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||Asean Affairs 17 May 2012
Asean Market Preview
By Shayne Heffernan Ph.D.
Asia will come under pressure today as the EuroCrisis continues to worsen.Greeks are said to have withdrawn at least 700 million euros ($890 million) from banks on Monday alone. Several banking sources said Tuesday was similar.
Nearly a third of bank deposits were taken out in the first three months of this year.
The Greek Central Bank said that since the beginning of 2010, 72 billion euros of savings deposits have been taken out of Greek banks.
Experts say this is not only people moving their money somewhere else. They say a lot of Greeks are also eating into their capital, spending it on daily survival.
Overnight in the USA
JPMorgan’s shareholders sued the bank and Chief Executive Officer Jamie Dimon in two separate cases over the company’s $2 billion trading loss. The bank continues to employ Bruno Iksil, the trader known as the London Whale whose positions may have distorted prices in some derivatives markets.
Equities rose earlier today as economic data bolstered optimism the U.S. could withstand fallout from Europe. Several Federal Reserve policy makers said a loss of momentum in growth or increased risks to their economic outlook could warrant additional action to keep the recovery going, minutes of their last meeting showed.
Financial stocks fell the most in the S&P 500 among 10 groups as Bank of America Corp. (BAC) and JPMorgan (JPM) Chase & Co. sank at least 2.1 percent. Alcoa Inc. (AA) slid 2.5 percent as commodities retreated after the Dollar Index rose for a record 13th straight day. J.C. Penney Co. (JCP) tumbled 20 percent, the biggest drop ever, on disappointing results. General Motors Co. (GM) rose 2.3 percent as Berkshire Hathaway Inc. disclosed a stake in the automaker.
Concern about Europe’s crisis drove the S&P 500 down 2.4 percent in four days and trimmed this year’s gain in the gauge to 5.3 percent. The European Central Bank said it will temporarily stop lending to some Greek banks to limit its risk as President Mario Draghi signaled the ECB won’t compromise on key principles to keep Greece in the euro area.
Olam, Wilmar, are Shayne Heffernan's best buys
The benchmark Straits Times Index closed 1.6%, or 45.55 points lower at 2,831.15, its lowest close since Jan. 19, 2012. Market losers outnumbered gainers by a huge 365 to 71, while volumes were lower at 1.47 billion shares compared with 1.64 billion Tuesday.
Of the 30 STI components, 24 ended lower, with 12 falling 2.0% or more. Commodities supplier Olam International was by far the worst performer, ending down 10.8% at S$1.785 after it reported late Tuesday a 23% drop in third-quarter net profit to S$98.7 million, mainly due to cotton procurement problems at its industrial raw materials unit.
The sharp fall in Olam's share price came as many analysts cut their earnings expectations for the company. Local brokerage DBS Vickers cuts its target price for the stock to S$2.00 from S$2.75 after trimming its fiscal year 2012-14 earnings forecasts by 13% to 31%, due to a weaker margin outlook amid "a projected softer commodity price environment."
Other commodity-related companies have also faced weakness recently following their results. Last Thursday, palm oil firm Wilmar International fell 9.1% after posting a 34% drop in its first-quarter net profit.
Foreign direct investment (FDI) over the first four months of the year (Jan-April) was up 44 per cent from the same period last year, Hiranya Sujinai, an investment adviser to the Board of Investment (BoI) said on Wednesday.
Over the period, a total of 407 investment applications with a combined worth of 155.49 billion baht were submitted to the BoI for investment privileges, she said.
The number of applications increased from the first four months of 2011 by 21 per cent and by 44 per cent for investment cost, she added.
Of the total investment applications, 240, or 59 per cent, worth 113.10 billion baht, were projects to expand existing businesses. Altogether 167 applications, with a combined cost of 42.49 billion baht, were new investment projects, said Mrs Hiranya.
Japanese investors had the largest number of applications, at 228 projects, worth 93.07 billion baht, followed by the Malaysians (12 projects, worth 10.75 billion baht), Americans (17 projects, worth 9.12 billion baht), Dutch (11 projects, worth 9.81 billion baht) and Hong Kong (nine projects, worth 5.46 billion baht).
Foreign Trade Department deputy director-general Pongpun Gearaviriyapun said trade between Thailand and member countries of the Asean Free Trade Area (Afta) had returned to a plus figure in the first quarter of the year.
The total number of vehicle sales in April was up from last April by 30.5 per cent to 87,788 units, Wuttikorn Suriyachantananont, executive vice president of Toyota Motors (Thailand), said on Wednesday.
Sales of passenger cars increased 23.4 per cent, to 38,211 units, commercial vehicle sales went up 35.2 per cent to 49,132 units, and sales of one tonne pickups rose by 34.8 per cent to 42,163 units, he said.
Mr Wuttikorn attributed the increase in car sales to the recent Motor Show fair that boosted demand for cars and the fact flood-affected car makers have now reopened production lines and could deliver more ordered cars to clients.
Total sales for the first four months of the year (Jan-April) stood at 367,109 units, up 20 per cent from the same period last year, he added.
The FBM KLCI index lost 25.03 points or 1.60% on Wednesday. The Finance Index fell 1.09% to 13760.01 points, the Properties Index dropped 1.08% to 967.09 points and the Plantation Index down 2.49% to 8156.61 points. The market traded within a range of 23.20 points between an intra-day high of 1558.25 and a low of 1535.05 during the session.
Actively traded stocks include AGLOBAL, FOCUS, LUSTER, SAAG, NICORP, SANICHI, MTRONIC, UTOPIA, ASUPREM and PCHEM. Trading volume increased to 1330.99 mil shares worth RM2061.03 mil as compared to Tuesday’s 1121.29 mil shares worth RM1645.06 mil.
Leading Movers were RHBCAP (+7 sen to RM7.27) and UEMLAND (+1 sen to RM1.96). Lagging Movers were TENAGA (-28 sen to RM6.17), SIME (-19 sen to RM9.54), CIMB (-14 sen to RM7.18), IOICORP (-11 sen to RM4.90) and DIGI (-7 sen to RM3.90). Market breadth was negative with 97 gainers as compared to 822 losers.
Yesterday in Asia
Tokyo fell 1.12 percent, or 99.57 points, at 8,801.17 while Sydney was 2.36 percent lower, or 100.8 points, at 4,165.5 and Seoul closed 3.08 percent lower, easing 58.43 points to 1,840.53.
Hong Kong slumped 3.19 percent, or 634.48 points, to 19,259.83 and Shanghai was down 1.21 percent, or 28.65 points, at 2,346.19.
– Manila closed 2.27 percent, or 113.22 points, lower at 4,864.23.
DMCI Holdings fell 2.96 percent to 59 pesos while Universal Robina dropped 6.28 percent to 61.10 pesos but SM Investments bucked the trend to rise 1.87 percent to 678 pesos.
– Taipei fell 2.18 percent, or 161.07 points, to 7,234.57.
Leading smartphone maker HTC shed 6.59 percent to end at Tw$411.0 while Taiwan Semiconductor Manufacturing Co. slipped 2.46 percent to Tw$83.4.
– Kuala Lumpur ended 1.60 percent lower, or 25.03 points, at 1,536.04.
YTL Power sank 4.9 percent to 1.54 ringgit, Tenaga Nasional shed 4.3 percent to 6.17 and AirAsia dipped 4.3 percent to 3.34.
– Singapore closed down 1.58 percent, or 45.55 points, to 2,831.15.
Commodities firm Olam International shed 10.75 percent to Sg$1.79 while Singapore Telecom was down 1.57 percent to Sg$3.13.
– Bangkok fell 1.12 percent or 13.32 points to 1,171.23.
Banpu dropped 3.07 percent to 506 baht, while Siam cement added 1.47 percent to 344 baht.
– Jakarta closed down 65.15 points, or 1.61 percent, to 3,980.50.
Telecommunications company Telkom fell 3.1 percent to 7,900 rupiah and Bank Rakyat slid 3.2 percent to 6,000 rupiah.
– Mumbai closed down 1.83 percent, or 298.16 points, at 16,030.09.
Shayne Heffernan Ph.D.
Linda Johnson, Business Development Director - Private Client Group, Heffernan Capital Management
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Bharat Building Singapore 048617
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