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||Asean Affairs 29 June 2012
ASEAN Market Preview
By Shayne Heffernan Ph.D.
Concern about a worsening of Europe’s debt crisis and a global slowdown has taken the S&P 500 down 6.5 percent this quarter. Energy and financial shares have had the biggest losses in the period, tumbling at least 11 percent.
All 10 groups in the S&P 500 fell today as technology and financial shares had the biggest losses. The KBW Bank Index slumped 1.8 percent as 23 of its 24 stocks retreated.
Financial shares tumbled as the New York Times reported that JPMorgan’s losses have increased in recent weeks as it sought to exit its holdings, citing unidentified former traders and executives at the bank. American banks also followed European lenders lower after Barclays Plc, Britain’s second- largest bank by assets, slid the most in three years. Its record fines yesterday for falsifying London interbank offered rate submissions sparked speculation lawsuits will follow.
Demand for homes in Singapore has prompted the government to introduce five rounds of measures since 2009 to rein in property prices. The latest, in December, imposed additional taxes on private residential property purchases by foreigners and existing homeowners to curb excessive investment that may stoke risks in the banking system and economy.
Foreigners and corporate entities have to pay an extra 10 percent stamp duty under the rules introduced on Dec. 8. The extra levy is 3 percent for permanent residents purchasing a second home, as well as for citizens’ third residences.
“The property market continues to be buoyant,” said Linda Sim, Singapore-based senior vice president of secured lending at DBS Group Holdings Ltd., Southeast Asia’s largest bank. “Foreign buying is currently on the lukewarm side, but it’s replaced by local buyers, with the bulk of those purchases for own occupation.”
The government has announced its plan to forward a bill to parliament requesting to borrow 1.6-2 trillion baht over the next six months for investment in infrastructure projects.
The Yingluck Shinawatra administration will also aim to push through the disbursement over the next six months of 350 billion baht which it mobilised with an executive decree earlier this year.
Kittiratt Na-Ranong, a deputy prime minister and the finance minister, said the infrastructure bill that the government plans to forward for deliberation by parliament will aim to boost the capacity of facilities like Laem Chabang deep sea port, Suvarnabhumi airport and Greater Bangkok's mass transit system.
The money will also be used to invest in new projects including a high-speed train and dual-tracked railways.
"This legislation to borrow the money will be pushed forward as a bill, rather than through an executive degree, although I think implementation of projects like upgrading Laem Chabang seaport must happen urgently," Mr Kittiratt said.
Mr Kittiratt said the government remained committed to its election pledge of increasing the minimum wage nationwide to 300 baht early next year, having already increased it in seven pilot provinces this April.
Mr Kittiratt said transferring management of the Financial Institutions Development Fund's total liabilities to the Bank of Thailand could free up fiscal space by 1.14 trillion baht, even though the liabilities still remain on the government's books.
Overall, public debt, including liabilities of the financial bailout fund, is currently 4.9 trillion baht, or 40% of GDP.
Yesterday in Asia
Tokyo jumped 1.65 percent, or 143.62 points, to close at 8,874.11, but Hong Kong dropped 0.79 percent, or 151.68 points to finish at 19,025.27 and Shanghai was off 0.95 percent, or 21.09 points, at 2,195.84.
Seoul was flat, edging up 0.08 percent, or 1.53 points, to close at 1,819.18, while Sydney added 0.04 percent, or 1.62 points, to end at 4,044.8.
– Taipei slipped 0.19 percent, or 13.40 points, to 7,169.61.
Smartphone maker HTC ended 0.27 percent lower at TW$375.0 while Taiwan Semiconductor Manufacturing Co. added 0.76 percent at Tw$79.9.
– Wellington rose 0.40 percent, or 13.57 points, to 3,401.34.
Fletcher Building was up 2.42 percent at NZ$5.93, Chorus rose 0.32 percent to NZ$3.12 and Telecom Corp. was down 1.64 percent at NZ$2.40.
– Manila slipped 1.77 points, or 0.03 percent, to close at 5,256.15.
Philippine Long Distance Telephone Co. fell 0.95 percent to 2,688 pesos and Ayala Corp. shed 0.63 percent to 472.60 pesos.
– Singapore closed up 0.18 percent, or 5.22 points, to 2,846.82.
Singapore Telecommunications rose 0.62 percent to Sg$3.24 and DBS Group gained 0.29 percent to Sg$13.84.
– Kuala Lumpur ended 0.48 percent, or 7.65 points, lower at 1,594.24.
Telekom Malaysia lost 0.18 percent to 5.68 ringgit, while budget carrier AirAsia shed 0.28 percent to 3.58 ringgit. Shipping company MISC gained 2.71 percent to 4.54 ringgit.
– Jakarta fell 1.20 percent, or 47.29 points, closing at 3,887.58.
Nickel and gold miner Aneka Tambang fell 6.4 percent to 1,320 rupiah, Bumi Resources slid 3.6 percent to 1,080 rupiah and carmaker Astra International slipped 2.2 percent to 6,650 rupiah.
– Bangkok added 0.46 percent, or 5.34 points, to close at 1,171.32.
Banpu lost 0.45 percent to 438 baht, while PTT gained 1.27 percent to 320 baht.
– Mumbai was up 0.14 percent, or 23.0 points, to 16,990.76.
The world’s seventh-largest steel maker Tata Steel rose 1.83 percent to 428.4 rupees and India’s largest software exporter TCS rose 0.97 percent to 1,258.8.
Shayne Heffernan Ph.D.
Linda Johnson, Business Development Director - Private Client Group, Heffernan Capital Management
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