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ASEAN STOCK WATCH Asean Affairs   9 May 2012

Asean Market Preview

By Shayne Heffernan Ph.D.
 

Trading is expected to remain volatile as Greece struggles to form a government after voters punished pro-austerity parties, however Asia will see a rally today.

Yesterday

Japan’s Nikkei 225 index edged up 0.6 percent to 9,172.09, a day after closing at its lowest level in three months. Hong Kong’s Hang Seng rose 0.3 percent to 20,596.28.

South Korea’s Kospi added 0.5 percent to 1,966.34 while benchmarks in Taiwan and Singapore also rose. As often happens, mainland Chinese stocks ran contrary to overseas trends and fell.

Overnight in the USA

U.S. stocks fell, sending the Standard & Poor’s 500 Index to about a one-month low on a closing basis, as Greece’s struggle to form a government intensified concern about a euro exit and deepening of the region’s debt crisis.

The S&P 500 slid 0.4 percent to 1,363.67 at 4 p.m. New York time. The S&P 500 pared a decline of as much as 1.6 percent in the final hour of trading.

Thailand

The Government reset of the minimum wage in a number of provinces has of course sparked a surge in food prices.

The prices of many basic items has seen strong inflationary pressure as the new minimum wage has hit the streets.

Core inflation, which removes raw food and energy prices, was at a 12-month low of 2.13%, but it is energy and food prices that are soaring.

As the wage legislation expands through out the other provinces this inflationary pressure will increase dramatically.

For now the Government is trying to artificially offset higher prices by searching out cheaply priced consumer products and begin selling them to people at low prices by the end of the week, Commerce Minister Boonsong Teriyapirom said on Tuesday.

Agencies under the Commerce Ministry are inspecting product prices and will open shops to sell consumer products at low prices soon, he said.

He said he and Deputy Agriculture and Cooperatives Minister Nattawut Saikuar had also discussed plans to open shops selling Otop goods at cheap prices nationwide.

Deputy Public Health Minister Surawit Khonsomboonsuk said the premier instructed the Commerce Ministry to produce handbooks for cabinet ministers to use comparing different product prices in the market.

Asia Real Estate

China

A customs office report due May 10 may show exports grew 8.5 percent in April from a year earlier, compared with 8.9 percent in March, according to the median estimate of 28 economists surveyed by Bloomberg. The statistics bureau is scheduled to release April economic data including inflation and industrial production on May 11.   

China’s gross domestic product grew 8.1 percent in the first quarter, the slowest pace in more than two years, as the housing market cooled and export growth slowed.    

A total of 60,000 square meters of residential land were sold in 20 major Chinese cities from April 30 to May 6, a drop of 92 percent from the previous week, Soufun Holdings Ltd. said in an e-mailed statement yesterday. None of the 20 cities sold a single residential plot other than Shanghai, it said.    

Chinese homeowners protested at three property companies in Hangzhou, near Shanghai, on May 3, 4 and 5 against discounts offered to attract new buyers, the Xiandai Jinbao newspaper reported, without citing anyone.  

Foreign Investment has started once again to pour into the Chinese commercial real estate market as Chinese developers are selling properties to survive a lag in cash flow, Beijing Business Today reported.

On Monday, US-based Pramerica Financial Group acquired a large shopping center development in Guangzhou for 2 billion yuan through a subsidiary after a year of negotiations.

According to sources, the Haizhu District property covers a land area of 100,000 square meters. The complex consists of a supermarket, a cinema, restaurants, and several dozen retail outlets. The property has inked lease letters of intent with many well-known brands for its retail space. The seller was a listed division of China Overseas Holdings Ltd. It was the first time for the city to see a commercial property project wholly acquired by a foreign company.

In late April, the Poly Real Estate Group also sold a Beijing property to Singapore's Capitaland for 2.3 billion yuan.

According to Jones Lang LaSalle, a US-based real estate service firm, in 2011, trade deals involving Chinese mainland retail properties reached a new peak of 26.5 billion yuan. 90 percent of the investment was from Asian countries, especially Singapore, and domestic capitals.

"Foreign funds such as The Carlyle Group and Blackstone Group are all looking to find properties to invest in, and Chinese developers in second and third tier cities like Zhengzhou and Changchun want to sell [their properties] for cash," Zhang said.

Huge foreign funds usually appear at the Chinese market in the time of lowest prices and hardest restrictions. In 2009, the Chinese real estate market exploded. At that time, Goldman Sachs, SEB, J.P. Morgan, Carlyle, Citibank, and Lehman Brothers all sold their Chinese properties they bought at the lowest point in the market, and received more than 100 percent reward. The buyers were all Chinese. Now the cycle looks like it is going back again.


Singapore

Prospects of higher investment yields are driving demand and prices of industrial properties.

The robust economic growth since the rebound from the US debt crisis in 2008 has generated a lot more economic activity. This has boosted demand for industrial space in Singapore in the last two years.

Latest URA data shows industrial property prices have bucked the general downtrend and grew by 7.2 per cent in the first quarter this year, compared to the previous quarter. Prices of residential property meanwhile, dipped marginally by 0.1 per cent from the previous quarter.

Experts said low-interest rates and high liquidity in the market have kept industrial property prices on the high. Analysts also said that a "healthy" occupancy rate of industrial properties at 93 per cent suggest that a price correction is not on the cards yet.

Alan Cheong, head of research at Savills, said: "For the first quarter of this year, the strength of the price and rental increases will push that momentum into the second quarter. We expect to see prices for multi-user warehouse and multi-user industrial space to rise by six to eight per cent, a similar strength to what we saw for the first quarter of this year."

Meanwhile, analysts are cautious, saying that the uptrend may not be sustainable.

The slowing economy may cause demand for industrial properties to slacken and cause prices to dwindle lower as well. While rentals may come down, yields could still be attractive at five per cent. This is because an industrial unit could cost an investor as low as S$400,000, although the use of CPF is not allowed.

Some have even suggested that the elevated prices have raised concerns of a potential bubble forming.

Chia Siew Chuin, research director at Colliers, said: "The higher prices we see now is probably the result of a skew, because of higher prices that we have achieved due to smaller units for industrial premises being sold. The government has already put in subtle measures, but they are just development guidelines, in a way, to achieve a more stabilised market going forward."

Analysts do not believe that authorities will implement measures to cool the industrial property market, which makes up only about one-tenth of property transactions. They said any measures may need to be targeted on investors so as to protect businesses that have bought industrial property as a hedge against future rental increases.

Thailand

Thailand

New Guide to Buying Real Estate in Thailand Released

Thailand Property Buyer’s Guide explains the legal fees, legal procedures, taxes and mortgage procedure.

Overseas buyers can purchase Thai residential or commercial property without major restrictions.

There are a number of ways to own Real Estate in Thailand in a foreigners name,

1. Around 40% of Apartments and Condominiums can be owned by foreigners.

2. We have Industrial Land available for commercial use that has an exemption and may be owned in a foreigners name.

3. You can become the Mortgage holder and lessee of land.

Shayne Heffernan Ph.D.  

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



 


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AseanAffairs   04 January 2011
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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