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ASEAN STOCK WATCH Asean Affairs   12 June 2012

ASEAN Markets Set to Fall

 By Shayne Heffernan Ph.D.

ASEAN Markets will fall today after US investors rejected to so called bail out of Spain.

U.S. stocks fell on Monday as Europe's aid package for Spanish banks did little to alleviate investor concerns about the euro zone's finances and the slowdown in the global economy.

The Dow Jones industrial average .DJI fell 141.91 points, or 1.13 percent, to 12,412.29. The S&P 500 Index .SPX dropped 16.66 points, or 1.26 percent, to 1,309.00. The Nasdaq Composite .IXIC lost 48.69 points, or 1.70 percent, to 2,809.73.

The Thai economy appears to be well-positioned to take advantage of additional stimulus that may be injected into the global economy, in addition to strong, domestically-derived growth.

Thailand's export-driven economy usually vacillates with the global economy because of its dependence on external demand. However, government spending to rebuild infrastructure in the wake of last year's disastrous flooding has buoyed the Thai economy when other export-reliant economies around the globe have suffered.

Building on this foundation of domestic demand, Thailand looks ready to take advantage of global stimulus packages, both confirmed and hypothetical.

The Chinese government has already enacted stimulus to promote slumping growth on the Mainland. As China is one of Thailand's largest trading partners, the Southeast Asian economy will likely benefit from the residual effects of such measures.

With the United States and Europe mulling over their own potential stimulus packages, the implementation of such economic catalysts would be a net positive for Thailand's exports. As a result of stimulus rumors, the Thai baht has strengthened over the past week .

For those considering Thailand, it is imperative to incorporate the political situation into your investment thesis. The country's political stability is feeble; with an awkward transition in the monarchy looming on the horizon. The government could potentially have trouble maintaining order given the grievances of the so-called "Red Shirt" faction that caused 87 deaths in 2010, and last year's opposition win in the general election.

The success of the Thai economy, evidently, is contingent upon the health of the global economy. It is probably too early to jump into THD; however, once the euro zone is able to bring some order and/or clarity to its crisis, the Thai economy is well positioned to take advantage of a return to growth.
Singapore's economy will experience growth slower than in the last 10 years.

This, against the backdrop of a more developed economy, internal resources constraints and fierce competition from the region.

But Singapore needs to strive for growth to improve the collective well-being of its people.

Prime Minister Lee Hsien Loong said this at the Economic Society of Singapore's annual dinner on Friday evening.

Since 2003, Singapore's economy grew an average 6.3 per cent per year.

Mr Lee said: "Singapore cannot avoid slower growth in the next decade and beyond. This is natural because we are now more developed and we are also running up against land and labour constraints, especially as we reduce the inflow of foreign workers.

"Plus competition is fiercer, not only from hundreds of millions of hungry workers in the emerging economies, but also from new technologies that will transform industries all over the world."

Mr Lee noted that some Singaporeans may desire slower growth, but deliberately slowing growth beyond Singapore's economic potential could have irreversible consequences.

"For Singa­pore, slow growth will mean fewer new investments. Good jobs will be scarcer, and unemployment will be higher," he said.

"Enterprising and talented Singaporeans will be lured away by the opportunities and the incomes they can earn in other leading cities. Low-income workers will be hardest hit, just as they were each time our economy slowed down in the last decade. Over time, our confidence will be dented."

The government is also prioritising low-income Singaporeans through skills upgrading and sharing productivity gains.

Low-income households are also not neglected.

According to Mr Lee, a low-income household will receive more than S$500,000 in transfers from the government over a lifetime.

And to boost their assets more than incomes, Mr Lee said the bottom 20 per cent of households have an average of more than S$200,000 of equity in their HDB flat.

To continue doing so, he pointed out that Singapore must have a successful thriving economy to improve the collective well-being of its people.

But Mr Lee cautioned that the Singapore government must strike a balance between raising social spending and taxes.

Expenditure has so far been 17 per cent of GDP including defence, while tax revenue is only 15 per cent of GDP.
KLCI index gained 7.79 points or 0.50% on Monday. The Finance Index increased 0.43% to 14128.17 points, the Properties Index up 0.20% to 990.58 points and the Plantation Index rose 0.94% to 8379.07 points. The market traded within a range of 6.34 points between an intra-day high of 1582.29 and a low of 1575.95 during the session.

Actively traded stocks include GASMSIA, DSCSOL, TMS, SKPETRO, TRINITY, FLONIC, GLOTEC, SKPETRO-CB, AGLOBAL and NICORP. Trading volume increased to 732.91 mil shares worth RM1373.45 mil as compared to Friday’s 576.86 mil shares worth RM988.39 mil.

Leading Movers were TENAGA (+8 sen to RM6.48), SIME (+6 sen to RM9.75), YTL (+5 sen to RM2.05), DIGI (+4 sen to RM4.06) and IOICORP (+4 sen to RM5.10). Lagging Movers were PETCHEM (-5 sen to RM6.44), GENM (-1 sen to RM3.53), YTLPOWR (-1 sen to RM1.62) and PPB (-4 sen to RM15.98). Market breadth was positive with 418 gainers as compared to 262 losers.

Indonesian thermal coal miner PT Toba Bara Sejahtera said on Monday it has cut the size of a planned June initial public offering to about $75 million, from previous expectations of up to $400 million, due to weak investor sentiment.

Toba Bara, controlled by former army general Luhut Panjaitan, plans to sell a 15 percent stake in the offering and has set a price range for bookbuilding at between 1,850 rupiah to 2,400 rupiah per share, one of its underwriters said.

"We have to cut the size because the market is volatile at the moment," said Pandu Sjahrir, a Toba Bara director.

The price range values the company at up to 5.06 trillion rupiah ($539.16 million), compared to earlier expectations for a valuation of about $2 billion, as Europe's debt crisis has led equity investors to demand a discount for offerings.

Many firms in Indonesia and globally have delayed plans to raise capital or canceled deals this year.
Wunna Maung Lwin, will make an official visit to the Philippines on June 14 and 15 as head of his country’s delegation to the second meeting of the Manila-Yangon Joint Commission for Bilateral Cooperation (JCBC), the Department of Foreign Affairs (DFA) said Monday.

In a statement, the DFA said Wunna’s visit “follows the historic trip made by Foreign Secretary Albert del Rosario to Myanmar in February, which marked a new page in Philippine and Myanmar relations following the prodemocracy reforms undertaken by the latter’s government.”

The foreign office noted the JCBC was a “political mechanism for the two countries to discuss areas of mutual interest, such as political cooperation, trade and investments, tourism, education, human rights, agriculture and forestry, culture and information, and law enforcement.”

The Philippines and Burma, both members of the Association of Southeast Asian Nations (Asean), established diplomatic relations in 1956.

During his trip to Burma, Del Rosario met with democracy icon Aung San Suu Kyi who was then preparing to run for parliament. She won the elections in April and now represents the constituency of Kawmhu.

Del Rosario said Suu Kyi and he “held a brief exchange of views” about the Burmese elections, as well as political and socioeconomic reforms and the rule of law in her country.

“We also declared our support for the lifting of sanctions against Myanmar and offered our proposal to develop Philippine-Myanmar parliamentary friendship,” Del Rosario had told the Inquirer.

He described his trip to the country’s capital as “significant,” noting that it was “taking place when Myanmar is at its crossroads of history.”

On February 8, Del Rosario called on President Thein Sein and held discussions with Foreign Minister Wunna.

The secretary congratulated his hosts for the “political, economic and social reforms they have undertaken.”

For his part, Thein Sein urged the Philippine business community to “invest in various sectors of the Myanmar economy, such as oil and gas, mining, agriculture, forestry, and in the development of sea ports and other infrastructure.”

The State Bank of Vietnam has said it will restructure nine weak lenders in the country by the end of June, calling for the participation of all investors in the process.

“For these nine banks, the priority is to let them restructure on their own. If they can’t come up with a plan, the State Bank will step in,” Governor Nguyen Van Binh told legislators at a meeting last week.

“So far banks have solved their own problems by calling for new investors and looking for partners for mergers,” he said.

Binh did not reveal the names of the banks. He said the government has already approved a plan to restructure two of the nine banks, aiming to deal with at least two banks in every remaining weeks of June.

The central bank arranged for three weak lenders with liquidity problems to merge at the end of last year.


The local automotive industry has started recovering from last year’s slump as vehicle sales in the first five months of the year inched up by 0.6 percent to 59,177 units from 58,847 units a year ago.

Based on the joint report by the Chamber of Automotive Manufacturers of the Philippines (Campi) and the Truck Manufacturers Association (TMA), the month of May showed a much stronger performance with a 30.7-percent growth in vehicle sales to 14,265 units from the 10,913 units sold in the same month last year.

According to Campi, the growth could be largely attributed to the “improved supply condition and sustained consumer confidence that was reflected by the 6.4-percent growth in the Philippines economy” in the first quarter of the year.

“During the first four months of the year, the industry posted minimal sales growth due to the continued limitations in supply still brought about by the effects of the flooding in Thailand last year. However, because of exciting new model introductions, improved supply conditions and the country’s thriving economy, all brands still maintained a good showing during this period,” according to Campi president Rommel Gutierrez.

“This May, we have seen drastic improvements in the industry because manufacturers are able to serve strong customer demands due to the stabilization of the supply situation. We are very optimistic that the strong performance in May is a clear sign that the industry is on the road to recovery and can achieve record-breaking sales for 2012,” Gutierrez said.

According to the report, sales of passenger cars alone in the January-May period declined 9.5 percent to 17,616 units compared to the 19,462 units sold during the same period last year. From the previous month, however, May 2012 sales of passenger cars were higher by 15.5 percent to 4,274 units.

Sales of commercial vehicles rose slightly by 5.5 percent in the first five months of the year to 41,561 units from the previous year’s 39,385 units. For May alone, sales of commercial vehicles similarly rose by 16.1 percent to 9,991 units from the previous month’s 8,602 units.

Yesterday in Asia
Asian markets and the euro rallied Monday after the eurozone agreed to lend Spain up to $125 billion to save its banks, but analysts warn the deal is just a sticking plaster for Europe’s wider problems.

The weekend also saw China release a mixed bag of data that, despite not being as bad as expected, was unable to soothe dealers concerns over the world’s second biggest economy. But it did provide hope that Beijing will introduce more easing measures.

Tokyo surged 1.96 percent, or 165.64 points, to 8,624.90 and Seoul jumped 1.71 percent, or 31.40 points, to end at 1,867.04.
Hong Kong climbed 2.44 percent, or 451.29 points, to 18,953.63 and Shanghai gained 1.07 percent, or 24.41 points, to 2,305.86.
Sydney was closed for a public holiday.
– Singapore closed up 1.82 percent, or 49.92 points, to 2,787.81.

United Overseas Bank gained 2.19 percent to Sg$17.70 while palm oil producer Wilmar International was up 0.58 percent at Sg$3.48.

– Taipei rose 1.72 percent, or 120.58 points, to 7,120.23.

Taiwan Semiconductor Manufacturing Co ended 3.21 percent higher at Tw$80.4 while Hon Hai Precision added 2.57 percent to Tw$83.8.

– Wellington gained 0.14 percent, or 4.77 points, to 3,454.24.

– Manila closed 1.64 percent higher, adding 81.78 points to 5,075.85.

First Gen Corp. rose 1.8 percent to 16.28 pesos and Metropolitan Bank gained 1.6 percent to 87.80 pesos.

– Bangkok rose 2.75 percent, or 30.97 points, to 1,158.07.

Banpu gained 5.29 percent to 478.00 baht while PTT added 3.56 percent to 320.00 baht.

– Kuala Lumpur ended up 0.50 percent, or 7.79 points, at 1,578.41.

Budget carrier AirAsia gained 1.10 percent to 3.69 ringgit while plantation giant Sime Darby added 0.62 percent to 9.75. Petronas Chemicals Group lost 0.77 percent to 6.44 ringgit.

– Jakarta advanced 1.07 percent, or 40.89 points, to 3,866.21.

Bank Rakyat jumped 4.2 percent to 6,150 rupiah and nickel miner Vale Indonesia rose 5.1 percent to 2,575 rupiah while cigarette maker Gudang Garam fell 1.0 percent to 58,050 rupiah.

– Mumbai fell 0.30 percent, or 50.86 points, to 16,668.01.

India’s biggest engineering company Larsen and Toubro slipped 1.99 percent to 1,283.00 points while leading vehicle maker Tata Motors retreated 1.40 percent to 235.55 points.

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.

The first issue that can’t be answered is the health of Thailand’s beloved King Bhumibol, who is now 83 years old. He is the world's longest reigning monarch, but elaborate birthday celebrations in December failed to mask concern over his health. More


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