ASEAN KEY DESTINATIONS
Asean Stock Watch- October 10
Overnight, the Dow Jones Industrial Average jumped 183.38 points, or 1.7 percent to 11,123.33 after the ECB vowed to provide unlimited one-year loans to the region’s lenders until 2013. Also lifting Wall Street was the stronger US retail sales in September.
A slew of better-than-forecast U.S. data this week--including Thursday's weekly jobless claims report - put investors in a better mood.
Some investors are betting that Friday's nonfarm payrolls report for September, this week's key U.S. data release, could show some improvement in the jobs market. Overnight, Dow Jones was up 183.38 points to 11,123.33 while the Nasdaq was up 46.31 points to 506.82 and the S&P 500 was up 20.94 points to 1,164.97 percent.
Stocks fell on Friday, halting a two-day advance, after Moody’s lowered the ratings of several financial institutions in Britain and Portugal. The Jakarta Composite Index lost 17.42 points, or 0.5 percent, to close at 3,425.68, halting a 2.8 percent gain over the previous two trading sessions. For the week, the benchmark was down 3.5 percent.
More than 4.50 billion shares worth Rp 4.54 trillion ($508 million) changed hands at the Indonesia Stock Exchange (IDX). Decliners beat gainers, 144 to 70. Foreign investors bought Rp 381 billion more in shares than they sold, and dominated the market with 70 percent of the total transaction value.
Rating agency Moody’s Investors Service on Friday cut the senior debt and deposit ratings of 12 financial institutions in Britain, and the ratings of nine banks in Portugal.
“In the afternoon, the index was pressured by negative sentiment from some of the main European markets because of Moody’s rating cuts,” said Mastono Ali, an analyst with CIMB Securities Indonesia in Jakarta.
Mastono said a number of investors exited the market ahead of the weekend to reduce their exposure in the face of the continuing uncertainty.
“Investors don’t know what news will come out on the weekend, so they decided to temporarily sell off,” he said.
Indonesia’s financial sector lost 0.8 percent despite its “insignificant exposure to European banking,” Mastono said.
Shares in palm oil producers dropped as the crude palm oil price for December delivery lost 1.3 percent at Bursa Malaysia amid worries slowing global growth would hurt demand.
Astra Agro Lestari, the largest listed palm oil producer, dropped 3.1 percent to close at Rp 17,100. Fellow producer London Sumatra Indonesia declined 1.1 percent to Rp 1,830.
The rupiah fell 0.5 percent against the dollar to trade at 8,968. It lost 1.6 percent for the week.
The FBM KLCI and other stock markets in Asia continued with its rebound after more reassuring data and news was released from the US and Europe. In Malaysia, the upside was two-prong driven.
The budget announced by Prime Minister Datuk Seri Najib Tun Razak was mainly targeted at helping civil servants cope with the rising cost of living.
Global markets rebounded strongly on news that European officials have detailed out plans to tame the sovereign debt crisis. While there is no concrete resolution yet in sight, the temporary stop gap measure shows that Europe is trying to solve the problem.
At 5pm, the FBM KLCI was up 6.36 points to 1,400.05. There were a total of 374 gainers and 240 losers with 271 stocks unchanged
The Philippine stock market on Friday extended its gains for the second straight session and closed above the 4,000 level, buoyed by the European Central Bank’s move to support the region’s banks and by positive US retail sales.
At the Philippine Stock Exchange, the composite index rallied 118.74 points, or 3.05 percent to 4,009.26, closing just slightly above last week’s finish of 3,999.65.
The broader all-shares index jumped 64.49 points, or 2.31 percent to 2,856.18 with all subindices posting a gain of at least a percent led by the 4.25 percent rise in the holding firms counter.
Advancers beat decliners, 103 to 28, while 44 stocks were unchanged. A total of 7.59 billion stocks worth P5.29 billion changed hands.
“Institutional players hyped on European banks’ expected recapitalization, but future gains are not likely to be that spectacular as firmer guidance has to be announced on how actions will be coordinated,” said Freya Natividad, investment analyst at 2TradeAsia.com.
“The approaching earnings season, the seemingly positive turn Europe is taking and the recent spate of neutral but positively biased numbers from the US, may provide investors with a decent short- to medium-term return on their equity portfolios,” said Jun Calaycay of Accord Capital Equities
While the confusing mix of developments have prompted investors to keep their hands deep in their pockets, the recent change in sentiment overseas may give them reason to continue selectively loading up their equity portfolios.
“We are not yet out of the woods, but we have strong confidence on the domestic economy, and ergo, domestic firms, particularly those whose products and services are principally distributed locally,” Calaycay added.
The peso continued a three-day rally, along with other Asian currencies, after European leaders moved to backstop troubled banks and following Britain’s plan to pump more money into the economy.
At the Philippine Dealing System, the peso gained 12 centavos to close at 43.540 against the US dollar from 43.660 the previous trading day.
The dollar-peso pair opened at 43.500 and moved to high of 43.600 and to a low of 43.500. Total trading volume eased to $808.170 million from $932.870 million on Thursday.
Singapore shares closed higher on Friday, with the benchmark Straits Times Index at 2,640.30, up 1.43 percent, or 37.18 points.
About 1.6 billion shares exchanged hands.
Gainers beat losers 322 to 171.
The Thai stock market is expected to rebound next week, although several risks remain over the medium term.
The Stock Exchange of Thailand index closed Friday at 909.17 points, down 4.55 points, in trade worth 32.6 billion baht. The market gained 6.76 percent on Wednesday and Thursday.
Foreign investors were net buyers of 4.61 billion baht with a net buy position of 7.53 billion baht for the whole week. Local institutions were net buyers of 60.18 million baht while brokers and retail investors were net sellers of 1.17 billion and 3.49 billion baht, respectively.
Most brokers expect the index will rebound above 950 points next week. Asia Plus Securities projected the index will hit 962 points while Thanachart Securities said it would test 950 points. SCB Securities put its range below 950 points while Krungsri Securities pointed to 960-990 points if there is good news about the euro zone.
However, DBS Vickers Securities (Thailand) suggested investors should be careful about equities over the medium term.
Adisak Phupiphathirungpul, executive vice-president of Krungsri Securities, said the market remained bearish.
Strong third-quarter performances by banks, which will be released next week, may improve sentiment as they were not affected by the European debt crisis.
Yet Thailand is so dependent on exports that it cannot completely escape a downturn in the global economy. Global market liquidity may decrease, he said.
Mr. Adisak said speculators could play if the market makes a short-term rebound, but they must remain disciplined to prevent losses and take a profit. Investors should hold cash for possible long-term investments.
As a worst case, the SET may decline to 630-650 points for a price-to-earnings ratio of 7 times.
Sukit Udomsirikul, senior vice-president for retail strategy of SCB Securities, has an upbeat view as the market expects many European banks to talk about new capital increases to solve the crisis at the EU Summit next week.
"We suggest investors play big-cap stocks and make accumulated buys if the market drops," he said.
Shares continued their downward spiral yesterday, with indices on both national stock exchanges once again declining after a brief rebound on Thursday.
The State Bank of Viet Nam decision yesterday to hike refinancing and discount rates from the current 14 percent to 15 percent, lifting the repurchase, raised concerns that the bank was undermining its own efforts to ease upward pressures on commercial lending rates.
On the HCM City Stock Exchange, the VN-Index declined by 0.8 percent to conclude yesterday's session at 417.96 points. The value of trades also fell by 23 percent from the previous day to just VND513.6 billion (US$24.7 million), with only 32.4 million shares changing hands.
Becamex Infrastructure Development Co (IJC), with nearly 2.7 million shares traded, continued to be the most-active share in HCM City, hitting its ceiling price for a second day in a row.
IJC has almost doubed in value since mid-September, led by heavy buys by exchange-traded funds (ETFs) following its inclusion by the FTSE Group in its basket of shares used to calculate its FTSE Vietnam Index.
Domestic investors were closely following the investment moves of ETFs, but this could bring its own risks as many investors did not understand the strategies of these funds, commented Euro Capital Securities Co analyst Le Thanh Tung.
"Shares favoured by ETFs are highly liquid, and if the funds dump them, share prices can decline quickly, causing heavy losses for investors left holding the bag," Tung said.
Decliners outnumbered advancers on the HCM City market yesterday by 125-87, led by a slump in blue chips. Food processor Masan Group (MSN) dropped to the floor while real estate developers Vincom (VIC) and Hoang Anh Gia Lai (HAG) each declined by 1.6 percent.
On the Ha Noi Stock Exchange, the HNX-Index also lost 0.8 percent on the day to close at 71.50. Trades were anemic, totaling just VND322 billion ($15.5 million) on a volume of 31.4 million shares. Gainers predominated over losers by a margin of 161 to 89.
Kim Long Securities (KLS) reclaimed its position as the most-active share on the Ha Noi bourse, with 3.2 million traded, before closing unchanged at VND11,700 per share.
Foreign investors remained net sellers on the HCM City bourse, unloading over VND20 billion ($970,000) worth of shares, but they were net buyers in Ha Noi by a narrow margin of about VND5 billion ($240,000).
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