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||Asean Affairs 10 November 2011
Asean Stock Watch-November 10
US Stocks tumbled 3 percent on Wednesday in the market's worst day since mid-August as a spike in Italian bond yields signaled the European debt crisis had worsened.
All 10 S&P sectors were down, but S&P financials were the hardest hit on worries about European exposure, dropping 5.4 percent.
U.S. stock markets have grown more chaotic in response to rising volatility in European debt markets, and investors have trouble keeping up with a steady stream of headlines and pricing in how the crisis might play out.
"The market has turned into a derivative of what happens in Europe now," said Craig Hodges, president of Hodges Capital Management in Dallas, Texas.
The Dow Jones industrial average was down 389.24 points, or 3.20 percent, at 11,780.94. The Standard & Poor's 500 Index was down 46.82 points, or 3.67 percent, at 1,229.10. The Nasdaq Composite Index was down 105.84 points, or 3.88 percent, at 2,621.65.
Dominating market moves are "day traders and people trying to capture and skim fractions of decimals off stocks," Hodges said.
The spread of the crisis to Italy has lifted it to a new level. European Union sources said German and French officials were discussing drastic plans, including an overhaul that would possibly create a smaller euro zone.
Italy's bond yields shot up to 7.502 percent, a new high since the euro was introduced in 1999. Investors were forced to sell Italian bonds after a European clearing house increased the collateral needed to borrow against that debt.
The 7 percent level was the point where European nations, including Ireland and Portugal, had to seek bailouts as their financing costs ballooned.
General Motors Co slid 10.9 percent to $22.31 after the automaker said it would not break even for the year in Europe, as it had forecast, due to deteriorating conditions in the region.
The S&P 500 saw its worst daily percentage drop since August 18.
Stocks advanced for the second day on Wednesday amid optimism that the central bank will cut its key interest rate at this week’s meeting in a move that would help protect economic growth.
The Jakarta Composite Index gained 51.72 points, or 1.4 percent, to 3,857.36, extending Tuesday’s 0.7 percent advance. Almost 4.2 billion shares worth a total of Rp 5.2 trillion ($588 million) changed hands. Orders totaled 121,246 transactions, up 40 percent from Tuesday. Gainers outnumbered decliners, 142 to 63. Foreign investors bought Rp 843 billion more in shares than they sold.
Bank Indonesia’s committee responsible for monetary policy meets today, and some economists expect the key interest to be reduced by a quarter percentage point to 6.25 percent.
Lower borrowing costs would encourage consumers to take out loans that they would use to purchase goods such as cars and motorcycles. Indonesian bank lending in 2011 may be at least 24 percent ahead of last year, Bank Indonesia deputy governor Halim Alamsyah said in Jakarta on Wednesday.
“There is a possibility that the rate will be cut at Thursday’s meeting. It led the financial sector to a decent gain on Wednesday,” said Janson Nasrial, an analyst at AmCapital. He said the room to cut interest rates is increasing with the inflation heading lower and increasing concerns of a global economic slowdown.
Bank Mandiri, Indonesia’s biggest bank by assets, gained 2.1 percent to Rp 7,400 and Bank Rakyat Indonesia, the second-largest by market value, rose 2.9 percent to Rp 7,050.
Still, concerns about Europe’s debt position persisted after Indonesia’s market closed. Italy’s borrowing rates spiked beyond the 7 percent threshold that forced other euro zone countries to seek bailouts, a day after Prime Minister Silvio Berlusconi said he would step aside after the passage of economic reforms.
The FMB KLCI closed higher today by 9.18 points or 0.62 percent to 1,489.64 while its regional counterparts Nikkei 225 climbed 99.93 points or 1.15 percent to 8,755.44, the Hang Seng ended higher by 335.96 points or 1.71 percent to 20,014.43, Shanghai Composite Index was 21.08 points or 0.84 percent higher to 2,524.92 and the Kospi Index was 4.39 points or 0.23 percent higher to 1,907.53.
However, Straits Times Index closed lower by 5.35 points or 0.19 percent to 2,861.17. According to HwangDBS, FBM KLCI could pull away from the immediate support level of 1,475 going ahead.
Among the top three gainers in FBM KLCI today were DLady that gained 50 sen to RM21, BAT increased 40 sen to RM46.60 and UTDPLT climbed 30 sen to RM17.88.
For the heavyweights, Axiata added 13 sen to RM4.96, Sime Darby gained 12 sen to RM8.92 and Genting was up 14 sen to RM11.
Philippines share prices on Wednesday advanced after the Italian prime minister agreed to step down, renewing optimism that Europe may contain its debt crisis.
At the Philippine Stock Exchange, the composite index rose 31 points, or 0.73 percent to 4,346.20, while the broader all-shares index lost 1.35 points, or 0.04 percent to 3,025.80.
Gainers beat losers, 85 to 59, while 41 stocks were unchanged. A total of 4.88 billion stocks worth P3.998 billion changed hands.
“Italian leader Silvio Berlusconi’s offer to resign, conceding to a growing call which resulted in losing a majority in parliament, greeted investors and raised optimism sending equities across Asia higher,” said Jun Calaycay of Accord Capital Equities Corp.
“Europe, despite new developments with a positive spin, remains wrapped in uncertainties. The easing of political tensions only directs the focus back to the economy, but does not solve it outright,” said Calaycay.
The market’s rise may also be attributed to corporate earnings, which have been generally positive as most reporting entities showed decent year-on-year growth in their bottom lines, the analyst said. Resistance of the index is at 4,330, while support is at the 4,270 to 4,300 range.
At the Philippine Dealing System, the peso gained 9.5 centavos to close at 43.050 to the dollar from 43.145 the previous trading day.
The dollar-peso pair opened at 43.00 with bids ranging from a high of 43.060 to a low of 42.950. Total trading volume surged to $1.062 billion from $800 million the previous trading day. Security Bank said in a commentary that the pairing was affected by risk appetite as markets shifted focus to Italy’s Berlusconi.
It added that the market took the resignation as a positive development, causing a rally across the region.
In a separate commentary, Metropolitan Bank and Trust Co. said it expects the dollar-peso pair to trade at the 42.60 to 43.50 range within the week.
Singapore shares closed lower on Wednesday, with the benchmark Straits Times Index at 2,858.66, down 0.27 percent, or 7.86 points.
About 1.5 billion shares exchanged hands.
Losers beat gainers 236 to 227.
The Stock Exchange of Thailand main index went down 15.60 points or 1.59 percent to close at 967.84 points at the end of trading session on Wednesday Afternoon. The trade value was 33.27 billion baht, with 4.26 billion shares traded.
The SET50 index ended at 682.33 points, down 13.53 points or 1.94 percent, with a total trade value of 25.53 billion baht.
The SET100 index fell 27.33 points or 1.82 percent to stand at 1,476.92 points, with a total turnover of 30.51 billion baht.
The SETHD index went down 17.05 points or 1.73 percent to stand at 966.24 points, with total trade value of 9.09 billion baht.
The MAI index rose 2.40 points or 0.95 percent to close at 255.12 points, with total transaction value of 550.84 million baht.
The five most active values were:
PTTGC closed at 65.00 baht, down 2.75 baht (4.06 percent)
PTT closed at 296.00 baht, down 10.00 baht (3.27 percent)
JAS closed at 1.81 baht, up 0.05 baht (2.84 percent)
BANPU closed at 582.00 baht, down 12.00 baht (2.02 percent)
SCC closed at 322.00 baht, up 1.00 baht (0.31 percent)