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ASEAN STOCK WATCH Asean Affairs   23  May  2011

Asean Stock Watch-May 23



On Friday, the Dow Jones industrial average slid 93.28 points, or 0.7 percent to 12,512.04 on signs of weakening consumer demand.


The Jakarta Composite Index (JCI) on Friday extended its rally to a third day, reaching a new record high on the way, as investors continued to chase gains in emerging economies.

“Since global investors are faced with the uncertainty of Europe’s debt crisis and a slowing economic recovery in US, they only have limited options for their investments, and emerging markets are the most promising of all,” said Janson Nasrial, an analyst at AM Capital Indonesia.

The JCI set a fresh record by gaining 13.14 points, or 0.3 percent, to 3,872,95. About 5.4 billion shares worth Rp 4.9 trillion ($573.3 million) were traded as the benchmark closed with a 1.1 percent weekly gain.

“Speculation that Indonesia’s inflation rate may slow again in May also added sentiment for local equities,” Janson added. The consumer price index has fallen from 7 percent in January to an annualized 6.16 percent last month.

Among the day’s gainers, Elang Mahkota Teknologi jumped 4.6 percent to Rp 1,580 on its offer to buy 1.47 billion shares of Indosiar Karya Media for Rp 950 each. Indosiar rose 1.1 percent to Rp 930.

Consumer goods producer Unilever Indonesia climbed 0.3 percent to Rp 15,000 on reports that it would pay a dividend of Rp 344 a share, amounting to all of last year’s net income.

Astra Agro Lestari, the nation’s largest listed plantation stock, added 0.6 percent to Rp 24,000, as palm oil futures gained as much as 0.7 percent to 3,382 ringgit ($1,121) a metric ton in Kuala Lumpur.

Astra International, Indonesia’s top auto retailer, advanced 1.5 percent to Rp 62,000. Its shares rose amid speculation that its assembly of Toyota and Daihatsu vehicles would return to normal next month after supply disruptions caused by the March earthquake in Japan, Mandiri Sekuritas said.

The rupiah advanced 0.3 percent to 8,528 per dollar on Friday, after data showing an improving US labor market boosted confidence in the global recovery and increased demand for emerging-market assets.


The FBM KLCI was down 7.03 points, or 0.46 percent, at 1,534 in early trade on Monday dragged down by losses in banking stocks and in line with the decline seen in regional peers. Turnover was 210 million shares done valued at RM201.05 million. There were 124 gainers, 363 losers and 215 stocks unchanged.

HwangDBS Vickers Research said in a report issued today that the index would remain under downward pressure after closing at its intra-day low of 1,541 last Friday.

“The benchmark index is expected to find immediate support at 1,530. This follows a slump on Wall Street last Friday, which saw its leading equity indices falling between 0.7 percent and 0.8 percent on concerns that the Europe debt woes might persist amid an uncertain US economic outlook,” the research house said.

It added that against a broadly weak market backdrop, stocks in focus today may include Time Engineering, Melati Ehsan and Malaysia Smelting Corp.

A news report quoting sources said that UEM Group's 45 percent stake in Time Engineering has drawn the interests of several potential buyers for a strategic block of shares while Melati Ehsan was just awarded a road construction project valued at RM149mil.

Meanwhile, Malaysia Smelting Corp is in talks for a potential joint venture in exploring and developing tin and mineral-related resources in the Republic of Congo.

Meanwhile, regional peers were down in their early trade with Shanghai SE Composite losing 0.34 percent to 2,848.85, Nikkei 225 shedding 1.41 percent to 9,471.27 and Singapore's STI down 0.96 percent to 3,138.11.

The ringgit against the US dollar was quoted at 3.0343 against its previous close of 3.0120. Crude oil was down at US$99.17, from its previous close of US$100.10.


Philippine share prices may continue to consolidate on heightened risk aversion. The consolidation will also allow the Philippine Stock Exchange index to take a breather following the upswing that started in late March.

“With sentiment going neither here nor there, the market is seen to go into a consolidation mode in the coming weeks,” said AB Capital Securities Inc.

Technical indicators support the market’s “confused” stage, drawing investors to rumor- and news-driven counters for a quick profit, said Jun Calaycay of Accord Capital Equities Corp. Asian stocks continue to be held back by concerns on Greece’s debt problems, the contraction of Japan’s economy and mixed economic data from the United States fuelling concern about global recovery.

A host of important and expected high-impact economic numbers from the US, however, may provide leads for the local market starting with the new home sales report and pending home sales index. “The housing sector is a critical segment of the US economy, attracting for the biggest chunk of consumer spending,” said Calaycay.

Other US economic indicators due within the week are durable good orders, gross domestic product, jobless claims, and personal income & outlays.

On Friday, the Dow Jones industrial average slid 93.28 points, or 0.7 percent to 12,512.04 on signs of weakening consumer demand.

This week, the PSE is seen to encounter resistance at 4,340 with support at 4,220. “Its failure to [break out of its major resistance] during the first quarter earnings reporting season shows investors disappointment over the results,” said AB Capital.

“What we’re waiting for is the break of the PSEi of the resistance of the month long triangle at 4,325. When this is broken, we see a near term target for the index to reach 4,484,” said Bonner Dytoc, senior instructor at Absolute Traders and Consulting Services Inc.


Singapore shares opened lower on Monday, with the benchmark Straits Times Index at 3,143.05 in early trade, down 0.80 percent, or 25.49 points.

Around 79.1 million shares exchanged hands.


The Stock Exchange of Thailand (SET) eased further in relatively thin volume on just three trading days last week. Unable to break the resistance at 1,080 on worries about politics and uneven foreign fund flows, the SET traded in a narrow range between 1,069.12 and 1,082.48 and closed on Friday at 1,072.94, down 1.11 percent from a week earlier.

Foreign investors were net sellers of 4.78 billion baht and brokers 878.3 million baht. Retail investors were net buyers of almost 5 billion and local institutions 659 million baht.

Big movers: Shares of Siam Industrial Credit (SICCO) surged after Siam Commercial Bank (SCB) announced a tender offer priced at 6.89 baht. SICCO rose from 4.30 baht a week earlier to close at 6.70 on Friday, up 55.8 percent. SCB shares shed 2.6 percent on the week to 112.50 baht.

FCPF, the week's second most active stock by value, announced a first-quarter net profit of 3.47 billion baht, but said its gross profit margin dropped to 16.1 percent from 18 percent in the same period last year. The shares closed this week at 29.25 baht, down 8.6 percent from the previous week.

FPTT outperformed most expectations in Q1 with a net profit of 34.52 billion baht, up 51.6 percent year-on-year and 57.5 percent quarter-on-quarter. Its shares closed the week unchanged at 361 baht.

Newsmakers: The July 3 election campaign gathered momentum with the registration of party-list candidates, and constituency MP candidates will register this week.

FTrue Corp and CAT Telecom reaffirmed plans to go full steam ahead to jointly develop a nationwide 3G network, after the Central Administrative Court rejected rival mobile operator DTAC's request for an injunction to halt work. However, the court will look into CAT's approval of the contracts with True.

FIndustrial confidence in April improved on the back of brisk export orders, as well as strong domestic demand, particularly during the Songkran festival.

FKasikornbank was appointed lead arranger to raise 21 billion baht for Solar Power Co (SPC), which plans to become Asean's largest solar farm operator by 2013. SPC is completing a reverse takeover of MAI-listed Steel Intertech Plc (STEEL), a steel-roofing producer, and says revenue from electricity generation will be more than 50 percent of the company's total by next year. Coming up this week: Investors will monitor attempts to resolve worsening debt problems in Greece and the possible impact on euro and dollar movements. Oil prices also bear watching as OPEC comes under growing pressure to increase production.

FThe National Economic and Social Development Board today will release official gross domestic product figures for the first quarter. The market is expecting 2.7 percent expansion year-on-year, compared with 3.8 percent in the fourth quarter last year. If the figures exceed expectations, optimism is likely to pull in more foreign funds.

Stocks to Watch: Asia Plus Securities suggests investors take overweight positions in agricultural and food shares on expectations of good second-quarter performance. CPF and GFPT will benefit from higher exports to Japan, where the March earthquake and tsunami resulted in heavy damage to food-growing land.

KGI Securities recommends defensive stocks, especially in sectors that stand to benefit from spending ahead of the election.

Possible gainers include media stocks BEC World and Major Cineplex Group and retail stocks CP All and Siam Makro.


Blue chip washouts concluded a disappointing week for domestic investors.

On the HCM City Stock Exchange, the VN-Index lost 9.76 percent last week to close at 432.87 points – the lowest standing since Nov. 22, 2010.

Blue chips contributed to the market loss by falling 11.57 percent, with key pillars such as insurer Bao Viet Holdings (BVH) and multi-business Masan Group (MSN) fell consecutively to their floor prices.

BVH closed last Friday at VND77,500, down from VND90,000 last Monday while MSN closed last Friday at VND97,000 down from Monday's VND117,000.

"As the pacemakers for the VN-Index in recent months, which took turns leading the VN-Index and boosted it to 480 points in April, it was hard to accept their wash-out in just one week," said Nguyen Van Khanh from a Hanoi-based securities company.

Khanh watched Vietcombank after it announced a big additional listing from the State's holdings which lifted its shares (VCB) to the ceiling price in two earlier sessions sending VCB to the top as the new VN-Index pacemaker.

"Unfortunately, the wash-out was big enough to stagnate the trading in VCB," he said, blaming the media for mentioning a new VN-Index calculation at an inopportune moment.

"Blue chips are the most popular stocks among foreign investors and exchange-traded funds who seems to be the most active in domestic markets right now," he said, revealing that this sector purchased a net VND74.2 billion (US$3.5 million) last week, compared to VND45.5 billion ($2.2 million) in the previous week.

"But the recalculation plan (which may not be governed by blue chips) might worry them to boost sell-offs or restructure their investment portfolio," he added, noting substantial sell-offs by this sector last Friday.

The value of the HCM City Stock Exchange enjoyed a 16 per cent increase over the previous week to VND517 billion ($24.6 million) per day on an average volume of 26 million shares traded. On the Hanoi Stock Exchange, the HNX-Index fell 6.12 percent last week, plunging to a historic low of 76.98 points.

The value of the Hanoi market rose 2.76 percent to VND306.4 billion ($14.6 million) per session, with nearly 25 million shares traded each day.

"Although the value sounds higher and hints at attempts to buy at low prices, the figure is modest," said analysts at FPT Securities, who blamed the poor performance on instabilities in the credit system.

They noted the deposit rates on the open-market which increased from 14 per cent to 15 per cent, and the climbing deposit rates in commercial banks forced the State Bank of Viet Nam to post more warnings to credit institutes.

"It sounds like the State Bank is insisting on the target to curb inflation," Khanh said. "As a result, the stock markets may continue this bearing until the third quarter".

The May inflation rate for Ha Noi City was released late last week revealing a lower increase of 1.76 percent compared to the March and April rates. The nation's inflation rate is expected to be lower in May, "but this hardly encourages a loosened monetary system right away", said Khanh. The FPT Securities' analysts said that the sharp fall last week might create some technical rallies this week "but the capital boost could remain cautious".


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This year in Thailand-what next?

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By David Swartzentruber      

It is commonplace in journalism to write two types of articles at the transition point between the year that has passed and the New Year. As this writer qualifies as an “old hand” in observing Thailand with a track record dating back 14 years, it is time take a shot at what may unfold in Thailand in 2011.

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