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ASEAN STOCK WATCH Asean Affairs   21 May 2012

ASEAN Market Outlook

By Shayne Heffernan Ph.D.

iShares MSCI Malaysia Index Fund (EWM), iShares MSCI Indonesia Investable Market Index Fund (EIDO), iShares MSCI Singapore Index Fund (EWS), Market Vectors Indonesia Index ETF (IDX), iShares MSCI Thailand Index Fund (THD), Market Vectors Vietnam ETF (VNM), Trai Thien USA Inc (PINK:TRTH)

Another Bumpy Week on Wall St

Weighing on sentiment is a growing sense among investors that the euro zone debt crisis is nearing new heights, fueled by fears of the potential for a Greek euro exit and the deteriorating health of the Spanish banking system.

Solid corporate earnings and upbeat U.S. economic indicators had fueled the rally in U.S. stocks, offsetting jitters over Europe. But with earnings almost out of the way and data starting to disappoint, investors have shifted their focus back to headlines out of Europe.

With the corporate earnings season drawing to an end and recent U.S. economic data raising doubts about the pace of growth, the S&P 500, which is down 7.3 percent so far in May, could decline further this week as concerns about the financial health of Europe persist.

The S&P 500 fell 4.3 percent for the week, its steepest weekly decline this year, and closed below 1,300 for the first time in four months.For the week, the Dow was off 3.5 percent and the Nasdaq was down 5.3 percent.

The coming week's economic data includes April's existing home sales on Tuesday at 10 a.m. EDT (1400 GMT). Existing home sales are forecast at a 4.60 million-unit annual, up from 4.48 million in March.

New homes sales figures are due on Wednesday at 10 a.m. EDT. April's new home sales are also expected to post an increase, gaining about 7,000 units over a 328,000-unit annual rate in March.

Initial jobless claims and durable goods orders will be published on Thursday at 8:30 a.m. Consumer sentiment is due at 9:55 a.m. on Friday.

The best way to trade this week is to buy value stocks on a sell off.

The Emerging markets in Asia are a stand out buy with strong fundamentals and no exposure to Greece they are attractively priced this week and any fall in them is worth taking advantage of long term.

For many the easiest and most cost effective way to gain exposure to the booming markets and currencies of South East Asia is via ETF’s, this is the Shayne Heffernan Must Own ETF list for Asia.

iShares MSCI Malaysia Index Fund (EWM)
The Malaysia ETF is well diversified, especially for an emerging market. Four sectors account for more than 10% of total assets, and consumer goods and services receive a significant allocation. EWM is very light on energy firms, as well as health care and technology names, which combine to make up less than 1% of the total fund assets.

iShares MSCI Indonesia Investable Market Index Fund (EIDO)
EIDO is a new fund which seeks to track the MSCI Indonesia Investable Market Index, a free-float adjusted market capitalization weighted benchmark designed to measure the performance of equity securities in the top 99% by market capitalization of equity securities listed on stock exchanges in Indonesia.

iShares MSCI Singapore Index Fund (EWS)
As the most developed market in ASEAN, EWS suffered more than most from issues in Europe. US market correction will see this one leap forward. EWS is heavily focused on the finance sector which makes up just more than half of the fund’s total assets. EWS holds about 31 stocks, so it is not surprising to see that roughly 70% of EWS is concentrated in its top 10 holdings.

Market Vectors Indonesia Index ETF (IDX)
IDX is pretty well diversified among sectors with large allocations going towards financials (25%) and industrial materials (19.8%). However, the fund has no securities that are engaged in the technology or health care sectors, so investors will have to achieve that international exposure elsewhere. Indonesia has been soaring as of late due to strengthening commodity prices.

iShares MSCI Thailand Index Fund (THD)
Despite relentless protests from the “Red Shirts” and election jitters in Bangkok, THD has held up surprisingly well in recent weeks.THD is more typical of an emerging market ETF, depending heavily on two sectors to make up slightly more than two-thirds of its total assets: financials and energy. THD focuses on large and giant cap corporations which make up 62% of its total assets compared to just 6% for small and micro cap securities.

Market Vectors Vietnam ETF (VNM)
Vietnam has been one of the worst performing countries in the Southeast Asian area. VNM only holds 32 companies and is highly focused on three sectors which make up almost 65% of the fund’s total assets; financials, energy, and industrial materials. This is achieved by tracking the Market Vectors Vietnam Index, which provides exposure to publicly traded companies that, predominantly, are domiciled and primarily listed in Vietnam and which generate at least 50% of their revenues from Vietnam.

For those trading Vietnam take a look at TRTH

Trai Thien USA Inc (PINK:TRTH)

ASEAN +3 is the Association of Southeast Asian Nations (ASEAN), the People’s Republic of China (including Hong Kong), Japan, and South Korea.
Home to 600 million people, ASEAN has a combined gross domestic product (GDP) of US$1.8 trillion with total trade valued at $2 trillion among the countries.

ASEAN is set to explode as an economic force in 2015 as financial, trade and investment rules become integrated and seamless. ASEAN last year secured $78.5 billion in investments. Regional trade also increased by 32.9 percent to more than $2 trillion and Trai Thien is well positioned to capitalize on the growing Inter-ASEAN +3 trade.

The Association of Southeast Asian Nations is beefing up various frameworks for cooperation and development within the region and with its trading partners, in preparation for regional economic integration by 2015.

The changing trade barriers have seen fast paced growth in agricultural and mineral exports around the region, these changes have already reflected themselves on the books at Trai Thien USA as revenue has almost tripled in the last year.

The Trai Thien Fleet has the distinct advantage of having been designed to suit the region, while huge Dry Bulk Carriers service many areas. Most of the trade in agriculture and minerals is done from ports in ASEAN that cannot accommodate the large ships, nor can the large ships be loaded and unloaded at these smaller ports due to the lack of stevedoring infrastructure.

Trai Thien smaller fleet can service these ports directly removing the additional costs of trans-shipping and adding savings in terms of cash and time to purchasers.
Based on corporate and market growth and given a conservative set of ratio’s in our financial model we see Trai Thien trading over $3.40 in 2013.

Shayne Heffernan Ph.D.  

Linda Johnson, Business Development Director - Private Client Group, Heffernan Capital Management
3 Raffles Place #07-01
Bharat Building Singapore 048617
Tel: +65 6329 6408 Fax: +65 6329 9699
Email :
Suite 53 Athenee Tower
63 Wireless Road, Lumpini, Pathumwan, Bangkok 10330
New York 347 5th Avenue, Suite 1402-508 NY, NY 10016


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