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ASEAN STOCK WATCH Asean Affairs   13 June 2012

ASEAN Markets to Rally

 By Shayne Heffernan Ph.D.

In China

China's economy is expected to stay on a steady course in the second half of this year after key economic data over the weekend brought some relief to jittery markets.

The latest data from the world's second largest economy show that it is not heading towards a hard landing as earlier expected.

Still, analysts warn that the jury is still out, as any potential headwinds from Europe may hamper overall economic growth globally.

Industrial output, fixed asset investment and retail sales data paint a more positive than negative picture of China's economy.

But export in May leaped 15.3 per cent from a year earlier, up from April's rise of 4.9 per cent.

Analysts said they didn't expect a rebound so soon but believe the data will boost investor confidence.

Vasu Menon, head of Content & Research Wealth Management at OCBC, said: "I think the general take is China is not headed for gloom and doom. Overall, China is still continuing to enjoy growth although growth is slowing down. I think that's the key message that came out of the data. The market has taken the comfort on the fact that there's a slow down and there's no hard landing."

Analysts believe that measures taken by Beijing to support growth are working and the interest rate cuts announced last Thursday underscored China's commitment to do what is necessary to ensure its growth.

They also expect China to further loosen its monetary policy in the coming months.

This may include more cuts in reserve requirement ratio and interest rates.

All these will help prop-up its economy in the second half of the year and achieve the forecast 8.3 per cent full-year growth.

Experts also warned that China alone do not determine the prospects of other Asian economies.

Pu Yonghao, chief investment strategist at UBS Wealth Management, said: "I don't think China will do the big stimulus. Neither is the US in position to do the same. In that case, I think everybody is trying to find the way to generate growth... and not to rely too much on external demand."

Looking ahead, China's economy remains vulnerable to the Eurozone debt crisis just like other global economies.


Singapore's economy grew by 1.6 percent year-on-year in the first quarter of 2012, slower than 3. 6 percent growth in the preceding quarter, Singapore's Ministry of Trade and Industry announced on Thursday.

On a quarter-on-quarter seasonally-adjusted annualised basis, the economy expanded by 10.0 percent, reversing the 2.5 percent contraction in the previous quarter, it said.

The improved growth momentum was largely attributable to the upturn in the manufacturing sector. On a sequential basis, the manufacturing sector expanded by an annualised rate of 19.8 percent, reversing the 11.1 percent contraction in the previous quarter.

The ministry said this turnaround was driven by increased production across all key manufacturing clusters, notably electronics and precision engineering.

On a year-on-year basis, however, the sector contracted by 1.0 percent due to a high base a year ago.

The construction sector grew by 7.7 percent on a year-on-year basis, an improvement from the 2.9 percent growth in the preceding quarter.

On a sequential basis, the sector rebounded by an annualised rate of 32.1 percent, largely due to increased construction activities in the residential and institutional building segments.

The wholesale and retail trade sector contracted by 0.3 percent on a year-on-year basis, following the marginal growth of 0.9 percent in the preceding quarter. On a sequential basis, the sector contracted by an annualised rate of 2.3 percent.

The weak performance was mainly attributable to a decline in re-export volume which negatively affected the wholesale trade segment.

The transportation and storage sector continued to see moderate growth, at 3.5 percent compared to a year ago and 1.5 percent ( annualised) on a sequential basis.

Growth in the finance and insurance sector moderated to 0.8 percent on a year-on-year basis, from 3.5 percent in the preceding quarter. On a sequential basis, the sector contracted for the second consecutive quarter, by 3.4 percent (annualised), partly due to sluggishness in fund management activities.

In contrast, the business services sector posted a faster year- on-year growth of 3.5 percent and a strong sequential gain of 12.7 percent (annualised), largely due to a pick-up in real estate transaction volume.

Supported by healthy visitor arrivals, tourism-related sectors continued to expand. The accommodation and food services and other services industries (which include arts, entertainment and recreation activities) grew by 4.0 and 5.1 percent respectively, compared to a year ago.


Thailand's parliament delayed debate on a constitutional amendment bill on Tuesday, lowering the heat on an issue that has brought rival protest groups into the street and threatened to reignite political violence.

"I will not let even a single Thai shed their blood for this issue," said Somsak Kiatsuranon, parliament's speaker, adding the debate would not go ahead during the current session.

A parallel debate on a reconciliation and amnesty bill has also been postponed and preparations were being made to end the parliamentary session, Somsak told reporters.

The constitution was drafted under a military government following a 2006 coup that ousted the then prime minister, Thaksin Shinawatra. The current prime minister, Yingluck Shinawatra, is his sister.

A former telecoms tycoon, Thaksin has chosen to live in exile since 2008 to avoid a two-year prison sentence for corruption, which he called politically motivated.

His opponents say the amnesty bill and push to change the constitution are designed to allow him to come home without serving jail time.

The royalist "yellow shirts", who oppose Thaksin, surrounded parliament and forced the postponement of a debate on the reconciliation bill on June 1. The "red shirts", who back him, have said they would protest if the various bills were shelved.


KLCI index lost 2.34 points or 0.15% on Tuesday. The Finance Index fell 0.02% to 14125.27 points, the Properties Index up 0.02% to 990.79 points and the Plantation Index down 0.32% to 8352.5 points. The market traded within a range of 4.44 points between an intra-day high of 1576.97 and a low of 1572.53 during the session.

Actively traded stocks include LUSTER-WA, LUSTER, NICORP, GASMSIA, MTRONIC, AGLOBAL, PERMAJU, YTL, SKPETRO and JCY. Trading volume decreased to 707.44 mil shares worth RM1072.72 mil as compared to Monday’s 732.91 mil shares worth RM1373.45 mil.

Leading Movers were MAXIS (+11 sen to RM6.59), PBBANK (+4 sen to RM13.74), AXIATA (+1 sen to RM5.37), PETDAG (+18 sen to RM21.30) and UMW (+4 sen to RM8.17). Lagging Movers were GENTING (-8 sen to RM9.50), GENM (-7 sen to RM3.46), BAT (-120 sen to RM54.80), TENAGA (-4 sen to RM6.44) and IOICORP (-2 sen to RM5.08). Market breadth was negative with 271 gainers as compared to 370 losers.


Gunshots rang out and residents fled blazing homes in western Myanmar on Tuesday as security forces struggled to contain deadly ethnic and religious violence that has killed at least a dozen people and forced thousands to flee.

The conflict pitting ethnic Rakhine Buddhists against stateless Rohingya Muslims in coastal Rakhine state marks some of the worst sectarian unrest recorded in Myanmar in years. President Thein Sein has declared an emergency and warned that the spiraling violence could threaten the democratic reforms tentatively taking shape in Myanmar after half a century of military rule.

On Tuesday in the regional capital, Sittwe, police fired live rounds into the air to disperse Rohingyas who could be seen burning homes in one neighborhood. Hordes of people ran to escape the chaos.

"Smoke is billowing from many directions and we are scared," said Ma Thein, an ethnic Rakhine resident in Sittwe, where dark smoke from numerous fires covered the skyline into the late afternoon. "The government should send in more security forces to protect both communities."

Truckloads of security forces have been deployed in Sittwe for days, and much of the port city was reported calm, including its main road. But homes were burning in three or four districts that have yet to be pacified.

In one, police fired skyward to separate hundreds-strong mobs wielding sticks and stones; in another, soldiers helped move 1,000 Muslims by trucks to safer areas.

Ma Thein said that some people were running short of food and water, with banks, schools and markets closed. Some small shops opened early Tuesday to sell fish and vegetables early in the morning to residents who braved the tense streets.


Vietnam’s real-estate market is expected to receive a new infusion of money following a deposit interest-rate cut to 9 per cent from 12-13 percent by the State Bank of Viet Nam and a subsequent fall in loan interest rates.

This was the fourth time during the last three months that the central bank has decided to reduce the dong interest-rate on deposits.

The central bank’s move yesterday resulted in a decrease in interest rates on loans with various terms at commercial banks.

At Vietcombank, last week the bank decided to slash the interest rate of termed loans to 12-13 per cent.

Experts said that with such lending interest rates, enterprises’ financial burdens created from high capital costs would ease significantly, thus encouraging them to invest in production.

The lower interest-rate cap of deposits also means that depositing money at banks was no longer an attractive investment channel.

These changes have prompted many people to shift from depositing their savings into the banking sector to other investment channels that they believe will bring profit in the future.

Real estate, along with other sectors, is still popular among long-term investors since property developers, who have been thirsty for capital, have cut prices by 30-40 per cent.

According to many real estate offices in HCM City, within one month, the number of clients who came to buy houses increased significantly, but the number of transactions was still modest.

Trinh Xuan Bac in Tan Phu District said that, although the real estate market remained sluggish, investment in real estate products would bring profits in the long term.

Previously, Bac had deposited money at a bank while he waited for real estate prices to drop even more.

However, he believes that the current interest rate is not attractive enough to deposit money in banks and that now is the right time to invest in property when the prices are low.

Huynh Anh Minh, director of a real estate company in District 2, said the number of people seeking to buy land plots and apartments had increased slightly in recent days, and the number of successful transactions had increased by 20 per cent compared with previous months.

Investors were especially interested in land plots in outlying districts such as Binh Chanh and Cu Chi, Minh said.

Real estate developers have said that the rapid interest-rate reduction had greatly affected investors and individuals who want to buy a home. The lowering of the deposit interest-rate cap to 9 per cent and the banks’ commitments to slash the lending interest rate to 13 or 14 per cent have led people to believe that the property sector would warm up again.

Ngo Dinh Han, director of the ACB real estate trading floor, said the recent interest-rate reduction had not yet created a significant impact on the real estate market.

But he was confident that more money would be pumped into the market, thus improving its liquidity in the future.

The market’s real changes would likely take place in the third quarter of the year, Han said.

Pham Thanh Mai, general director of the Viet Nam Real Estate Association, said the domestic real estate market would continue to meet capital-related difficulties in the near future.

Thus, real estate developers should use mobilised capital resources effectively and efficiently.

Mai said that real estate companies should prepare long-term investment strategies while reducing their risks to ensure available cash flows for important projects.


Inflation in Indonesia picked up to a seven-month high of 4.5 percent in April from a year earlier but eased slightly in May. Reflecting slowing global demand, April exports fell to create the country’s first trade deficit in nearly three years.

Yet domestic demand remains buoyant, with retail sales up 10.5 percent in April and bank loans growing by nearly 26 percent from a year earlier.

Remarkably, retailers are confident about sales in coming months, reflecting the economy’s resilience to global woes that made the country an emerging market investor favorite in recent years and led rating agencies to lift it to investment grade credit status.

Nervous investors, however, have turned to selling rupiah assets this year, making the currency the worst performer in Asia. The rupiah was little changed after the central bank announcement at 9,440 per dollar, down 0.5 percent on the day and 4 percent this year.

Bank Indonesia will soon start issuing dollar term deposits in an effort to relieve a local scarcity of the US currency which has weighed on the rupiah, and said on Tuesday it will maintain sufficient market liquidity to stabilize the currency.


Net inflow of foreign direct investments (FDIs) into the Philippines grew sharply in the first quarter in what monetary officials claimed was due to the country’s favorable economic performance.

The Bangko Sentral ng Pilipinas reported that net inflow of FDIs amounted to $850 million from January to March, up 72 percent from $493 million in the same period last year.

Gross inflow of FDIs for the three-month period reached $936 million while outflows amounted to $86 million.

Yesterday in Asia

Tokyo was 1.02 percent lower, shedding 88.18 points to 8,536.72 while Seoul fell 0.66 percent, or 12.30 points, to 1,854.74.

Hong Kong fell 0.43 percent, or 81.07 points, to 18,872.56, while Shanghai closed down 0.70 percent, or 16.07 points, at 2,289.79.

Sydney, however, rose 0.23 percent, or 9.2 points, to 4,072.9 as it caught up with regional gains from Monday when it was closed for a holiday.

– Singapore closed up 0.33 percent, or 9.27 points, at 2,797.08.

Oversea-Chinese Banking Corp. was up 1.20 percent at Sg$8.45 while oil rig maker Keppel Corp. gained 1.20 percent to Sg$10.10.

– Taipei closed 0.68 percent, or 48.15 points, lower at 7,072.08.

Taiwan Semiconductor Manufacturing Co. was 1.24 percent lower at Tw$79.4 while Hon Hai Precision lost 1.55 percent to close at Tw$82.5.

– Wellington fell 0.83 percent, or 28.64 points, to 3,425.60.

Telecom eased 1.9 percent to NZ$2.39, Fletcher Building lost 1.1 percent to NZ$6.28 and Air New Zealand dropped 1.16 percent to NZ$0.86.

– Kuala Lumpur fell 0.15 percent, or 2.34 points, to 1,576.07.

Budget carrier AirAsia fell 0.27 percent to 3.68 ringgit, while plantation giant Sime Darby eased 0.21 percent to 9.73 rupiah. Telecoms provider Maxis gained 1.70 percent to 6.59 ringgit.

– Jakarta shed 0.35 percent, or 13.64 points, to end at 3,852.58.

Bank Rakyat fell 1.6 percent to 6,050 rupiah, BCA slid 0.7 percent to 7,150 rupiah while Telkom rose 2.7 percent to 7,600 rupiah.

– Bangkok closed up 0.42 percent, or 4.86 points, at 1,162.93.

PTT gained 1.56 percent to 325 baht, while Banpu lost 1.26 percent to 472 baht.

– Mumbai finished 1.17 percent, or 194.79 points, higher at 16,862.80.

– Manila was closed for a public holiday.

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
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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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