ASEAN KEY DESTINATIONS
ASEAN Set for Gains
Early gains in U.S. stocks came after jobless claims decreased and service industries expanded in May for a fifth straight month, showing the U.S. recovery is broadening. The Institute for Supply Management’s index of non-manufacturing businesses, which makes up almost 90 percent of the economy, held at 55.4 for a third month. Readings above 50 signal expansion.
The Jakarta Composite Index jumped 77.30, or 2.8 percent, to 2,810.98, its highest since May 19, boosting gains for the year to 10.9 percent, making it Asia’s second-best performer.
Volume was heavy, with 7.36 billion shares valued at Rp 4.95 trillion ($540 million). Gainers outpaced decliners 188 to 23.
Foreign investors bought a net $42.7 million of Indonesian shares on the day, reversing foreign outflows of $31 million in the past two days, according to Reuters.
Driving buying sentiment was Bank Indonesia’s decision on Thursday to hold its key rate at a record-low 6.5 percent to support economic growth.
The rupiah climbed 0.5 percent to 9,190 against the dollar as of 3:33 p.m. in Jakarta, according Bloomberg. It slid 1.8 percent last month, the most since February 2009, as concern Europe’s debt crisis would derail the global economic recovery drove investors from emerging-market assets. The currency has strengthened 2.2 percent this year.
Among market leaders, PT Bank Rakyat Indonesia, the nation’s second-biggest lender, jumped 5.4 percent, while market leader PT Bank Mandiri rose 3.8 percent. Auto distributor PT Astra International, which sells Toyotas, rose 3.8 percent to Rp 44,100. The gain came after Toyota announced that it may relocate a plant that builds Fortuner sport utility vehicles to Indonesia from Thailand, Astra director Johnny Darmawan said.
The nation’s foreign exchange reserves fell slightly to $74.6 billion at the end of May from April’s $78.6 billion as Bank Indonesia supported the rupiah last month, BI Governor Darmin Nasution said on Thursday.
Singapore Exchange (SGX) looks set to grow the derivatives pie, after achieving a 40 per cent jump in derivatives trading last month and Singapore climbed 2.4 percent to a two-week high. Rubber producer GMG Global soared 13.9 percent to S$0.205 after the research arm of RBS initiated coverage on the company with a “buy” call and target price of 27 Singapore cents.
It will also become the first Asian bourse to trade a dividend futures contract when it rolls out the SGX Nikkei Dividend Point Index futures on June 17.
The launch, which will expand SGX’s range of Nikkei products, follows public feedback on contract specifications last month.
This is also taking place against a backdrop of strong growth in derivatives trading. Overall trading volume in the derivatives market here jumped 40 per cent year-on-year to six million contracts, data from SGX yesterday showed. The daily average derivatives volume jumped 34 per cent to 310,809 contracts.
Bangkok investors bought shares in hire purchase firms on expectations the central bank’s decision to maintain its main interest rate would boost demand for car loans, analysts said.
Market leader Thanachart Capital rose 5 percent, Tisco Financial Group, which owns the second-largest car-loan provider, jumped 6.9 percent and Kiatnakin Bank, the third biggest, climbed 3.9 percent.
Thai shares extended gains for the second session, with foreign investors buying Thai shares worth a net $46.08 million. Foreigners had been bearish on Thailand, offloading $1.8 billion of shares in May due to domestic political violence.
Dealers also attributed the buying interests to cheap valutations. Thai shares now trade at 10.3 times forward earnings, the cheapest in ASEAN.
Vietnam edged up 0.08 percent, while the Philippines was up 2 percent to its highest in more than two years before its central bank’s decision to hold policy rate at a record low, announced after the market closed.
Gains in Manila were led by a 8.5 percent jump in the country’s largest power distributor, Manila Electric Co, and a 7.3 percent surge in mall developer and operator SM Prime Holdings.
In Kuala Lumpur, gains were led by financial firm CIMB Group , mobile phone network operator Axiata Group and gaming firm Genting each rising over 2 percent.
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