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ASEAN STOCK WATCH Asean Affairs   11  November  2010

ASEAN Markets Headed Higher

Shayne Heffernan

ASEAN Markets look set for a broad based rally today after a positive night in US markets.

News on US Jobs and a Shrinking US Trade Gap will help ASEAN Markets build on their incredible rally in 2010.US stocks erased their morning losses Wednesday, moving tepidly in and out of positive territory in late trading as global concerns continued to weigh ahead of a meeting of world leaders.

Dow Jones 11,357.04 +10.29 (0.09%)

S&P 500 1,218.71 +5.31 (0.44%)

Nasdaq 2,578.78 +15.80 (0.62%)

Philippines will bounce back today and Ayala looks like great buying there.

In Thailand UVAN, PTT and IVL look best.

In Singapore Wilmar and DBS are both great buys.

In Malaysia Yee Lee stands out as great value.

In Jakarta Bank ICB Bumiputera is a bargain.

In Jakarta the index advanced 19.48 points, or 0.5 percent, to 3,756.97 to a new all time high.

More than eight billion shares valued at Rp 7.6 trillion ($847.3 million) changed hands. Decliners outnumbered gainers 137 to 71.

Krakatau, the nation’s top steel producer, surged 49.4 percent to Rp 1,270 in its first day of trading to lead gains on the JCI.

The state-owned company raised Rp 2.7 trillion from its initial public offering last week, with share prices at Rp 850.

Krakatau plans to invest Rp 3.3 trillion next year to expand production capacity, said its president director, Fazwar Bujang.

Telekomunikasi Indonesia, the nation’s top telecom, advanced 3.7 percent to Rp 8,450. Shares rose after Telkom’s finance director, Sudiro Asno, said its Flexi unit’s merger with Bakrie Telecom would be less costly than expected.

Bank Rakyat Indonesia, the country’s second-biggest lender by market capitalization, rose 0.4 percent to Rp 12,500 on expectations it would win shareholder approval this month to buy a 76 percent stake in Bank Agroniaga.

Astra Agro Lestari, Indonesia’s biggest listed plantation company, advanced 3.1 percent to Rp 26,800. The company may spend $150 million in capital expenditure next year, Investor Daily reported.

Among decliners, Bank ICB Bumiputera plunged 34 percent to Rp 103. Traders said the shares had soared after the insurer’s nine-month revenue far surpassed forecasts, prompting investors to bank gains.

The rupiah strengthened to 8,879 per dollar at the market’s close on Wednesday, compared with 8,930 a day earlier.

The rise was largely driven by the rally in Indonesian stocks as foreign investors continued to seek high returns in assets here.

“We have a hot market,’’ Fauzi Ichsan, a senior economist at Standard Chartered, said at a summit held by the IDX and the Capital Market and Financial Institution Supervisory Board. “The [central bank] has been intervening to protect the nation’s exports.”

Without intervention, “the rupiah might have strengthened to as strong as 8,500 level by now,” he said.

According to exchange data, global funds have bought $2.3 billion more local stocks than they have sold this year.

In Manila the Philippine Stock Exchange index lost 68.88 points or 1.6 percent to finish at 4,197.57.

Value turnover amounted to P6.7 billion. There were nearly five decliners for every single gainer.

The Losers Ayala Corp., DMCI Holdings Inc., Banco de Oro Unibank, Megaworld Corp., Energy Development Corp., Aboitiz Power Corp., International Container Terminal Services Inc., Globe Telecom Inc., Metropolitan Bank & Trust Co., Metro Pacific Investments Corp., Bank of the Philippine Islands, Ayala Land Inc., First Philippine Holdings Corp., Atlas Consolidated Mining & Development Corp. and Filinvest Land Inc.

The Winners Philippine Long Distance Telephone Co., Cebu Air Inc. and SM Prime Holdings Inc.

In Bangkok, The Stock Exchange of Thailand (SET) composite index went down 5.27 points or 0.50% to close at 1,042.28 points at the end of trading session on Wednesday afternoon. The trade value was 56.99 billion baht.

The Stock Exchange of Thailand plans to make itself a top investment destination over the next three years by improving its competitiveness through demutualisation.

“Next year will be a significant step for the SET as we prepare for a tougher competitive environment after demutualisation in 2012,” said SET president Charamporn Jotikasthira.

The demutualisation will require the SET to split its operations into two functions: the exchange and the Capital Market Development Fund (CMDF).

The process will allow new services such as securities trading, clearing, and depository and registration services. Tougher competition should add new business, connecting with foreign exchange as well as investor networks.

Mr Charamporn said the strategy used four facets, including coverage expansion, value enhancement, efficiency and capacity improvements.

In 2011, the SET targets increasing market capitalisation to 100 billion baht from new listings, especially from the insurance, telecom, autos and parts, energy and alternative energy sectors.

The SET will also launch new products to better serve investors’ needs, such as oil futures, silver futures, transferable custody receipts, and new exchanged-traded funds.

It hopes to expand the investor base by joining with commercial banks to encourage internet banking clients to trade online and will expand post-trade services.

“We’ll allow member companies to do clearing for other members and allow foreign securities depositories to support cross-border securities clearing, in accordance with the Asean Linkage and dual listing plan,” said Mr Charamporn.

The SET aims to increase internet trading, now at 23% of total trade, as its traditional method was unable to serve all the orders given the huge funds inflows.

Trading hours for gold futures will be extended to increase investment opportunity and reduce price fluctuation.

To improve efficiency, it plans to bolster investing through non-voting depository receipts to tap more foreign investors and enhance the risk management process in post-trading services.

As for capacity, the SET budgeted two billion baht to upgrade the IT infrastructure to support new services over the next three years, having spent 1.05 billion already.

“This will offer our trading system world-class standards,” said Mr Charamporn.

The CMDF will work with the public sector and capital market-related associations to create a roadmap covering all capital market operations.

Developing capital market professionals will be the task of the Association of Investment Management Companies and the Association of Securities Companies, which will become self-regulatory.

CMDF has the duty to improve corporate governance.

“The SET seeks to amend the Securities and Exchange Act as part of its preparations for demutualisation,” said Mr Charamporn.

SET market capitalisation rose to more than 8 trillion baht from 6 trillion earlier this year due to rapid fund inflows. Market capitalisation accounts for around 80% of GDP at the moment, and this figure will significantly ease the country’s economic funding structure in the future, said Veerathai Santiprabhop, SET chief strategy officer.

“This means wealth increased for not only the 200,000 active investors, but also the more than 15 million investors in mutual and government funds,” said Mr Charamporn.

PTL closed at 39.00 baht, down 2.50 baht (6.02%)

PTTAR closed at 36.75 baht, up 1.75 baht (5.00%)

PTT closed at 337.00 baht, down 1.00 baht (0.30%)

AJ closed at 31.75 baht, down 3.00 baht (8.63%)

PDI closed at 29.00 baht, up 4.80 baht (19.83%)

In Kuala Lumpur the Bursa Malaysia rose 0.10% to close at 1528.01 points, after hitting 1531.99 points in the morning session.


Trading volume increased to 1741.46 mil shares worth RM2274.51 mil as compared to Tuesday’s 1643.55 mil shares worth RM2136.38 mil.

The Winners were CIMB (+6 sen to RM8.56), YTL (+34 sen to RM8.39), HONG LEONG BANK (+44 sen to RM9.80), AXIATA (+4 sen to RM4.49) and PLUS (+4 sen to RM4.44).

The Losers were GENTING (-12 sen to RM10.68), AMMB (-10 sen to RM6.20), SIME (-3 sen to RM9.00), MISC (-6 sen to RM8.68) and MAYBANK (-2 sen to RM9.27).

Market breadth was positive with 441 gainers as compared to 420 losers.

Trading sentiment remained firm amid profit-taking activities seen after the index rose to a record high of 1526.53 points in the previous session.

The Finance Index added 0.29% to 14003.30 points, the Properties Index fell 0.24% to 1026.53 points and the Plantation Index climbed 0.10% to 7871.50 points.

The market traded within a range of 8.07 points between an intra-day high of 1531.99 and a low of 1523.92 during the session. In Singapore the Straits Times Index closed at 3289.24, down 0.74 per cent, or 24.37 points.

Around 2.4 billion shares exchanged hands.

Losers beat gainers 293 to 201.

Temasek Plays Games

TEMASEK Holdings is making a play for a slice of the booming online gaming business.

The sovereign fund is heading a consortium of investors set to pump US$60 million (S$77 million) into United States-based online gaming studio Gazillion Entertainment.

The privately held firm, which last month launched Lego Universe, an online game based on the building block toy, is currently working on a Marvel Entertainment superhero title called Super Hero Squad Online, slated to be released early next year.

Gazillion chief executive Rob Hutter, who has hailed massively multiplayer online (MMO) games as one of the most profitable entertainment sectors in the world, welcomed Temasek's investment 'as we enter a key phase of expansion for the company'.

Although better known for its punts on financial heavyweights such as Standard Chartered and technology players like SingTel, Temasek is no newbie to the digital entertainment space.

In 2008, it spent US$100 million buying an undisclosed stake in Chinese online games operator And late last year, it acquired a 5.53 per cent stake in Shanda, another Chinese gaming company.

Wilmar comes up short

Wilmar International had a staggering $2.36 billion shaved off its market value on Wednesday following an unexpected 60.3 per cent drop in third-quarter profit.

The profit shrinkage to US$259.48 million (S$333.95 million) - which came despite a 23.3 per cent jump in revenues to US$7.76 billion - sent analysts scrambling to rush out reports expressing disappointment after their earlier glowing comments on its prospects proved illusory.

And traders lost no time in selling off the stock, which had climbed 15 per cent in the past six weeks. This knocked Wilmar's share price down 37 cents to $6.51 - a 5.5 per cent fall - on a heavy volume of 37.34 million shares.

Putting a positive spin on the company's latest financials, Wilmar's chairman and chief executive Kuok Khoon Hong said that 'despite the weak third-quarter performance, the group remains positive on its long-term prospects'.

The company will continue to leverage on its well-established presence in markets like China, India and Indonesia, and invest in existing and new businesses.

Among analysts, though, the big question is whether Wilmar's weak third-quarter performance is a one-off, or flags a potentially more serious problem. The consensus is that the firm's full-year earnings estimates may drop by about 10 per cent, as a result of the weaker quarter.

DBS to raise $500m

Singapore's largest bank, DBS, has taken the wraps off a $500 million preference share issue that qualifies for tier 1 capital to small investors.

The launch is the largest retail offering ever made in Singapore and dwarfs OCBC's $250 million preference share issue for retail investors unveiled in 2008.

DBS has the option to further increase the offer to as much as $800 million.

The shares, which operate in a similar manner to bonds, pay an attractive dividend of 4.7 per cent a year for 10 years - well above the 0.125 per cent interest that a saver currently gets on a POSB savings account.

The offer follows DBS selling $1.7 billion worth of preference shares last month to institutional investors. And the retail tranche should prove just as popular, judging from the voracious appetite of institutional investors.

Shayne Heffernan brings more than 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over US$500m and 1 that reach a peak market cap of US$15billion. He has managed and overseen start-ups in Mining, Shipping, Technology and Financial Services.


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