ASEAN KEY DESTINATIONS
Asean Stock Watch- June 13
On Friday, the Dow Jones Industrial Average plummeted 172.45 points
or 1.4 percent to 11,951.91, falling below the 12,000-mark for the first time since March, on concerns that the global economic recovery has stalled.
The US Federal Reserve will meet on June 21-22. Few expect the Fed to raise interest rates but investors will closely watch for any new measures to replace the second Quantitative Easing (QE2) programme that is due to expire at the end of this month.
PT Jaya Agra Wattie Tbk. (JAWA) officially listed its shares at the Indonesian Stock Exchange (BEI) here on Monday at an initial offering price of Rp500 per share.
JAWA released 1.132 billion shares or 30 percent of its issued capital, fully paid in after initial public offering that raised Rp566.202 billion.
In the primary trading the price of JAWA shares rose 8 percent to Rp540 from an initial price of Rp500 per share.
"We are grateful the market response is very good. During offering we are oversubscribed 2.44 times of the number of shares released to the public. This is because the market has seen our business experience of 90 years in the plantation sector," JAWA president director Harijadi Soedarjo after listing here on Monday.
He said 90 percent of the proceeds from the IPO would be used for planting and developing rubber and oil palm plantations to support the company`s business.
Apart from that, he said, he also planned to build rubber factories in West Java and East Java each with a capacity of 150 kilograms per hour.
The rest 10 percent of the proceeds meanwhile would be used for paying the cost of new land acquisition, working capital and capital expenditures, he said.
"We would use 90 percent of the funds from the IPO for planting and developing rubber and oil palm plantations in South Kalimantan, building crumb rubber factories in South Kalimantan, West and East Java and other corporate actions," he said.
After the IPO Utama Hadi Surya holds 19.99 percent, Dwijaya Hadi Surya 19.99 percent, PT Sinar Kasih Abadi 21 percent, PT Aji Lebur Seketi 9.02 percent and the public 30 percent.
Acting as underwriters for the IPO were PT Mandiri Sekuritas and PT OSK Nusadana Securities Indonesia.
PT Jaya Agra Wattie is a rubber, oil palm, coffee and tea plantations company and has nine palm oil processing plants in Banten (West Java), East Java and South Kalimantan.
PT Jaya Agra Wattie is the eighth issuer recorded at BEI this year to increase the number of listed companies to 426.
The FBM KLCI eased slightly in Monday's early trade, shedding 0.43 percent or 6.68 points to 1,549.51 at 10am on selling of selected blue chip stocks.
Among the losers were Genting Bhd and United Plantations Bhd, which were both down 20 sen to RM11.12 and RM19 respectively.
Regional bourses were mostly down. Tokyo's Nikkei 225 fell 0.77 percent to 9,441.34 and Hong Kong's Hang Seng Index was down 0.82 percent to 22,237.15.
Shanghai's A index was down 1.02 percent to 2,677.54 while Taiwan's Taiex Index slipped 0.35 percent to 8,807.06. Nymex crude oil lost 3 cents to US$99.26 per barrel. Spot gold gained 10 cents to US$1,531.70 per ounce. The ringgit was quoted at 3.032 to the US dollar.
The Philippine Stock Exchange is not discounting a possibility that the main index will hit 5,000 by yearend amid concerns of a slowdown in global economic growth and of domestic monetary tightening.
Hans Sicat, PSE president, made this bold forecast in response to an impromptu speech delivered by President Benigno Aquino 3rd during a cocktails event organized by the local bourse.
The composite index closed at 4,219.58 on Friday.
Sicat told reporters that hitting the 5,000 mark would likely happen especially “if the global economy booms.”
He said the PSE is seeking the approval of the government for some measures that will help boost liquidity in the stock market, such as the rules on securities borrowing and lending.
“If we get the help of the government in terms of some of the assistance [we need], why not?” he said.
While the index may be consolidating, it is also forming a bullish
pattern with resistance at 4,328 and a target of 4,980, said Bonner Dytoc, senior instructor at Absolute Traders and Consulting Services Inc.
“It’s only a matter of time before the PSEi continues climbing higher and index issues will be the ones leading the way,” Dytoc said.
For the week, the benchmark index will continue to trade at a tight range between 4,200 and 4,340, digesting the poor economic numbers out of the US, which point to a possible “double-dip” recession.
Europe’s debt woes will continue to drag investor confidence lower.
“These overseas factors may continue to haunt the PSEi and keep it from securing a firm move higher in the coming week,” said Prince Anthony Yeung of AB Capital Securities Inc.
“The debates on whether the ‘glitches’ we are encountering at the moment are of a temporary or a permanent nature will keep the markets volatile, as investors bet on every direction, reacting to short-term stories,” said Jun Calaycay of Accord Capital Equities Corp.
On Friday, the Dow Jones Industrial Average plummeted 172.45 points or 1.4 percent to 11,951.91, falling below the 12,000-mark for the first time since March, on concerns that the global economic recovery has stalled.
Domestic investors have opted to play it safe in the previous weeks ahead of the release of important local data such as the gross domestic product and inflation and this may again be the scenario until Thursday’s Monetary Board meeting.
“The slower-than-projected first quarter GDP growth makes it untenable for the BSP to adjust the rates higher at this time. However, with inflation already tipping the high-end of the full-year target, a pre-emptive move cannot be ruled out,” Calaycay said.
He added that all these concerns may send the index lower, raising the possibility of a retracement to the 4,070 to 4,100 range.
Compared with other markets, Philippine equities are “relatively expensive” based on their trailing 12-month earnings and they have to drop a bit more to become attractive propositions to institutional clients, Calaycay said.
Singapore's Straits Times Index fell 0.44 to 3,064.80 on Friday
Singapore shares opened lower on Monday, with the benchmark Straits Times Index at 3,064.75 in early trade, down 0.44 percent, or 13.6 points.
Around 99.2 million shares exchanged hands
Some of the recent high-profile initial public offerings (IPO) in Singapore have had lacklustre debuts and the global markets are looking weak, but some bankers are optimistic of a healthy IPO pipeline for the rest of the year.
Matthew Song, who heads HSBC's equity capital markets team in Southeast Asia, is one of those who expects the IPO market to continue buzzing for the next six months.
The Stock Exchange of Thailand last week slipped briefly below 1,000 points after giant foreign brokers suggested it was time to be underweight on Thailand due to political risk.
The SET Index moved between 998.39 and 1,055.58 points and closed on Friday at 1,020.37, down 3.54 percent from a week earlier. Foreign investors continued to be net sellers of 17.76 billion baht, retail investors were net buyers of 17.83 billion, local institutions net buyers of 399.56 million and brokers net sellers of 466.76 million baht. For the year to date, foreign investors have made net sales worth 8.19 billion baht.
Big movers: Big-cap stocks and sectors such as banking and energy were in the top 10 in trading value, in line with heavy foreign heavy sales. BBL closed at 151.50 baht, down 4.42 percent from the previous week. PTT lost 3.75 percent to 334 baht, KBANK closed down 5.9 percent at 111.5 baht, KTB lost 7 percent to 17.20 baht, TOP declined 3.3 percent to 73 baht, and SCB 3.6 percent to 106 baht.
- Jasmine International (JAS) and Raimon Land (RAIMON) have featured high turnover on speculative trade for the past two weeks, ranking top in both volume and value. JAS closed last week 2.96 baht, up 2.07 percent from 2.90 baht a previous week in trade worth 6.1 billion baht. RAIMON rose 3.5 percent on the week to 1.18 baht, in trade worth 3.29 billion.
Newsmakers: The Bank of Thailand said the baht has depreciated 0.8 percent so far this year, mainly because foreign investors have reduced investments in stocks and bonds more than US$1 billion. Foreign reserves as of June 3 were $186.9 billion.
- Capital Nomura Securities said that if the country's GDP growth did not reach projections of around 4 percent, earnings growth of listed companies would decline. Its analysis shows that every one percentage point reduction in earnings growth takes the SET index down 11 points.
- Goldman Sachs and Credit Suisse made waves among foreign investors by warning that political instability was a risk for the Thai market after the July 3 election. Inflation would continue to rise while a weakening economy could result from political instability.
- The European Central Bank signalled that its key interest rate will rise from 1.25 percent in July. The Bank of England rate is still 0.5 percent but is expected to increase soon to cope with higher inflation.
Globlex Securities recommends Thai Oil as expected revenue and net profit will continue to increase from the first quarter, supported by high oil prices. - Glow Energy is expected to see revenue improve next year, due to a capacity increase from the 660-MW Gheco-One power plant in which the company holds 65%. It will begin operating by the second quarter of next year, contributing to an expected net profit increase of 40-50% for GLOW.
- Noble Development will open sales on June 19 of a 14-billion-baht project in the Phloenchit area, which should contribute to improved revenue realisation.
- Samart expects operating results in the second quarter of this year will increase as subsidiary Samart Telcoms, part of the SL Consortium, begins work on the 18-billion-baht 3G network for TOT.
- Capital Nomura Securities has a buy recommendation on ITD because of potential from the Dawei megaproject in Burma, but it still expects the contractor to record a net loss this year. - Asia Plus Securities recommends accumulating shares for long-term portfolios when the market drops to 980 points. Selected high beta stocks are: PTTAR, TOP, KABANK, PTTCH, BAY, KTB, BBL and SVI.
Technical view: Globlex Securities sees support this week at 1,000 points and resistance at 1,050 points. Kiatnakin Securities sees support at 1,050 and resistance at 1,070. Phillip Securities sees support for the medium term at 950 points and resistance at 1,110.
Stocks rose on heavy demand on the HCM City Stock Exchange on Friday, with the VN-Index edging up 0.24 percent to close at 445 points. "Demand was stronger than previous sessions, but wash-outs also took place on a large scale," said brokerage director for MHB Securities Co Hoang Thach Lan. "As it was the end-of-week session, investors hesitated to sell because they didn't know what was going to happen next week."
The value of trades climbed 16 percent over Thursday's session, reaching VND665.5 billion (US$31.7 million), while volume jumped by 22.7 percent to 41.1 million shares. While advancers outnumbered decliners overall, six of the 10 leading shares by capitalisation plunged by 0.9-3 percent, including Vietinbank (CTG), Phu My Fertilisers (DPM), software producer FPT, property developer Hoang Anh Gia Lai (HAG), food products conglomerate Masan Group (MSN) and PetroVietnam Finance (PVF).
Only Sacombank (STB) saw a gain on the day, closing up 0.8 per cent.
Saigon Securities Inc (SSI), which hit its ceiling price, was the most active code for the 10th consecutive session, with 5.4 million traded.
"Cash flows were rushing to mid-cap and penny stocks rather than blue chips, indicating that individual investors might be coming back," said Trang An Securities Co analyst Ngo Minh Duc.
Investors were gravitating to small-cap shares which had plunged previously, hoping to gain a quick turnaround in short term, suggested the financial information website vietstock.vn.
On the Hanoi Stock Exchange yesterday, the HNX-Index gained 2.2 percent to close at 79.10 points. Value rose by around 6 percent, reaching VND701.3 billion ($33.4 million) on a volume of 58.4 million shares. Over 72 per cent of listed codes posted gains on the day.
"More money was poured into the northern bourse, as it gathers together more speculative stocks," Duc said.
Sacom Real Estate Co (SCR) was the most active share nationwide, with 7.7 million traded. SCR could boast of solid earnings performance, so Duc suggested that the prices of shares like SCR had recently been manipulated in order to make the companies less attractive as takeover targets.
"Sessions next week will possibly see more unpredictability as stocks like these are hotly pursued," Duc said.
Foreign investors were sellers on both national exchanges yesterday, unloading a combined net of VND35.5 billion ($1.7 million) worth of shares.
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