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ASEAN STOCK WATCH Asean Affairs   6 June 2012

Overnight on Wall St

 By Shayne Heffernan Ph.D.

The pace of growth in the U.S. services sector picked up in May as a gauge of new orders improved, according to an industry report released on Tuesday. The Institute for Supply Management's services index edged up to 53.7 in May from 53.5 in April, a touch above economists' forecast for it to hold steady.

The ISM data let investors breathe a brief sigh of relief from recent economic reports, which coupled with concerns about the euro zone, drove the S&P 500 down more than 6 percent for May.

Last Friday, the three major U.S. stock indexes slid more than 2 percent and the Dow industrials turned negative for the year after U.S. data showed much weaker-than-expected growth in nonfarm payrolls in May.

Spain's Treasury Minister Cristobal Montoro said the nation's high borrowing costs has effectively shut the euro zone's fourth-largest economy out of the bond market and the European Union should help Madrid recapitalize its debt-laden banks.

Statements on the outcome of emergency talks among the Group of Seven industrialized nations as they tackle the euro zone's deepening crisis offered little clarity to investors. The Treasury Department said G7 finance ministers "reviewed developments in the global economy and financial markets and the policy response under consideration.

Japan's finance minister said he told G7 members that Japan is confident in Europe's response to its problems, but indicated Tokyo was prepared to intervene in order to curb its currency.

The latest purchasing managers indexes (PMIs), published on Tuesday, underlined why finance chiefs from the Group of Seven leading industrialized powers held emergency talks on the euro zone's debt crisis.

The euro zone private sector economy shrank in May at the fastest pace in nearly three years, according to the PMIs, which suggested even Germany is no longer immune to the tremors emanating from the debts of Greece and Spain.

The euro zone set an overwhelmingly dismal tone for the PMIs, which gauge how thousands of businesses across the world fare each month. It overshadowed positive data elsewhere.

The vast U.S. services sector grew at a slightly faster pace last month as a gauge of new orders improved. China's fledgling services sector expanded at the fastest pace for 19 months. A separate measure of worldwide private sector activity eased slightly in May but managed to grow for a 34th straight month.

The U.S. data "does not suggest that the sector or the overall economy is slipping into a recession, but it does suggest that the economy is settling into a lower growth trajectory," said Thomas Simons, an economist at Jefferies.

U.S. stocks rose after the data. Treasuries prices dipped. The euro slid after Spain said the euro zone's fourth-biggest economy was being shut out of credit markets. .N

The G7 meeting had little impact on markets as there was no sign finance chiefs agreed on concrete action to address problems in Spain and Greece. That upped the ante for a European Central Bank policy meeting on Wednesday.

Financial markets are anxious about the risks cascading from a Spanish banking crisis and fret that a Greek election on June 17 could lead Athens to leave the single currency and precipitate yet more economic turbulence.


Singapore's manufacturing sector reverted to expansion in May after a month of contraction, indicating that production in the island nation may be picking up despite few signs of revival in the global economy.

The country's purchasing managers index rose to 50.4 in May from 49.7 in April, the Singapore Institute of Purchasing & Materials Management said in a statement Tuesday.

A PMI reading above 50 signals expansion in manufacturing activity, while that below 50 indicates contraction.

Singapore's marginal rise in the manufacturing PMI comes as similar indexes from major economies such as the U.S., China and Hong Kong have shown a decline.

The institute attributed the rise in May to an expansion in new orders and new export orders. According to its statement, inventory reverted to expansion and production output continued to expand for the fourth consecutive month.

The PMI for electronics, a major export item for trade-dependent Singapore, eased in May to 50.8 from the 51.5 in the previous month, the data showed.


The country’s inflation rate decelerated slightly to 2.9 percent in May from 3 percent in April on slower price increases in housing, utilities, fuels and services, the National Statistics Office (NSO) said in a report released Tuesday.

The recent series of price rollbacks in LPG, kerosene, gasoline and diesel in most of the regions, including Metro Manila, resulted in a slower national monthly price increment in consumer items, the NSO said.

The low inflation rate for May brought the year-to-date average to 3 percent, or the low end of the government’s target of 3 to 5 percent for the whole year of 2012.

Excluding selected food and energy items, core inflation for the whole country rose slightly to 3.7 percent last month from 3.6 percent in April, according to the NSO. Core inflation takes out food and fuel items that tend to be influenced by seasonal and short-term price pressures, revealing the underlying trend in average consumer prices.

Bangko Sentral ng Pilipinas Governor Amando Tetangco Jr. said the latest inflation rate showed that current interest rates were appropriate at the moment.

He said, however, that the BSP would not hesitate to make adjustments should there be factors that could significantly drag growth lower or cause inflation to surge.

“We will continue to monitor developments, particularly in Europe and the United States, to assess their potential impact on domestic price movements and on our own growth prospects to see if there is any need to make adjustments in our policy stance,” Tetangco said.

Professor Benjamin E. Diokno of the UP School of Economics said in an e-mail to the Inquirer that the mild inflation in May was likely to be sustained in the coming months, barring major catastrophes that could affect food prices, as oil prices were expected to fall and with the summer months over, the demand for electricity would normalize.

“The relatively tame inflation rates may provide BSP more confidence in addressing its other mandate, which is economic growth. Increased lending to small- and medium-scale industries should be encouraged,” Diokno said.

HSBC also expects the BSP to keep interest rates at current levels throughout the year, saying the favorable growth and inflation dynamics in the country gave monetary authorities the flexibility to observe status quo.


Data from the Indonesian Stock Index showed that the average price to earnings ratio (P/E Ratio) had fallen 16 times in January 2012 to below 13 times.

The falling Composite Stock Price Index (IHSG) on Monday made the share prices of LQ45 reach a low level.

Finance Minister Agus Martowardojo said he was not worried about the condition of the Indonesian financial market.

“On Friday, the European market fell and the Asian market followed,” he said. “I’m not worried about it. It’s important to keep the Indonesian market healthy and transparent with disciplined players.”


The FBM KLCI index gained 5.18 points or 0.33% on Tuesday. The Finance Index increased 0.39% to 13984.91 points, the Properties Index up 0.57% to 987.96 points and the Plantation Index rose 0.84% to 8210.04 points. The market traded within a range of 8.82 points between an intra-day high of 1563.33 and a low of 1554.51 during the session.

Actively traded stocks include GLOTEC, NICORP, MTRONIC, DSCSOL, AGLOBAL, PERMAJU, AXIATA, SKPETRO, MAS-CG and YTL. Trading volume decreased to 637.97 mil shares worth RM923.14 mil as compared to Monday’s 677.62 mil shares worth RM1144.23 mil.

Leading Movers were MAYBANK (+6 sen to RM8.66), IOICORP (+6 sen to RM5.06), CIMB (+5 sen to RM7.42), PBBANK (+6 sen to RM13.70) and KLK (+36 sen to RM22.22). Lagging Movers were PPB (-14 sen to RM15.78), AXIATA (-1 sen to RM5.32), BAT (-44 sen to RM53.20), GENM (-2 sen to RM3.52) and ARMADA (-5 sen to RM3.90). Market breadth was positive with 411 gainers as compared to 275 losers.


Shares of the following companies had unusual moves in Thailand trading on Tuesday. Stock symbols are in parentheses and prices are as of the close in Bangkok. The financial markets were closed on Monday for a public holiday.

The SET (Stock Exchange of Thailand ) Index fell 1.4 per cent to 1,099.15 points, the lowest close since Feb 6, 2012.

Rubber producers: Sri Trang Agro-Industry Pcl (STA), the country's largest rubber producer, dropped 4.8 per cent to 14 baht, the lowest close since June 16, 2010. Thai Rubber Latex Corp (Thailand) Pcl (TRUBB) lost two per cent to three baht, the lowest level since Jan 18. Rubber futures slid 4.9 per cent on the Tokyo Commodity Exchange on Monday.

Shipping companies: Precious Shipping Pcl (PSL) fell 2.7 per cent to 14.30 baht, the lowest close since Oct 7. Thoresen Thai Agencies Pcl (TTA) lost 2.4 per cent to 16.60 baht, the most since May 23.

The Baltic Dry Index, a measure of shipping costs for dry- bulk commodities, fell 2.1 per cent on Monday, its ninth straight day of declines, according to the Baltic Exchange in London.

Yesterday in Asia

Tokyo finished up 1.04 percent, or 86.37 points, at 8,382.00, and Hong Kong was up 0.40 percent, gaining 73.44 points to close at 18,259.03.

Sydney was one of the region’s biggest risers, ending 1.47 percent, or 58.7 points, higher at 4,043.7, after the central bank cut interest rates.

Seoul closed up 1.05 percent, or 18.72 points, at 1,801.85, and Chinese shares edged up 0.15 percent, or 3.37 points, to 2,311.92.

– Bangkok fell 1.44 percent, or 16.04 points, to 1,099.15.

Energy firm Banpu dropped 4 percent to 432 baht, while oil giant PTT lost 0.66 percent to 303 baht.

– Kuala Lumpur ended 0.33 percent, or 5.18 points, higher, at 1,560.36.

Budget carrier AirAsia Bhd gained 2.56 percent to 3.60 ringgit, while financial firm CIMB Group Holdings added 0.68 percent to 7.42.

– Jakarta rose 1.73 percent, or 63,294 points, to 3,717.876.

Car maker Astra was up 5.6 percent to 6,600 rupiah and Bank Rakyat was up 1.9 percent to 5,350 rupiah.

– Singapore closed up 0.50 percent, or 13.41 points, to 2,712.31.

Commodities firm Olam International gained 1.31 percent to Sg$1.55 while Oversea-Chinese Banking Corp. was up 0.24 percent at Sg$8.20.

– Manila was up 35.47 points, or 0.73 percent, to 4,925.67.

– Taipei rose 1.53 percent, or 105.79 points, to 7,000.45.

Computer maker Acer rose by its daily limit of 7.0 percent to end at Tw$31.45, while Taiwan Semiconductor Manufacturing Co. rose 2.22 percent to Tw$78.2.

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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