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Be selective in ASEAN today, China's services sector slowed sharply in April to its lowest point since August 2011, a private sector survey showed on Monday - fresh evidence of rising risks to a revival in the world's No.2 economy.
The HSBC services Purchasing Managers' Index (PMI) fell to 51.1 in April from 54.3 in March, with new order expansion the slowest in 20 months and staffing levels in the service sector decreasing for the first time since January 2009.
Two separate PMIs last week had already shown that China's manufacturing sector growth slowed [ID:nL3N0D5569], With the weakness spreading to services, which make up almost half of gross domestic product, the risk to the recovery may be increasing.
"The weak HSBC service PMI figure provides further evidence of a slowdown not only in the factory sector but also in the service sector," said Zhang Zhiwei, chief China economist at Nomura Securities in Hong Kong.
"This confirms our worries about insufficient growth momentum in the economy, which we expect to slow to 7.5 percent in the second quarter."
The HSBC services PMI follows a similar survey by China's National Bureau of Statistics, which found non-manufacturing activity eased to 54.5 from 55.
Readings above 50 indicate activity in the sector is growing, while those below 50 indicate it is contracting.
Philippine Stock Exchange index closed 44.7 points or 0.62-percent weaker at 7,170.65, wiping out gains after a strong opening. Earlier in the session, the index hit a new record high of 7,284.34, tracking the upbeat trading in Wall Street last Friday. The recent upgrade of Philippine sovereign credit to investment grade by Standard & Poor’s, the second global credit watchdog to do so, also contributed to the early rally alongside expectations of further cuts in the special deposit accounts (SDAs) by the Bangko Sentral ng Pilipinas.
It was reported Monday that BSP Governor Amando Tetangco Jr. could not rule out further cuts in the SDAs after the 150-basis point cut already sanctioned so far this year. Dealers said the market had digested most of the good news, particularly the S&P rating upgrade, and needed to pause for a correction.
All counters ended in the red. There were 78 advancers, which were outnumbered by 95 decliners, while 48 stocks were unchanged. Value turnover stood at P8.77 billion.
The market sold down shares of Jollibee (-3.24 percent), AEV (-3 percent) and ICTSI (-2.84 percent). Shares of Megaworld and Belle faltered by more than 2 percent while those of RLC, Bloomberry, Philex and AP fell more than 1 percent. Also among the decliners were SMIC, AGI,
Metrobank, AC, BDO, BPI and ALI.
On the other hand, the PSEi’s decline was tempered by the gains of Petron and SM Prime. Outside of the PSEi, Puregold (+1.72 percent), LTG (+5.47 percent), GT Capital (+0.57 percent), Vista Land (+0.57 percent) and PNB (+0.43 percent) gained in heavy volume.
KLCI surged to an all-time high of 1,826 early Monday, while the ringgit advanced to the highest since 1997 against the US dollar, after the Barisan Nasional won 133 parliamentary seats at the 13th General Elections to continue to rule the country.
The relief rally broke past all technical indicators, surging 131.45 points or 7.75%, while CIMB Equities Research upgraded Malaysia from Neutral to Overweight and raised its end-2013 KLCI target from 1,640 to 1,850.
At 9.48am, the KLCI was up 55.88 points to 1,750.65. Turnover was 433.36 million shares valued at RM1.39bil. There were 557 gainers, 33 losers and 69 counters unchanged.
The ringgit had earlier surged to 2.9625 against the greenback. This was the strongest before the local unit was pegged to the US dollar during the Asian Financial Crisis in 1998.
BAT rose RM3.04 to RM65.40, PetGas RM1.30 to RM20.86, CIMB 73 sen to RM8.34 while KLK gained 66 sen to RM21.60.
HLFG rose 66 sen to RM15.96, Genting 55 sen to RM10.54 and PPB Group 34 sen to RM12.94.
Public Invest Research said with the largest overhang on markets out of the way, the next question was the positioning of the investors' portfolio for the months ahead.
"Our suggested stocks at the end of last year has yielded a year-to-date return of about 10.9% versus the weighted- benchmark index return of 2.3%, amplifying our point of a winning strategy (for now) coming from stock-specific investments," it said.
Hwang DBS Vickers Research said in terms of share price actions, counters that will probably attract added interest this week include construction plays - Gamuda, MMC, MRCB and IJM - as mega infrastructure projects (such as MRT, LRT system extensions and high-speed rail) will proceed according to plans.
HDBSVR said market laggards like CIMB and DRB-Hicom would see trading interest while Tenaga might benefit from tariff hikes arising from the implementation of a proposed fuel cost pass-through formula.
Automotive companies - UMW, APM and MBM - could see trading interest in response to a likely announcement of a national automotive plan in the near future (following the Barisan Nasional coalition's promise to gradually reduce car selling prices in its election manifesto).
Hong Kong shares rose 0.99 percent, or 225.13 points, to close at 22,915.09 while Shanghai advanced 1.16 percent, or 25.67 points, to 2,231.17.
Sydney added 0.52 percent, or 26.7 points, to 5,156.2. Tokyo and Bangkok were closed for holidays.
Malaysian shares soared as much as 7.76 percent to a record high of 1,826 points as investors welcomed the poll victory of the ruling Barisan Nasional coalition, which retained power by a comfortable margin in Sunday’s general election.
Profit-taking pared the early gains, with Kuala Lumpur closing up 3.38 percent, or 57.25 points, at 1,752.02.
– Singapore closed up 0.37 percent, or 12.39 points, at 3,382.29.
Singapore Telecommunications gained 1.05 percent to Sg$3.85 while DBS Bank was up 0.29 percent at Sg$17.45.
– Jakarta added 1.35 percent, or 66.39 points, to 4,991.87.
Palm oil firm Astra Agro Lestari gained 1.42 percent to 17,900 rupiah while carmaker Astra International rose 1.45 to 7,000 rupiah.
– Taipei rose 0.42 percent, or 34.02 points, to 8,169.05.
Taiwan Semiconductor Manufacturing Co. gained 1.36 percent to Tw$111.5 while leading integrated chip design house MediaTek was 1.64 percent higher at Tw$372.5.
– Manila closed down 0.62 percent, or 44.70 points, to 7,170.650 after last-minute selling reversed earlier gains.
Philippine Long Distance Telephone Co. shed 0.51 percent to 3,074 pesos and Ayala Corp. dropped 0.30 percent to 660 pesos.
– Wellington advanced 1.14 percent, or 51.91 points, to 4,596.23.
Fletcher Building was up 1.99 percent at NZ$8.19 and Telecom Corp. rose 2.10 percent to NZ$2.68.
– Mumbai rose 0.50 percent, or 98.0 points, to 19,673.64 points.
Leading steel producer Tata Steel rose 3.58 percent to 322.35 rupees while the country’s biggest IT outsourcer TCS rose 3.25 percent to 1,464.85 rupees.
Shayne Heffernan Ph.D.
Economist/Hedge Fund Manager
Live Trading News
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