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ASEAN STOCK WATCH Asean Affairs  14  October  2010

Record Day Expected in ASEAN‏;

Shayne Heffernan

As we predicted yesterday ASEAN markets soered to new highs today on the back of Agricultural prices and the expectation of Fed action in the USA. Today after a strong night on the US exchange, Thailand will break over 1000, Bursa Malaysia will break 1500 and the other ASEAN exchanges will hit all time highs.

The Stock Exchange of Thailand (SET) composite index on Wednesday gained 15.52 points or 1.59 per cent to close at 992.60 points. The market value was 41.42 billion baht, with 5.13 billion shares traded.

Thailand’s gross domestic product for 2010 should rise seven to eight per cent year-on-year as exports are expected to grow 20 to 30 per cent, Prime Minister Abhisit Vejjajiva said on Wednesday.

Mr Abhisit said this year’s economy was initially predicted to expand only four to five per cent. The growth estimate had increased mainly due to surging exports.

“One of the reasons driving export growth is because Asean country members have pressed ahead with free trade deals while pursuing important economic cooperation with key countries like India, China, Japan, Australia and South Korea.

“Asean trade will expand rapidly once the global economy starts recovering,” the prime minister said.

He believed the Asean population in the next five years would rise to 700 million people and the GDP of the 10 Asean member countries would be more than US$2.5 trillion.

The size of the Asean economy would be larger and the region would become a leading player in the world economic stage, he said.

“In terms of economic potential, Thailand is considered ready and the Thai economic management is widely accepted by other countries.

“Thailand is also considered to be the linkage between different Asean country members,” the premier said.

He said the government will continue promoting local businesses, particularly small- and medium-sized businesses, to the Asean region.

The government’s policy to promote creative economy will help local businesses improve their capabilities and readiness to join the Asean Economic Community in the next five years, he added.

Top five most active values were as follows;

PTT closed at 309.00 baht, up 5.00 baht or 1.64 per cent.

PTTEP closed at 172.00 baht, up 2.50 baht or 1.47 per cent.

BANPU closed at 732.00 baht, down 6.00 baht or 0.81 per cent.

PTTAR closed at 28.50 baht, up 1.00 baht or 3.64 per cent.

ITD closed at 5.10 baht, up 0.26 baht or 5.37 per cent.

The shares prices in Singapore rose 52.8 points or 1.68 percent on Wednesday with the benchmark Straits Times Index ( STI) closing at 3,202.16 points.

The overall volume stood at 2.48 billion shares worth 2.33 billion Singapore dollars (about 1.79 billion U.S. dollars).

Sembcorp Marine’s Jurong Shipyard unit has secured a $351 million contract from Norwegian firm Teekay Petrojarl Production to convert an oil tanker into a floating production, storage and offtake (FPSO) vessel.

It includes detailed engineering, installation and integration of 16 topside modules, the installation of spread mooring and power generation systems, as well as extensive piping and electrical cabling works.

The FPSO vessel, scheduled for delivery in the first quarter of 2012, will be chartered to Petrobras for nine years for installation offshore Brazil.

It will be capable of processing at least 80,000 barrels of crude per day and storing 650,000 barrels of oil. Jonathan Peeris.

In Kuala Lumpur the KLCI index surged 10.40 points or 0.70% to close at 1496.97 points on Wednesday. More than 45% of the rally comes from the plantation counters, thanks to a higher CPO price.

The 3rd month CPO future price hit a high of RM2940 per metric tonne on Monday. The price is currently trading above RM2900 per metric tonne level.

The slowdown in economic data pointing to a cooling of the economy has some economists worried but many are sticking to earlier projections of strong full-year growth on the strength of the first-half numbers.

Economists said expectations of an economic slowdown in the second half of the year was anticipated but say the dip in export, industrial production and the health of the global economy adds to worries that next year would be more difficult to read.

“The stimulus packages and the huge low-base effect contributed to the strong first half but the picture globally is not pretty,” said an economist.

He said any slowdown would not lead to a recession this year given the momentum that had been built on so far but said next year’s performance, which would see slower economic growth, would be more worrisome.

The economy grew by 10.1% in the first quarter and 8.9% in the second quarter.

Uneasiness has cropped up after recent data came in on the soft side.

Export growth for August was 10.6% which was the fifth consecutive month of slower external trade and industrial production for growth for August was 4% after dipping to 3.4% after a reading of 9.3% in June.

Economists attribute the fasting month for the declines in export and also industrial production and believe a pick-up in September is imminent given the low-base effect from last year.

“Because of the low-base effect, the IPI for September could come in between 6% and 7%,” said an economist.

Economists had said external trade globally was sluggish given the direction leading indicators were pointing.

“Based on latest consensus forecast and our in-house calculations, the global economy is expected to average 3.7% year-on-year in the second half of 2010 after growing by 4.5% year-on-year in the first quarter of 2010 and 4.8% year-on-year in the second quarter of 2010,” said Maybank Investment Bank in a report recently.

While the general belief is that China would remain a locomotive for Asia, Malaysia’s export growth to China was a meagre 2.4% in August, causing some to wonder if that is a one-time blip. But the export growth rates to South-East Asia too have slowed in recent months and showed growth of 5.6% in August.

Working against exports has been the ringgit’s steep appreciation against the dollar this year which Maybank noted that apart from Malaysia, countries such as South Korea, Japan and Thailand were showing a significant slowdown in exports in recent months as their currencies gain strength.

Another insight to the health of the global economy is the appetite for companies to consume goods.

Global purchasing managers indices are still on the health side of 50 – anything below would mean a contract and a reading above 50 would mean expansion – but the global average has been falling over the past three months.

In Asia, the Purchasing Managers’ Index (PMI) for China shows an expansion with the index reading of 53.8 for September but in other parts of Asia where external trade is a big component of growth, the index reading is below 50.

Those countries with a reading below 50 are South Korea, Taiwan, Japan and Singapore.

“Softening PMI numbers alongside index of leading economic indicators also support the view that growth will be slower in the second half of this year,” said Maybank Investment Bank in a report.

An economist said a slight drop below a reading of 50 would not cause much stress but a reading in the mid-40 region would.

“The global PMI is a good indicator of trade,” said the economist.

While many are hoping that the last couple of months of economic data would not be a reflection of things to come, the message though has been clear.

“Going into 2011, very few people know what the outcome will be. It’s still uncertain.” said an economist.

The Finance Index up 0.43% to 13520.22 points, the Properties Index gained 1.37% to 966.16 points and the Plantation Index rushed up 2.16% to 7261.06 points.

The market traded within a range of 7.70 points between an intra-day high of 1496.97 and a low of 1489.27 during the session.

Actively traded stocks include JCY, MALTON, HWGB, PLUS-CC, TA, INCKEN, KBUNAI, AXIATA, PLUS and CIMB.

Trading volume increased to 1199.52 mil shares worth RM2026.78 mil as compared to Tuesday’s 1169.15 mil shares worth RM1900.89 mil.

Leading Movers were IOICORP (+14 sen to RM5.74), AXIATA (+7 sen to RM 4.59), SIME (+9 sen to RM8.85), KLK (+72 sen to RM18.60) and PLUS (+19 sen to RM4.46).

Lagging Movers were GENTING (-14 sen to RM10.46), CIMB (-3 sen to RM8.07), TM (-1 sen to RM3.49), MISC (-1 sen to RM8.70), and HLFG (-3 sen to RM9.00). Market breadth was positive with 576 gainers as compared to 236 losers.

In Jakarta the JCI advanced 64.73 points, or 1.8 percent, to close at 3.611.98, the steepest advance since Oct. 1. Volume was heavy, with 9.4 billion shares worth Rp 6.67 trillion ($747 million) changing hands. Gainers led losers 174 to 50.

Janson Nasrial, an analyst at Amcapital Indonesia, said news that the US Federal Reserve was considering quantitative easing, which increases the supply of money, caused commodity prices to rise and commodity producers to gain.

Bumi Resources, the nation’s largest coal producer, gained 3.3 percent to Rp 2,375, its highest close since May 18. Oil services company Elnusa rose 1.5 percent.

Crude oil climbed for the first day in three in New York after the International Energy Agency raised its global demand forecast and China reported crude imports reached a record. Higher oil prices boost the appeal of alternative fuels such as coal.

Meanwhile, the rupiah rose toward its highest level in three years after minutes of the US Federal Reserve’s September meeting showed it was prepared to ease US monetary policy, boosting appetite for emerging-market assets.

The rupiah also received a boost after Finance Minister Agus Martowardojo said in Jakarta on Tuesday that the government had no plan to tax capital inflows after Thailand decided to remove a tax exemption for foreign investors on returns from domestic bonds. Ten-year government notes gained.

“There’s still a problem with the US economic recovery,” said Lucky Syafril, head of treasury at Bank Commonwealth in Jakarta. “Interest rates will be kept low. For investors, where else will their money go? The logical conclusion” is Asia.

The rupiah appreciated 0.2 percent to 8,923 against the dollar as of 5 p.m. in Jakarta.

In Manila the Philippine Stock Exchange index gained 27.5 points, or 0.66 percent, to close at 4,194.06.

The broader all-share index also ended the day higher by 0.42 percent, or 11.17 points, to 2,670.98. The property, financial, and industrial sub-indices went up, while services, holding firms, and mining and oil went down.

The property index went up by 2.53 percent, or 38.60 points, to 1,564.16, while the service index went down by 0.36 percent, or 6.01 points, to 1,662.55 points.

Decliners outnumbered advancers 68 to 63, while 37 shares did not move. A total of 888 million shares worth P5.44 billion changed hands, down from Tuesday.

“Investors took advantage of the buying opportunity,” local brokerage firm AB Capital Online said.

“Investors, however, are still picky and the market is seen to move flat to lower in the coming days. The good local economic developments today also helped give the market a positive spin,” it added.

Finance Undersecretary Gil Beltran’s recent pronouncement that the domestic economy likely grew by more than 7 percent in the third quarter, the brokerage firm said, helped improve investor sentiment.


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