ASEAN KEY DESTINATIONS
Asean Stock Watch- June 8
U.S. stocks closed lower for a fifth straight session, after Federal Reserve chairman Ben Bernanke acknowledged the U.S. economic slowdown, but did not mention possibility of more monetary stimulus.
The Dow Jones Industrial Averagclosed overnight down 19.15 points, or 0.16 percent to finish at 12,070.81.
The S&P 500 index fell 1.23 points, or 0.10 percent, to end at 1,284.94, while the Nasdaq composite dropped 1 point, or 0.04 percent, to close at 2,701.
Crude oil closed at US$99.41 a barrel, while gold settled at US$1,542 an ounce.
Shares on Bursa Malaysia traded higher as the morning session ended on Wednesday, bucking regional trend that saw Asian shares being dragged down due to the lack of clear direction from US Federal Reserve Chairman Ben S Bernanke on a new round of stimulus package to boost the world's largest economy.
At 12.30pm, the FBM-KLCI was up marginally by 1.39 points to 1,553.28, with 420.396 million shares valued at RM625.59mil changing hands. Losers beat gainers by 294 to 263 losers, while 301 counters were unchanged.
Singapore's Straits Times Index lost 12.62 points to 3,103.33.
Tokyo's Nikkei 225 was down 13.13 points to 8,429.82 and Shanghai's A share index was down 9.26 points to 2,735.04.
Hong Kong's Hang Seng Index lost 213.71 points to 22,654.96.
Philippines investors ignored the lower-than-expected inflation for May, as Philippine share prices on Tuesday extended their slump for a third straight session on additional signs of the US economy’s slowdown.
At the Philippine Stock Exchange, the composite index lost 22.45 points, or 0.53 percent to 4,236.45, while the broader all-shares index slid 11.96 points, or 0.40 percent to 2,985.62.
Decliners beat advancers, 78 to 54, while 39 issues were unchanged. A total of 2.88 billion stocks worth P3.93 billion changed hands.
“Sentiment was weak on signs of further weakness in the US economy,” said Astro del Castillo, managing director at First Grade Holdings.
“While the inflation rate was expected, somehow, it was also a dampener given the continued rise in consumer prices,” said del Castillo.
Investors brushed aside the lower-than-expected inflation, which came in at 4.5 percent in May after a revised 4.3 percent in April. The May figure was at the low end of the 4.5 percent to 5.5 percent forecast range of the Bangko Sentral ng Pilipinas (BSP).
As the challenging local and macro environment became less supportive of the stock market, odds are low that the main index will break out of its current resistance of 4,330 in the near term, said First Metro Investments Corp. and University of Asia and the Pacific in the latest edition of The Market Call.
“Over a 3-month horizon, we anticipate some heightened volatility as the status of the Philippine economy, the second quarter earnings reports, and the expectations of a credit upgrade are going to be the key inflection points in our local equities market going forward,” the study said.
The eurozone sovereign debt problems, the unrest in the Middle East and North Africa and the end of the second round of quantitative easing continue to weigh heavily on investor sentiment.
The peso closed higher against the dollar on Tuesday as the BSP signaled it may raise rates further as commodity prices remained volatile.
At the Philippine Dealing System, the peso gained 6 centavos to close at 43.15 to the dollar from 43.21 the previous trading day.
BSP Governor Amando Tetangco Jr. said the central bank was mindful of the continued risks to the inflation outlook, adding that monetary authorities will promptly adjust the policy stance, if needed, to achieve price stability.
The dollar-peso pair opened at 43.25, or 4 centavos weaker than Monday’s finish of 43.21.
It moved to a weaker high of 43.31 and a tested a low of 43.14.
Trading volume surged 44 percent to $866.95 million from $483.01 million the previous trading day.
The currency pair is expected to trade at 42.80 to 43.50 within the week.
Singapore shares were lower at midday on Monday, with the benchmark Straits Times Index at 3,103.33, down 0.41 percent, or 12.62 points.
About 486.2 million shares exchanged hands.
Losers beat gainers 208 to 117.
The Stock Exchange of Thailand (SET) is now facing pressure from both overseas and domestic factors which affected the main index in the short-term, director of the Capital Market Research Institute at the SET, Thianthip Supanich, said.
Foreign investors had adjusted their investment portfolios in the Thai stock market and turned to gold and bond markets on concerns about economic slowdown in the US. In the meantime, they were waiting for a clearer picture of the new financial assistance to be provided for Greece, Mrs Thianthip said.
Political uncertainty in Thailand had also affected the capital market in short-term, she added. She believed the stock market would return to normal after the July 3 election.
Moreover, high inflation in Thailand was another factor that drove away some foreign investors, Mrs Thainthip said, adding that stock markets in Indonesia and Malaysia were more attractive as they two countries could manage the soaring inflation better than Thailand.
In addition, both Indonesia and Malaysia have no problem of political conflict, she said.
“It is common for the SET index to drop in short-term as the Goldman Sachs had earlier reduced investment rate for Thailand to ‘negative’, due to the rising inflation.
But the Thai capital market would improve in the long-run, supported by the continued growing of the listed companies,” Mrs. Thianthip said.
The SET index this morning opened at 1,030.14 points, down 4.61 points, or 0.45 percent from Tuesday’s close. The trade value was 973.20 million baht.
The main index further went down 17.86 points or 1.73 percent to close at 1,016.89 points at the end of trading session on Wednesday morning. The trade value was 16.65 billion baht.
Stocks rallied yesterday following two days of heavy profit-taking. On the HCM City Stock Exchange, the VN-Index closed up 2.3 percent to 443.68 points, while the value of trades jumped 53 percent over the previous session to VND642 billion (US$30.6 million), on a volume of 31.8 million shares.
Among the 10 leading shares by capitalisation, most made gains between 1 and 4 percent. However, insurer Bao Viet Holdings (BVH), property developer Hoang Anh Gia Lai (HAG) and PetroVietnam Finance (PVF) all rose to their ceiling prices. Real estate developer Vincom (VIC) hit its floor price.
VIC has announced it would pay a dividend on 2010 profits at a rate of 58.8 percent – an amount that will total a whopping VND2.3 trillion ($109.5 million). Yet, according to VIC's first-quarter earnings statements, the company's total liabilities had reached VND17.13 trillion ($815.7 million), while equity was a mere VND7.5 trillion ($357.14 million).
If it proceeds with the massive dividend payment in July and August, its equity would shrink to about VND5 trillion ($238.1 million) and its debt-to-equity ratio soar beyond that of its competitors, increasing the company's risk of insolvency, according to the financial information website vietstock.vn.
On the Ha Noi Stock Exchange, meanwhile, the HNX-Index climbed 3.4 percent yesterday to close at 76.09 points. The value of trades rose 25.4 per centover Monday's session to VND434.4 billion (US$20.7 million) on a volume of 38 million shares.
"Circular No 74, which will make some changes to stock trading, from a psychological perspective, made a positive impact after a long depression," said the head of research and corporate finance for Hoa Binh Securities Co, Nguyen Phuc Thinh. "This is the first time the urgent demands of market participants and investors have been considered in a timely manner."
The solutions proposed in a recent Government meeting to appropriately manage the stock market were also good news, reflected in the current recovery, he said.
"There was a fundamental change in market value. I see that it is no longer being dominated by the three large-cap shares, BVH, MSN and VIC," Thinh said. "The stock market in June is unlikely to see strong growth, but it will definitely be better than in May, especially in terms of market volumes."
Foreign investors were net buyers on both national bourses yesterday, but by a net of just VND16.9 billion ($804,760) worth of shares.
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