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ASEAN STOCK WATCH Asean Affairs   26 June 2012

Asean Markets to Fall

 By Shayne Heffernan Ph.D.


Private sector economists expect Singapore's economy to grow 3 per cent this year, up from the median estimate of 2.5 per cent in the previous survey in March.

This is according to the latest Monetary Authority of Singapore (MAS) survey of 21 professional forecasters released on Wednesday. The survey was sent out on 17 May to economists and analysts who closely monitor the Singapore economy.

Despite the improved outlook, economists said they expect significant downside risks to remain.

The higher growth forecast seems optimistic despite the headwinds from Europe.

But it is still within the government's official forecast of 1 to 3 per cent GDP growth this year.

Still, some experts said the numbers could be misleading.

Leong Wai Ho, director, Research Barclays, said: "The survey was taken right after the Greek elections in the second half of May, so I think market respondents didn't have time to take in the full severity of the eurozone crisis. If you had delayed the survey by another two weeks, I think the numbers would have been worse."

Financial services continue to bear the brunt of the risk aversion from Europe's debt crisis.

Growth forecast for the sector has been trimmed to 2.7 per cent from 4 per cent.

While the forecast for manufacturing sector growth was largely unchanged at 3 per cent, economists said it could be a wildcard.

DBS economist Irvin Seah said: "This sector, which was responsible for strong first quarter GDP numbers, would also be responsible for a pull back in growth in the second quarter... Essentially because global demand from Europe has not improved substantially. We are still seeing risk aversion. Consumers are still pretty cautious... investors as well."

Besides the critical state of the eurozone, other downside risks clouding the growth outlook for Singapore include a sluggish recovery in the US, and moderating growth across some Asian economies.

But experts said some sectors, with a more regionally driven demand like tourism and retail, can better withstand these external headwinds.

Meanwhile, economists expect Singapore's inflation to come in at 4.2 per cent, an increase from the 3.5 per cent reported in the last survey.


The Bank of Thailand and the Monetary Authority of Singapore have entered a reciprocal cross-border collateral arrangement that allow banks in the two countries to use pledged collateral in each other's currency for liquidity.

Prasarn Trairatvorakul, the Bank of Thailand's governor, signed a memorandum of understanding with Ravi Menon, managing director for the Monetary Authority of Singapore, on Saturday.

Under the arrangement, eligible financial institutions operating in Singapore may obtain Singapore dollar liquidity from the Singaporean's central bank by pledging baht-denominated financial assets from the Thai government and central bank securities. Similarly, financial institutions may place Singapore dollar-denominated assets and Singaporean government and central bank securities for baht liquidity.

The central bank expects the collaboration to aid promotion of trade, investment and financial relationships between the two countries because of more flexible liquidity for financial institutions.

The Bank of Thailand engaged in a similar agreement with Bank Negara Malaysia this February and with Bank of Japan in October 2011.

"In times of market stress," said Mr Menon, "cross-border collateral arrangements between central banks can help sustain liquidity and promote financial stability. This new arrangement with the Bank of Thailand recognises the deep inter-linkages between our two economies."

Vietnam trade deficit may hit 685 mln USD

Vietnam's trade deficit in the first half of 2012 is forecast to hit 685 million U.S. dollars, up 10 percent year-on-year, local media cited sources from the Vietnam's General Statistics Office (GSO) as saying on Monday.

During the first six months of 2012, the country's export value increased by 6.9 percent year-on-year to 53.812 billion U.S. dollars, while import value surged 22.2 percent to 53.127 billion U.S. dollars, according to GSO.

The foreign direct investment (FDI) sector gained the highest export value at 32.65 billion U.S. dollars, an increase of 37.3 percent over the same period last year. Meanwhile, the domestic sector saw a year-on-year rise of four percent to 20.47 billion U. S. dollars, local daily Vietnam News reported on Monday.

During the period, telephones and components achieved the highest export growth rate of 129 percent to 4.69 billion U.S. dollars.

Meanwhile, agricultural, forestry and seafood exports bagged 13. 6 billion U.S. dollars, up 14 percent year-on-year, of which agricultural products earned 7.7 billion U.S. dollars (up 9.6 percent), seafood with 2.9 billion U.S. dollars (up 10.6 percent) and forestry with 2.3 billion U.S. dollars (up 22.7 percent).

Other export products with high increases in value include cashew nuts with an increase of 30 percent to 685 million U.S. dollars, wood and wooden products up 24.4 percent to 2.22 billion U.S. dollars, crude oil up 12.5 percent to 3.83 billion U.S. dollars, and garments and textiles up 8.7 percent to 6.76 billion U.S. dollars, according to GSO.

The country's export of rice in the first half is estimated at more than 2.7 million tons, worth 1.33 billion U.S. dollars, a decrease of 20 percent in volume and 23 percent in value compared with the same period last year.

Meanwhile, the import value for the FDI sector rose by 26.1 percent to 27.98 billion U.S. dollars in the first six months as the sector continued to witness high growth in production and exports.

The domestic sector witnessed a fall in import value of 8.2 percent to 25.82 billion U.S. dollars over the same period last year.

Many products that rely on imports of materials for production saw falls in import value, by 34.1 percent to 1.35 billion U.S. dollars for autos, 29.9 percent to 440 million U.S. dollars for cotton, 13 percent to 1.22 billion U.S. dollars for animal feed and 10 percent to 644 million U.S. dollars for fertilizer.

The low trade deficit in the first half of this year was due to high steady growth in exports along with declining growth in imports, according to GSO.


Likening Indonesia’s economy to the ferocious Komodo dragon, Vice President Boediono says the government needs more help in taming the beast.

“It is meant to characterize an economy that is resilient, buoyant and surprisingly agile,” he said in his keynote speech at the Wharton Alumni Forum 2012 on Friday. “But yes, the Komodo also bites.”

It was The Economist newspaper that first used the Komodo moniker in describing Indonesia’s economy, in an article on Feb. 12.

Boediono was the head of the central bank before being picked by President Susilo Bambang Yudhoyono to be his vice president in 2009.

Indonesia’s economy has been growing by an average of more than 5.5 percent over the past five years, due in part to robust domestic consumption. The economy last year expanded by 6.5 percent — the fastest rate since 1996 — to $813 billion.

Boediono said that Indonesia has learned its lessons and moved on from the 1997-98 Asian financial crisis, the worst crisis to hit the country. At the time, Indonesia’s entire banking system collapsed, forcing the government to spend more than Rp 450 trillion ($48 billion) to bail out lenders.

Boediono said that Indonesia, as a young democracy in the process of massive transition from a centralized, authoritarian regime to a vibrant, decentralized democracy, has tremendous investment potential.

The vice president expects the economy to grow by more than 6 percent this year, supported by an increase in household consumption. Private consumption accounts for around two-thirds of Indonesia’s economic activity.

Malaysia will expand with bank influx

Malaysia, the third-biggest economy in Southeast Asia, is considering opening up its banking system to foreign investors, a move seen by analysts as part of the country’s efforts to expedite integration into the so-called Asean Community in 2015.

Zeti Akhtar Aziz, governor of Bank Negara Malaysia, that nation’s central bank, said the country was preparing new banking rules to provide greater flexibility in the nation’s financial system.

“We are now pushing a new law in parliament for the full financial system,” Zeti said after delivering a keynote speech at the Wharton Global Alumni Forum in Jakarta on Friday. “We’re not sure when it will go, either this time or next time. Next time [may mean] in September. But that law will give us more flexibility in the licensing,” she said.

Bank Negara Malaysia has been discussing the move since last year. The central bank said in December, as reported by Bloomberg, that the country would allow foreign banks to own larger stakes in local lenders, grant more licenses and ease rules on short sales as it sought to triple the size of its finance sector by the end of the decade.

Under it’s first 10-year Financial Sector Master Plan published in 2001, Malaysia’s banks and brokerages were encouraged to merge as rules were gradually eased and more licenses were granted, Bloomberg reported.

Several international lenders currently own stakes in Malaysian lenders. Australia & New Zealand Banking Group holds 23.8 percent of AMMB Holdings, while Hong Kong’s Bank of East Asia has 23.5 percent ownership in Affin Holdings.

Tokyo fell 0.72 percent, or 63.73 points, to 8,734.62, Seoul dived 1.19 percent, or 22.01 points, to 1,825.38 and Sydney closed 0.50 percent, or 20.4 points, lower at 4,027.8.

Shanghai tumbled 1.63 percent, or 36.77 points, to 2,224.11 and Hong Kong closed 0.51 percent, or 97.68 points, lower at 18,897.45.

– Singapore closed down 0.45 percent, or 12.83 points, at 2,815.26.

Singapore Telecom gained 1.27 percent to Sg$3.20 while Keppel Corp fell 1.09 percent to Sg$9.99.

– Taipei fell 0.77 percent, or 55.67 points, to 7,166.38.

Taiwan Semiconductor Manufacturing Co. ended 0.62 percent lower at Tw$79.6 while leading smartphone maker HTC lost 1.94 percent to finish at Tw$378.5.

– Manila closed 0.92 percent, or 47.13 points, up at 5,167.20.

Philippine Long Distance Telephone was up 4.88 percent at 2,624 pesos while Alliance Global Group gained 0.67 percent to 12 pesos.

– Wellington closed flat, edging up 1.93 points to 3,401.13.

Telecom was up 0.41 percent to NZ$2.47 and Fletcher Building off 0.17 percent at NZ$5.98.

– Jakarta fell 0.82 percent, or 31.93 points, to 3,857.59.

– Bangkok closed 0.48 percent, or 5.48 points, lower at 1,147.43.

Banpu fell 2.23 percent to 438 baht, while PTT dropped 1.27 percent to 310 baht.

– Kuala Lumpur was almost unchanged, nudging up 0.05 points to 1,603.12.

Coal miner Bumi Resources fell 9.1 percent to 1,100 rupiah, nickel miner Vale Indonesia slid 3.0 percent to 2,425 rupiah and cement maker Indocement declined 0.89 percent to 16,700 rupiah.

– Mumbai was down 0.53 percent, or 90.35 points, to 16,882.16.

India’s largest private aluminium producer Hindalco fell 2.35 percent to 114.5 rupees while the largest commercial bank State Bank of India fell 1.94 percent to 2,114.9.


Shayne Heffernan Ph.D.  

Linda Johnson, Business Development Director - Private Client Group, Heffernan Capital Management
3 Raffles Place #07-01
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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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