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ASEAN STOCK WATCH 15 March 2010

Paul A. Ebeling, Jnr.
www.livetradingnews.com

Optimism is back in the Markets

We are seeing Bullishness in US stocks emerge after the market’s now year long rally. This according to a gauge derived from data compiled by the American Association of Individual Investors* (http://www.aaii.com/)

This past week, Optimists (the Bulls) outweighed Pessimists (the Bears) for the first time since January Y 2008, 3 months after the previous Bull Market closed.

According to the data the average rose to 0.64 pt from minus 0.26 a week ago, due to an increase in the number of participants expecting higher share prices in the next 6 months and a decline in those anticipating losses.

However, even after the gain, the barometer is near its lows in April 2003, when the previous Bull Market was getting started, and April 1994, when the Internet bubble was about to begin inflating. The average hit bottom at minus 1.98 and minus 2.48, respectively.

The 52-week moving average is designed to smooth out week- to-week fluctuations in the survey results.

This week’s figures, for example, showed Bulls rose to 44.9 % from 42.1% a week earlier and Bears sank to 23.6% from 27.8%.

Note: The level of bullishness is relatively neutral for stocks in here.

Bulls vs. Bears

This is a reading of the number of Bullish investment advisors vs. Bearish advisors.  This indicator gives us a look at Bullish investors: too bullish then everyone is in, and a Top is shaping up and visa-a-versa.

Bulls : are at 44.9%, the Bulls continue to run North as the market continues North, up from 42.1% and 41.1%. They rose from 35.6% and over the 35% threshold level that suggests Bullishness. After tapping  at 53 on this move the Bulls lost some momentum, but are still charging.

For your reference: The Bulls are over the 35% level that is the Key level for a Bullish climate.

Bears : are at 23.6%. Bears are not as convinced as Bulls in here, rising even as the market rises, up from 22.7%. Bears have been more skeptical on this move though they are down sharply falling from 27.8%. Over 35% is considered bullish for the market, so still a ways off even though Bulls are falling to a Bullish level. Continuing the rise from 16% on the lows this leg where it held for several weeks.

For your reference: For reference, cracking above the 35% threshold considered Bullish. The Bears hit a high on this run at 47.2%

Paul A. Ebeling, Jnr.  www.livetradingnews.com

**AAII is a nonprofit organization that arms individual investors with the education and tools they need to build wealth.

Domestic and Global demand to drive ASEAN nations

It is clear that Asian economic development is setting up to rely more on the domestic economies, as external demand begins to lessen in the future.

Arvind Virmani, the executive director for India for the International Monetary Fund, said recently that World trade is likely to decline in the future as demand in major importing countries tapers off. As well, excess production capacity will lead to a moderation in investment trends, he said.

China, a major driver of Global economic growth, will shift policies to boost domestic demand over the next 3-5 yrs as exports level out, as Beijing looks to raise demand through public investment in social infrastructure and the services sector rather than in manufacturing. China 's manufacturing growth now greatly depends on exports, which in turn account for the bulk of national income.

India, on the other hand has domestic demand that is stronger than China's, and should be able to maintain economic growth of between 8% and 11% from Y 2011 onward, if the government continues with reforms to remove obstacles to investment,

Shahid Yusuf, an economic adviser for the the World Bank's Development Economics Research Group, said most Asian countries were expected to continue to rely heavily on exports to help develop domestic industries.

Most Asian countries acknowledge the need to strengthen research capacity to raise the competitiveness of their exports. Dr Yusuf said governments must ensure that R&D capacity is broadly adopted within the economy, rather than simply committing budget funds to programs.

He said investment by industrialized economies was likely to decline in the future, while developing countries overall were unlikely to post growth of more than 4% to 5% per annum. He went on to say that developing countries should consider expanding intra-regional trade and production as their growing middle class has become a stronger. But as developing countries shift policy to become more oriented to domestic demand, they should also be aware of the potential negative impact, such as an erosion of savings.

Jiyao Bi, an economist with the National Development and Reform Commission of China, agreed that Beijing has been shifting away from an export-oriented policy in favour of policies to strengthen the domestic economy, and investments are now more focused on the domestic market. Policies are also planned to raise household income, upgrade technology and raise the competitiveness of exports.

"Global demand is unlikely to return to pre-crisis [levels]. China cannot rely on external demand and exports, and is shifting to a growth mode led by domestic demand," he said. "In the future, competition will intensify."

Troung Dinh Yuyen, senior adviser to the prime minister of Vietnam , said the ASEAN nations should find a niche in the World market.---Paul A. Ebeling, Jnr. www.livetradingnews.com

Thailand's Red Shirt anti-Gov rally under control

The ongoing Red Shirt anti-government rally is under control, and peaceful; the maximum-level-security measures were implemented in Bangkok , beginning last Saturday, in the latest move to prevent violence from occurring.

By Saturday evening, it was estimated that only about 50,000 United front for Democracy against Dictatorship (UDD) protesters from several provinces arrived at the Pan Fah Bridge , which is located on Ratchadamnoen Road in the center of capital Bangkok . A police meeting, which was held Saturday afternoon to assess the situation, was participated in by commanders of riot control teams from 88 police stations and the Special Weapon and Tactics (SWAT) Team.

The meeting concluded the Rally was under control as planned, the National News Bureau of Thailand (NNT) under the state-owned Public Relations Department, reported.

Overall, the rally situation is still peaceful as no severe problems were found during the Saturday Rally, Public Health Minister Jurin Laksanavisit said in an interview.

The Thai police were prepared to handle the rally Sunday, as the police staff were instructed to be patient in dealing with the protesters, said Metropolitan Police Commander Lt- General Santhan Chayanon, and also to be careful of ill- intended people, who might incite violence. In addition to those, some 400 investigative police officers have been deployed to ensure security. Maximum-level-security measures have been ordered, together with deploying attacking police teams aiming to prevent violence 24/7, Thai News Agency reported. ---Paul A. Ebeling, Jnr. www.livetradingnews.com

Chinese Yuan appreciated 14.5% when World economy was worst hit

Premier Wen Jiabao said Sunday in Beijing, that keeping the RMB exchange rate basically stable played an important role in facilitating the recovery of the Global economy from the worst financial crisis in decades, and that a stable exchange rate of the Renminbi (RMB), or Yuan, will facilitate the recovery of the World economy in the midst of the global financial crisis. He also said that since China began its currency reform to un-peg the Yuan from the USD in July 2005, the Yuan has appreciated 21% against the “Greenback”, or 16% in real terms, and that during this period, China's exports fell by 16% but imports only dropped 11% and its trade surplus decreased US$102B.

When the global economy was worst hit between July 2008 and February 2009, the real effective exchange rate of the RMB has risen by 14.5%, Wen told a press conference after the annual parliament session.

Wen went on to say that the development road of China will be bumpy and even thorny in the next few years, and he called for "un-slackened" efforts to tackle difficulties, saying "we must have firm confidence."

"No matter how high a mountain is, one can always ascend to the top. It is the only way out and hope when facing difficulties lie in our own efforts," Wen said. He also said he holds deep love for the country and vowed strong commitments in the next 3 yrs of his term. ---Paul A. Ebeling, Jnr. www.livetradingnews.com

The US economy, following Asia , will come "alive" this year

The US economy has weathered its worst days over the last two years and, following Asia , will come alive later in Y 2010.

The overall outlook here at EH for the US economy in Y 2010, is for slow, modest and sustained growth with a target of 2.7 to 2.9 % this year.

The limiting factors: the consumer is still over-burdened, corporate balance sheets are still in the process of getting healthier, and there remains the uncertain regulatory and fiscal environment that always makes business cautious in taking on risk and making investments.

US core inflation is expected to decelerate this year in the face of a very wide output gap, and in Y 2011, there will be a modest acceleration in core inflation, but fear remains that inflation may be the only escape from the debt problems.

EH believes that the US Federal Reserve  will begin tightening monetary policy later this year or early in Y 2011 that will lift the Fed funds rate to 1.00 during the period.

The US unemployment rate stood at 9.7% as of the end of February as employers shed fewer jobs than expected, according to official statistics, indicating that worse is past and the job market will soon begin to improve. Remember the job market is a lagging indicator and 100% employment is gauged at about 4.7% unemployment in the USA . ---Paul A. Ebeling, Jnr. www.livetradingnews.com

Stanley Works wins EU approval to buy Black & Decker

The giant US tool maker, Stanley Works, won approval Friday from the European Union (EU) antitrust regulator to buy rival Black & Decker for about US$3.5B.

"The parties are active in different product markets. While Stanley makes mostly hand and pneumatic tools, Black & Decker's strength is in electric power tools and the overlaps between the two of them are limited," the European Commission said in a statement. "The market investigation showed that the products offered by the parties do not compete closely with each other and that the combined entity would continue to face several strong competitors with significant market shares," it added.

Stanley Works, founded in Y1843, is a global tool manufacturer supplying mainly hand tools, security solutions for commercial applications and engineered solutions for industrial, construction and do-it-yourself (DIY) use. Its products have been widely used in numerous famous buildings, such as White House, Buckingham Palace , the New York World Trade Center , and Shanghai Jin Mao Tower .

Black & Decker is a worldwide manufacturer focusing on power tools and accessories, hardware and home improvement products, and fastening and assembly-based systems.

The merger was announced in November 2009, which created an UD$8.4B Global industrial leader in an all-stock transaction valued at approximately US$3.5B. ----Paul A. Ebeling, Jnr. www.livetradingnews.com

Google likely to shutter its  China search engine

Google has drawn up detailed plans to close its Chinese search engine and is now certain to go ahead as talks over censorship with the Chinese authorities have reached an impasse, according to a person familiar with the matter.

The positions on both sides have hardened. The Chinese government Friday threw down a direct public challenge to the US search company, with a warning that it was not prepared to compromise on Internet censorship on Google's behalf.

The sign that Google is on the brink of closing Google.cn, its local search service in China , came two months after it promised to stop bowing to censorship there. However, the company will likely to take some time to follow through with an orderly closure plan, and takes steps to protect local employees from retaliation by the authorities.

Google is seeking ways to keep its other operations in China going, although some executives fear that a backlash from the Chinese authorities will make it almost impossible to keep a presence there.

Last Friday, Li Yizhong, minister for industry and information technology, said: “If Google takes steps that violate Chinese laws, that would be unfriendly, that would be irresponsible, and they would have to bear the consequences.”

One person close to the search company said that its senior executives remained “adamant” about ending the censorship.

The company has also ruled out keeping the search service going by handing majority control, or even the entire business, to a local player, this person said.

The company’s other operations, which pre-date the launch of Google.cn 4 yrs ago, include its research center in Beijing , and a sales force that sells advertising on the Chinese-language Google.com search service, based outside China , to advertisers inside the country.

Mr. Li encouraged Google to continue its operations in the country noting, “Google has taken 30% of the Chinese search market. “If you don’t leave, China will welcome that, if you don’t leave, it will be beneficial for the development of the Internet in China .” ---Paul A. Ebeling, Jnr. www.livetradingnews.com

Russia expects 6% growth of meat production in Y 2010

Russian meat production is expected to rise 6% to reach 10.5M tons, said the Ministry of Agriculture in a report on Friday.

The Russian government has increased its funding on domestic meat producers, particularly on poultry meat producers, said the report, aiming to meet domestic and export demand.

Some 4.7 billion rubles (around US$160.5M) from federal and regional finances has been used to spur poultry meat production, according to the official report.

There are overall 124 relevant meat production projects currently underway in Russia , with the total production estimated at 646,000 tons.

According to a food security doctrine approved in February, the share of domestic meat and meat products in the country's market should be no less than 85%. ---Paul A. Ebeling, Jnr. www.livetradingnews.com

At the Movies with The Hollywood Reporter (THR)
' Alice ' retains Box Office Crown
'Green Zone' opens at # 2

Disney’s “Alice in Wonderland” topped all comers on Friday, ringing up an estimated $17.4 million in domestic coin, as Tim Burton’s 3D fantasy began what is sure to be a repeat No. 1 performance at the weekend box office.

The pic’s bodacious Friday box office suggests a soph-session tally of $60 million or more for the Johnny Depp starrer, which rung up $116 million last weekend. A modest drop of less than 50% this frame would see “ Alice ” soaring north of $200 million in cumulative b.o. through Sunday.

Four wide openers this session marked sluggish starts Friday.

Universal opened Paul Greengrass’ “Green Zone” with $5 million in Friday b.o. That was the second-highest tally among daily grossers, but the so-so sum reinforces a sense that the Iraq War thriller will be limited to the mid-teen millions for the weekend.

Elsewhere among the market entrants, Summit Entertainment’s Robert Pattinson starrer “Remember Me” debuted in third place with $3.6 million. That was roughly in line with modest pre-release expectations for the romantic drama this weekend.

Paramount ’s romantic comedy “She’s Out of My League” wooed $3.3 million in fourth place in its first day of release, while Fox Searchlight’s Forest Whitaker starrer “Our Family Wedding” fetched $2.5 million in fifth.


 

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