ASEAN KEY DESTINATIONS
ASEAN Markets to Trade Mixed Shayne Heffernan
ASEAN Markets to Trade Mixed
Pressure from falling USA and European markets will have a negative impact today in ASEAN, however the local news is good, China is staging a strong rebound, Thailand is finished and the energy sector around the region is recapitalizing. Expect a flat to lower day in ASEAN today.
Moody’s Investors Service said it was maintaining its negative outlook on Thailand’s Baa1 rating but was not downgrading for now. I would not give much thought to the Moody’s opinion they tend to be after the event ratings now as the firm avoids any real predictive role.
Some foreign investors are wary of the Thai market despite its cheap valuations because of the imagined political risk and the hype about the damage wrought on the economy by the unrest in April and May.
Fact is the economy grew 3.8 percent in the first three months of 2010 from the previous quarter, but economists and the government are worried the second quarter will see a minor contraction.
Thailand’s government will extend some property tax breaks for a month to June to help home buyers in the wake of political unrest that has disrupted economic life, Finance Minister Korn Chatikavanij said on Monday.
Thailand is Southeast Asia’s cheapest bourse in terms of valuations, trading at a forward price-to-earnings ratio of 10.4, attractive to many investors.
Foreign investors sold shares worth a net 7.75 billion baht ($239 million) after selling 11.6 billion baht last week. They are net sellers on the year of 8 billion baht, not bad considering the Euro Zone crisis and the local protests.
The Thai index finished 2.8 percent lower, having hit its lowest since April 20 at one point then recovering.
The Jakarta Composite Index initially looked like it might recover some of last week’s heavy losses, rising 1.2 percent in early trading on Monday, before succumbing to selling in the afternoon.
Analysts said the afternoon reversal was partly due to rumors that highly leveraged PT Bumi Resources, Indonesia’s biggest coal producer, planned to conduct a rights offering to raise cash.
The JCI fell 13.61 points, or 0.5 percent, to close at 2,609.61, sliding for a fourth-straight day. Some 6.3 billion shares worth Rp 4.6 trillion ($496.8 million) changed hands. Decliners outnumbered gainers 121 to 72.
Norico Gaman, head of research at PT BNI Securities, said traders were encouraged by gains on Wall Street on Friday and easing fears over the Greek debt crisis, but sentiment turned sour after rumors surfaced of the Bumi rights offering.
“The market is still sensitive right now. Investors saw that the rights issue would dilute their shares, so they started selling their shares until the rumor was cleared up,” Norico said.
Dileep Srivastava, head of investor relations at Bumi, said the company had no intention to conduct a rights offering but the coal miner plunged 16 percent anyway.
The rupiah made a slight 0.1 percent gain from the day before, extending its rebound from a two-week low, on speculation the central bank intervened to combat recent weakness in the currency. It was trading at 9,265 against the dollar at 4:07 p.m. in Jakarta. It declined 1.6 percent last week, touching a low of 9,363 on May 21, as overseas investors cut their holdings of the nation’s shares by $274 million.
“The rupiah will consolidate, in part because of central bank intervention,” said Joanna Tan, a regional economist at Forecast Singapore. “Any sharp movement would see the central bank coming in.”
On the stock market, other coal miners also suffered, as oil fell below $70 a barrel in overnight trading in New York. Power-station coal prices at Australia’s Newcastle port, a benchmark for Asia, fell 4.3 percent to $97.80 a metric ton in the week to Friday, falling for a third straight week.
PT Adaro Energy fell 2.2 percent, while PT Indo Tambangraya Megah, a unit of Thai coal miner Banpu, declined 3.9 percent.
Singapore commodities and banks led gains, with Wilmar International (WLIL.SI) up 2.7 percent, while Oversea-Chinese Banking Corp (OCBC.SI) rose 0.7 percent and United Overseas Bank (UOBH.SI) was up 0.8 percent.
In Kuala Lumpur, Sime Darby (SIME.KL) fell 3.3 percent on fears Malaysia’s second-biggest company by market value may have to set aside more money for potential losses at its energy division.
In Manila, foreign investors sold a net $4.1 million of stock but the market rose, with a 3.7 percent rise in Manila Electric (MER.PS).
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