the red at midday due to profit-taking activities, especially in CIMB Group.

At close, the Finance Index fell 18.47 points to 12,280.62 and the Industrial Index declined 5.06 points to 2,670.80 while the Plantation Index gained 12.62 points to 6,407.60.

The FBM Emas Index rose 3.79 points to 9,154.57 and the FBM70 Index went up 0.60 of a point to 9,149.03 but the FBM Ace Index dropped 10.98 points to 3,791.03.

Losers led gainers by 381 to 308 while 285 counters were unchanged, 390 untraded and 26 others suspended.

Volume declined to 731.634 million shares valued at RM1.33 billion from 850.663 million shares worth RM1.122 billion Monday.

Among the actives, Berjaya Corporation was flat at RM1.03 while AirAsia increased two sen to be at RM1.44.

Kenmark Industrial lost one sen to settle at seven sen while Jadi Imaging Holdings gained 1.5 sen to 27.5 sen.

Among the top gainers were Nestle which advanced RM1.36 to RM38.60, and Cycle & Carriage Bintang and Measat Global which added 31 sen each to be at RM6.08 and RM3.80 respectively.

For the heavyweights, Maybank rose one sen to RM7.71 CIMB Group declined 10 sen to RM7.40, Sime Darby was flat at RM7.79 and Maxis went up two sen to RM5.32. Main Market volume declined to 633.941 million shares worth RM1.316 billion from 748.439 million shares worth RM1.102 billion Monday.

Turnover on the ACE Market was slightly lower at 59.135 million shares valued at RM10.835 million compared to 59.410 million shares valued at RM11.476 million previously.

The volume of warrants dropped to 32.849 million units valued at RM4.906 million from 39.218 million units worth RM7.146 million Monday.

Consumer products accounted for 74.720 million shares traded on the Main Market, industrial products 116.502 million, construction 45.446 million, trade and services 203.294 million, technology 35.135 million, infrastructure 15.715 million, finance 43.422 million, hotels 869,200, properties 62.907 million, plantations 24.754 million, mining 10,000, REITs 11.005 million, and closed/fund 162,800.

Focus Point Holdings Bhd has postponed listing in Kuala Lumpur without any reason as yet. The company said the listing exercise would not have any impact on its business operations.

The company’s listing, which was scheduled for today, was deferred pending an announcement.

“We wish to apologise for any inconvenience caused and expect to provide further details in due course,” it said in a filing to Bursa Malaysia Tuesday.

Focus Point assured investors that all monies are securely held by both the placement agents, OSK Investment Bank Bhd as well as Malaysian Issuing House Sdn Bhd.

The company operates the largest chain of professional eyecare centres nationwide with strong fundamentals and solid financial standing.

Focus Point Holdings Bhd’s 8.25 million shares, allocated for public subscription, were oversubscribed by 2.08 times.

Malaysian Issuing House Sdn Bhd (MIH) said 1,068 applications for 17.141 million shares were received from the public.

A total of 299 applications for 3.689 million shares were received under the Bumiputera category while under the public category 769 applications for 13.452 million shares were received representing a subscription of 3.26 times in this category.

The placement agent confirmed 35.555 million shares, reserved for private placement to identified investors, have been subscribed.

The offer for sale of Focus Point involves 10.0 million shares made available for application by eligible directors, employees and franchisees who have contributed to the company’s success and development.

The Singapore STI stayed flat most of the day before closing with a 6.48-point loss at 2,966.99 as banks and bellwether counters failed to respond to positive news.

The big news of the day here was the end of the battle for Parkway Holdings, with India's Fortis Healthcare accepting Malaysian sovereign wealth fund Khazanah Nasional's revised offer of $3.95 per share.

In the process, Fortis will pocket a cool $117 million profit on the 24 per cent Parkway stake it bought earlier this year. Parkway remained suspended, but analysts now expect the stock to pull back from recent highs.

Elsewhere, Genting led the actives list as its counter was chased up to a five-month high of $1.24. Ironically, the stock attracted a slew of negative calls from analysts just two months ago when rival casino resort Marina Bay Sands opened.

'It's a casino out there and this time everyone is in the game,' joked a broker, who said he was watching as huge buy orders were placed, then switched to sell as new punters were drawn in.

Singapore Airlines' (SIA) counter fell two cents to $14.76 ahead of the group's first quarter results. After the market closed, SIA reported a Q1 profit of $252.5 million, reversing a loss of $307.1 million a year back.

Fraser & Neave, which had run up in recent days amid rumours that Temasek Holdings would sell a 15 per cent stake in the company to Japan's Kirin group, pulled back eight cents to $5.67.

Local bank stocks were flat after Citigroup called a 'neutral' on the sector, citing peaking GDP growth and potentially poorer Q2 earnings.

Caution was the order of the day as investors here watched Hong Kong's Hang Seng give back most of the day's gains by the close of Asian trading. Adding to caution were flattish Wall Street index futures.

That said, the general sense seems to be the world economy is in better shape today than thought. For one thing, the results of European bank stress tests has eased fears of a eurozone debt crisis. Only seven of 91 banks failed the regulators' tests - far fewer than expected.

'As expected, the European banking system is sound, with its 2011 expected Tier 1 ratio declining from 11.2 per cent under the baseline scenario to 9.2 per cent under the most severe scenario (this includes 1.2 per cent of government-provided capital as of July 1, 2010),' Citi said in a report. But the seven banks that failed the stress tests will require immediate recapitalisation of 3.5 billion euros (S$6.2 billion).

In Asia, new data showing a slight slowdown in property loans in China has raised optimism that the country's much feared inflated property bubble may be contained. In Singapore, the resilience of the local market is prompting technical analysts to review previously bearish calls on the STI.

At least three houses are now saying the cautious optimism that has been seeping into the market could lift the index above the key 3,000- points level, paving the way for a possible move to its year-high at 3,038 during the current quarter.

'In view of the infamous volatility during the second half of 2007-08, and the fact the STI is again nearing two-thirds of its pre-crash level, a cautious mood is likely to prevail, thus capping the rally to the year's high of 3,038 in the short term,' said AmFraser Securities.


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