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ASEAN Market Report

Shayne Heffernan

ASEAN Markets started the first session of the third quarter weaker, along with other Asian stocks and commodities, after manufacturing data showed China's rapid growth was slowing, increased fears of a global double dip.

US stocks pared earlier losses but could not climb out of the red on Thursday, as disappointing housing and jobs data weighed on the market ahead of Friday's key payroll report.

Weak world exchanges are being offset regionally by strong growth and as risk becomes more acceptable expect to see huge amounts of international funds investing in ASEAN.

Indonesian shares fell more than 1 percent on Thursday but gained 4.9 percent in the second quarter, Southeast Asia's second best after the Philippines' 6.7 percent, was seen having a rocky second half.

Investors fear higher-than-expected inflation might bring an interest rate rise sooner rather than later, while other markets also started the third quarter weakly. Indonesia gained net foreign inflows of $855 million in the first half when the market rose nearly 15 percent, Southeast Asia's best performer. The inflow of funds added to the inflationary pressure.

Indonesia's inflation picked up in June to its highest since May 2009, but was still within a central bank year-end forecast range, reinforcing expectation the bank will keep rates steady when it meets on Monday. But the higher-than-expected inflation data reinforced economists' views that the central bank will start raising rates BIPG from a record low of 6.5 percent later in the second half of the year.

The country's third biggest lender, PT Bank Central Asia (BBCA.JK), fell 4.2 percent and the sixth-largest lender, PT Bank Danamon (BDMN.JK) was down 3.7 percent.

The Stock Exchange of Thailand closed on Thursday for a mid-year holiday, The SET gained 1.2 percent in the second quarter, and is expected to extend gains by 5-7% in the in the second half according to Ebeling Heffernan.

Net foreign outflows of $540 million in the first half amid political turmoil in April and May. Thai economic data for May showed the political impact on the domestic economy was less than feared while upbeat economic forecasts by the Ministry of Finance pointed to ongoing economic recovery in the second half.

On Tuesday, the Finance Ministry raised its 2010 growth forecast to 5.0-6.0 percent from 4.0-5.0 percent following a strong first quarter and robust exports.

Singapore .FTSTI, Southeast Asia's worst performer in the second quarter, fell 0.5 percent.

Malaysia .KLSE eased 0.4 percent, In Kuala Lumpur, Sime Darby, Malaysia's No.2 company by market value, fell 2.6 percent.

Vietnam .VNI, the region's smallest bourse, was off 0.6 percent.

The Philippines .PSI, which was shut on Wednesday for a holiday and was Southeast Asia's best performer for the second quarter, dropped 1.7 percent to its lowest in almost a week. Philippine Long Distance Telephone Co (PLDT) (TEL.PS), the country's largest listed firm, fell 1.3 percent.

Manila gained net foreign inflows of $493 million in the first half.


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