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ASEAN STOCK WATCH Asean Affairs   24 May 2012

ASEAN Market Outlook

 By Shayne Heffernan Ph.D.

ASEAN markets are set to rally after the USA session erased losses in the last part of the day.

Stocks staged a late-day reversal on Wednesday, rallying into the close as a sharp rise in materials shares boosted the S&P 500 and gains in Apple helped lift the Nasdaq.


Betagro Group will spend 3 billion baht to expand its food-processing business this year.

Some 600 million baht has already been spent on Betagro MS Deli's sausage and cooked-food factory in Lop Buri province, said Athapol Uraipriwan, senior vice-president for corporate marketing.

The factory, which began operation in March, is a 80-20 joint venture between Betagro and Marudai of Japan.

It has a capacity of about 800 tonnes per month for export, mainly to Japan. Betagro MS Deli targets 200 million baht in sales in its first year of operation.

The remaining budget will be used to build a new food-processing plant in Khon Kaen province, improve its existing facilities and establish a new feed mill in Lop Buri.

The construction of the feed mill will be completed in the third quarter of this year. The output is split evenly between Betagro and outside customers.

Sales of Betagro Group this year are expected to reach 68 billion baht, up from 60 billion baht last year. Of the total, about 70% will come from the domestic market and the balance exports.

For overseas markets, about 55% of the products are exported to Europe and the remaining 45% to Japan.

"Though the European economy is facing a slowdown, our sales volume has not been affected because market demand continues to grow. However, sales value has declined slightly," Mr Athapol said.


Formula One has been given the go-ahead for a US$2.5 billion share sale in Singapore, a source close to the deal told AFP Tuesday, but analysts said conditions may not be ideal after Facebook's recent disappointment.

Private equity firm CVC Capital Partners, which has a majority stake in the glitzy motor sport's holding company, will gauge interest among investors and fund managers with a view to selling part of its stake at the end of June.

The source said the Singapore Exchange had approved a listing by Formula One, which has been rumored for the past two months.

A spokesman for the bourse, citing standard policy, said: “It is not our practice to publicly comment on our dealings with listing aspirants.”

Singapore hosts a popular Formula One night race, one of 20 stops on the F1 tour this year, and has a strong fanbase for the sport. This year's Singapore Grand Prix is scheduled for September 23.

An F1 initial public offering (IPO) would likely translate into a profit for CVC Capital Partners, which owns 63.4 percent of F1's business after it bought a majority stake in the racing company for US$2.5 billion in 2006.

F1 supremo Bernie Ecclestone who, the source said, owns 5.3 percent of the business, could gain financially if the stocks rise, but one analyst said the IPO would dilute some of his powers.

“It doesn't really matter to him (Ecclestone) directly if it is listed in Singapore or elsewhere,” said Jason Hughes, head of premium client management at IG Markets Singapore.

“The IPO will see him lose power somewhat, he may become a less dominant head of the sport,” Hughes told AFP.

The listing would be the biggest IPO this year in Singapore, which also approved a float by Manchester United in September.

However the English Premier League football club, which has a massive Asian following, is said to be awaiting better market conditions.

Some companies are looking at Asia's cash-rich markets to raise funds as Europe grapples with a debt crisis and the United States pursues a fragile recovery.

Dow Jones Newswires said order-taking international roadshows would begin in the second week of June.

But the suggested timing of the IPO is considered brave after turbulence returned to global financial markets last week amid renewed fears over the eurozone.

News of the F1 offering, which could raise as much as US$3 billion, follows Friday's float of Facebook on Wall Street, which valued the web giant at US$104 billion, but saw its shares plunge 11 percent Monday.

“We have to look at how Facebook has performed. It fell heavily after a couple of days of trading and there is no reason to believe that Formula One will be immune to such a reaction,” Hughes said.


Capital spending by the government is expected to reach 25 percent of the state budget in the second quarter of this year, Deputy Finance Minister Anny Ratnawati said.

In the first quarter, spending on government projects was only 10 percent of the budget, she said.

Capital spending was set at Rp 168 trillion ($18.1 billion) in the government’s proposed state budget for 2012, while total spending was set at Rp 1,548.3 trillion.

“Capital spending should hover around 25 percent because some of the projects have been offered for tender and the disbursement of funds will have to be rolled out,” Anny said.

Typically, officials from the central and regional governments have been slow on spending in the first half of the fiscal year, in part out of fear of being investigated by the Corruption Eradication Commission (KPK) for the misuse and mismanagement of state funds.

Capital spending refers to, among other things, government-related projects such as roads and bridges.


Japan will start negotiations on an investment treaty with Burma on Wednesday, the trade ministry said, as corporations around the world scramble to do business in one of the last frontier markets in response to encouraging political reforms.

The earliest possibility for an agreement would be a November summit of the Association of Southeast Asian Nations (ASEAN) and Japan in Cambodia, although the trade ministry said there was no pre-set schedule.

“Since many Japanese private companies are trying to do business with Burma, we want to reach the agreement as soon as possible,” a ministry official said.

Japan, which occupied Burma, also known as Myanmar, from 1942-45, will seek most-favored-nation status, meaning Burma would have to grant Japan at least as favorable conditions it grants other nations, the official said.

The United Stated last week suspended sanctions barring US investment in Burma in response to political reforms in the nation.  Burma’s reformist, quasi-civilian government took office a year ago and has started overhauling its economy, easing media censorship, legalizing trade unions and protests, freeing political prisoners and agreeing to ceasefires with ethnic minority rebels.

Nobel Peace Prize laureate and pro-democracy leader Aung San Suu Kyi has a seat in parliament. Analysts and experts have said there will be opportunities for foreign companies across the industrial landscape — from energy, mining and construction to agriculture, finance and tourism.

Japan’s move follows an announcement in April to write off $3.7 billion debt owed by Burma and restart development loans.


Malaysia’s economy grew at an annual pace of 4.7 percent in the first quarter of 2012, slowing from the previous three months as a struggling export sector weighed on the economy despite firm domestic demand, the central bank said on Wednesday.

The first-quarter growth, which beat economists’ expectations of a 4.5 percent expansion, comes as Malaysia’s net exports slumped 20.8 percent from a year ago.  

“For the Malaysian economy, domestic demand is expected to remain resilient, supported by continued expansion in private sector economic activity and public sector expenditure,” the central bank governor Zeti Akhtar Aziz said in a news conference.

Private consumption rose 7.4 percent from a year ago, while public spending increased 5.9 percent. Malaysia’s economy grew 5.2 percent year-on-year in the last three months of 2011, beating economists’ expectations, but has been slowing since the third quarter of last year as the country feels the effects of weaker global activity.


The Sterling Bank of Asia, the thrift banking arm of the Tiu family, grew its net profit in 2011 by 7 percent to P126.31 million on higher interest income on loans and bigger trading gains.

“Despite last year’s global challenges, prudent management allowed us to consistently weather the storms and maintain profitability,” Sterling Bank president Lamberto Villena said in a press statement.

The bank’s 2011 interest income amounted to P1.7 billion, 20 percent higher than the level in the previous year. Trading gains amounted to P348.82 million, 47 percent higher than the previous year’s level.

Sterling Bank’s assets stood at P26.77 billion at the end of 2011, a 13 percent expansion from the previous year. Its loan book amounted to P14.69 billion while its deposit base stood at P23.89 billion.

Established in March 2007, Sterling Bank is among the 11 thrift banks (out of 70 industry players) with a quasi-banking license. It also has an authority to operate a foreign currency deposit unit, trust operations, engage in derivatives and grant letters of credit for importers.

Yesterday in Asia

Tokyo tumbled 1.98 percent, or 172.69 points, to end at 8,556.60, Seoul fell 1.10 percent, or 20.07 points, to 1,808.62 while Sydney slumped 1.31 percent to close 54.0 points weaker at 4,067.0.

Hong Kong closed 1.33 percent, or 252.96 points lower at 18,786.19 and Shanghai fell 0.42 percent, or 9.87 points, to 2,363.44.

Manila closed 0.60 percent, or 29.90 points, down at 4,928.53.

SM Investments dropped 1.18 percent to 669.50 pesos and Philippine Long Distance Telephone fell 0.42 percent to 2,382 pesos.

– Wellington closed 0.56 percent, or 19.66 points, lower at 3,510.20.

Telecom Corp. was off 2.46 percent at NZ$2.575 and Fletcher Building was down 1.25 percent at NZ$6.30.

– Singapore closed down 1.53 percent, or 43.33 points, to 2,780.42.

Wilmar International fell 4.04 percent to 3.80 and Singapore Telecommunications shed 0.96 percent to 3.10.

– Kuala Lumpur shares ended 0.46 percent, or 7.13 points, lower at 1539.71.

Genting lost 2.3 percent to 10.02 ringgit, British American Tobacco eased 2.0 percent to 51.74 and MMC Corp shed 1.5 percent to 2.66.

– Bangkok fell 1.84 percent, or 20.82 points, to 1,110.70.

Banpu added 0.43 percent to 464 baht, while Siam lost 1.52 points to 135.50 baht.

– Jakarta closed down 0.98 percent, or 39.52 points, to 3,981.57.

Car maker Astra International declined 1.6 percent to 67,750 rupiah and Bank Mandiri fell 1.4 percent to 7,050 rupiah.

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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