ASEAN KEY DESTINATIONS
Asean Stock Watch- June 27
On Friday, the Dow plunged 115.42 points, or 0.96 percent to 11,934.58 on renewed concerns about Greece.
After the market cheered its agreement to a five-year austerity plan, the celebration was cut short on concerns that Greece may be forced to default on its debt repayments as its austerity measures face opposition from the parliament.
Indonesia’s benchmark stock index advanced for a fifth day on Friday, amid hopes that Greece’s financial condition will improve, staving off a global crisis.
The Jakarta Composite Index advanced 24.91 points, or 0.7 percent, to close at 3,848.56. About 4.93 billion shares valued at Rp 3.67 trillion ($427 million) changed hands. Gainers trumped decliners by 150 to 78. Foreign investors bought Rp 407 billion more than they sold.
The index rose 3.4 percent this week to be Asia’s best performer, according to Reuters. “Regional markets rebounded [on Friday] because there was some progress in Greece the day before,” said Bagus Hananto, a researcher at Onix Capital. “Indonesia’s fundamentals remain strong to support the market.”
European Union leaders promised more money to help Greece stave off looming bankruptcy, provided its Parliament adopts the austerity plan.
Back in Jakarta, the miscellaneous sector — which includes automotive, textile and footwear companies — gained 1.6 percent, posting the biggest gain among sectors. Manufacturing gained 1 percent, and basic industry added 0.8 percent.
Coal producers gained on optimism that higher energy prices would boost profits. Adaro Energy, the nation’s second-largest coal maker, rose 1.1 percent to Rp 2,375 and Borneo Lumbung Energi and Metal rose 0.7 percent to Rp 1,430.
International Nickel Indonesia, the country’s largest nickel producer, gained 0.6 percent to Rp 4,525. The company said it would invest $500 million over the next four years in a nickel project in Central Sulawesi.
Flag carrier Garuda Indonesia soared 3.9 percent to Rp 540, the highest since May 31, after oil futures declined the day before, reducing the company’s risk over fuel cost. But Brent Crude Future declined by 0.34 percent.
The rupiah weakened 0.1 percent against dollar to 8,603. “Uncertainty on the global growth outlook remains,” said Prakriti Sofat, a Singapore-based economist at Barclays Capital. “I think the next point to watch will be [on Tuesday] when we have the Greek Parliament looking to pass the privatization program.”
Malaysia is likely to see range bound trading this week due to uncertainty around the globe front.
A dealer said with no near term catalysts in sight, the market would continue in lackluster trade, poised for more weakness.
Affin Investment Bank's head of retail research, Dr Nazri Khan, said there could be little change to the doldrums sentiment with the benchmark FBM KLCI remaining trapped in a 1,540-1,570 sideway range over the last four weeks.
Domestically, he said that fundamentals and earnings remained intact with the key index showing resilient price performance with a mere 0.8 percent slide against bigger Dow Jones (6 percent) and Nikkei (11 percent) losses for this year.
Nazri said the proposed listing of MSM Malaysia on June 28 would give some positive impacts on Bursa Malaysia to offset some battered sentiment following the failed merger plan of RHB Capital. For the week just ended, the benchmark index stayed firm at its crucial 1,560 level and traded rangebound before closing the week higher on buying support from selected heavyweights, especially Maybank and CIMB.
This was due to the decision by the two largest banks to call off talks with RHB Capital on a possible merger as it was a relief for investors as the possible deal was believed to be expensive.
The benchmark index ended the week 1.23 points higher at 1,564.66. The Finance Index fell 131.5 points to 14,615.53, Plantation Index slipped 23.8 points to 7,863.83 while Industrial Index gained 26.90 points to 2,800.76.
The FBM Emas Index rose 3.10 points to 10,742.61, FBM Mid 70 Index was up 1.20 points to 11,685.66 while FBM Ace Index declined 13.10 points to 4,230.68. The weekly volume increased to 4.6 billion shares worth RM7.64bil from 4.12 billion shares worth RM7.81bil a week earlier. The Main Market turnover climbed to 3.48 billion units worth RM7.44bil.
Volume on the ACE Market rose to 890.96 million shares valued at RM160.69mil.
However, warrants declined to 201.29 million units worth RM25.52mil from 232.48 million units worth RM33.84mil
The mining sector will influence the Philippines market, but overseas worries particularly on the Greek financial crisis and the health of the US economy will continue to weigh down investor sentiment.
“It seems like we will be seeing the Philippine Stock Exchange index move higher again [this] week with a little push from the mining issues,” said Maria Arlysa Narciso of AB Capital Securities Inc.
Mining stocks Lepanto Consolidated Mining Co., Atlas Consolidated Mining and Development Corp., Philex Mining Corp. and Manila Mining Corp. outperformed the market on speculation that Manuel Pangilinan, who controls Philex, is eyeing to buy a stake in Atlas.
Index heavyweights Philippine Long Distance Telephone Co. (PLDT) and Ayala Land Inc. are expected to provide the needed cushion to keep the market from falling.
“Right now, both stocks are set to move higher. Technical indicators are positive for both PLDT and ALI,” said Narciso.
Following last week’s 3.22-percent rise on the back of the ratings upgrade on the country’s credit outlook, the market rose above all its moving averages and suggested a bullish trend for the main index, which is only a few points away from its resistance level of 4,300.
“Our own market has shown some resiliency that we didn’t imitate what the Dow Jones Industrial Average was doing but rather we’re now marching to the beat of our own drummer and this has proven to be a better picture,” said Bonner Dytoc of Absolute Traders and Consulting Services Inc.
Singapore shares opened lower on Monday, with the benchmark Straits Times Index at 3,038.84 in early trade, down 0.97 percent, or 28.01 points.
Around 45.6 million shares exchanged hands.
Losers beat gainers 139 to 16.
The Stock Exchange of Thailand fluctuated in line with regional markets where investors fretted about the US economy and Greece. Daily average turnover remained thin in a range of 17-22 billion baht for the week. The SET Index moved in a narrow range between 1,013.09 and 1,033.80 points and closed on Friday at 1,022.94, up 0.39 percent from the previous week. Foreign investors were net sellers of 6.243 billion baht, retail investors net buyers of 3.926 billion, local institutions net buyers of 775 million and brokers 1.54 billion baht.
Big movers: The energy sector will bear watching today following the slump in world oil prices to a seven-week low late last week. PTT was the most active stock in value last week, closing at 334 baht, up 1.21 percent from a week earlier. Banpu closed at 700 baht, down from 716 the previous week.
- Malee Sampran (MALEE) rose dramatically after resuming trade last Wednesday following business rehabilitation. It closed the week at 15.10 baht in trade worth 2.97 billion baht, up 961 percent from 1.57 baht when it last traded on May 7, 2009.
Newsmakers: The US Federal Reserve kept its interest rate at zero to 0.25 percent, believing the US recovery to be weak as long as joblessness remains high. The Fed also reduced its economic growth forecast for this year to a range of 2.7 percent to 2.9 percent from 3.1 percent to 3.3 percent predicted earlier, and to between 3.3 percent and 3.7 percent next year, from 3.5 percent to 4.2 percent. Significantly, it said nothing about a third round of quantitative easing (QE3) once its current QE2 programme involving $600 billion in bond purchases ends this week,
Asia Plus Securities said that if there is no QE3, as now appears likely, the market expects that the dollar index will move sideways up but commodity and oil stocks will move sideways down. - A new survey of listed Thai firms found that more than 55 percent of CEOs saw politics as the main threat to economic growth. They forecast Thai GDP growth of more than 3.5 percent, and proposed the new government invest more in infrastructure and reduce corporate tax rates. Over the next 12 months, 84 percent of respondents said they planned new investment.
Coming up this week: With only one week before the July 3 election, the market is expected to be at a standstill, pending the outcome of the race between the Democrat and Pheu Thai parties. Advance voting took place on Sunday.
- The Fiscal Policy Office is expected to reduce its GDP expansion forecast from 4-5% earlier to reflect increasing risks in the second half. If the Fed raises interest rates, it would affect the world economy, while higher inflation will affect costs of imported goods.
- The Bank of Thailand will announce economic figures for May on June 30. And July 1 is the midyear holiday for banks.
Stocks to Watch: Asia Plus Securities suggests being overweight in banks as the dollar is expected to appreciate more. And if there is no QE3, US economic growth will continue to be sluggish. Commodity stocks have already reacted negatively and dropped for a few days.
Despite considerable positive economic data, investors continued to hesitate to buy into the nation's stock markets last week.
Inflation rose in June by just 1.09 percent over May, its slowest pace since the beginning of the year, according to government figures.
"However, inflation in the first six months has already reached over 13 percent, so the 15-per-cent rate targeted by the Government for the year will be very difficult to achieve," said Nguyen Van Quy, an analyst with a Hanoi-based securities company.
The ability of banks to lend to securities investors also faces a permanent restriction under a circular being drafted to replace Circular No 13 on prudent ratios in the operations of credit institutions. Under the draft, a bank's total outstanding loans for securities investment would not be able to exceed 3 percent of the equity of the bank. Under the current rules in Circular No 13, that ratio is a whopping 20 percent.
Closing out the week on the HCM City Stock Exchange, the VN-Index lost a cumulative 1.26 per cent of its value from the previous Friday to close at 433.40 points. The average daily trading value was VND541 billion (US$26.3 million), dipping 36 per cent from the previous week. Value reached its lowest point in a month on Thursday, when trades totaled just under VND318 billion ($15.4 million).
On the Ha Noi Stock Exchange last week, the HNX-Index dropped 1.11 percent to 75.78 points, while the value of trades slumped by 44 percent from the previous week to a daily average of only VND415 billion ($20.1 million).
Foreign investors continued to be net sellers, but by a modest total of only VND25.1 billion ($1.2 million) worth of shares.
Real estate developer Vincom (VIC) continued to attract investors as it topped a net buy value of VND11.5 billion ($558,300).
"Information about non-manufacturing credit, which will have a new cap of 22 per cent by the end of this month, will be the centre of attention in the coming week," said analysts of the financial information website vietstock.vn. "In addition, first-half earnings reports will also affect investor decisions".
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