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ASEAN STOCK WATCH 27  October  2010

ASEAN Markets Set to Rally

Shayne Heffernan

ASEAN Markets should trade a little higher today after a flat day in the region yesterday. Over night on Wall St the market had good and bad news and ended flat.

The Dow Jones industrial average shed 1.86 points, or 0.02 per cent, to 11,162.19. The Standard & Poor's 500 Index slipped 0.99 points, or 0.08 per cent, to 1184.63. The Nasdaq Composite Index gained 7.27 points, or 0.29 per cent, to 2498.12.

Data showed single-family home prices fell for the second straight month in August, hovering near recent lows after the expiration of homebuyer tax credits.

These are more regional US issues that should not flatten the ASEAN Markets, today we should see ASEAN once again be the 1st market to rally followed by Hong Kong and a US rally tomorrow.

Best Buys in ASEAN today are, SGX, OLAM, GENTING, Noble Group, IVL, PTT, Banpu.

The Stock Exchange of Thailand (SET) composite index went up 5.77 points or 0.58% to close at 998.01 points at the end of trading session on Tuesday morning. The trade value was 19.37 billion baht.

The Stock Exchange of Thailand hit 1,001.06 Intraday, the first time since 1996 it had exceeded the 1,000 level.

The SET rose despite net selling by foreign investors, who have been pouring money into Thai stocks for most of the past four months. Local retail investor buying interest was strong as some listed companies have exceeded expected earnings in the third quarter, but profit-taking stunted any prolonged rally.

Foreign investors were net sellers of THB488 million ($ 16.32 million) worth of Thai stocks Tuesday out of a total of THB34.24 billion traded, the Stock Exchange of Thailand said.

Top five most active values were as follows;

IVL closed at 32.50 baht, down 5.25 baht (13.91%)

PTT closed at 307.00 baht, up 3.00 baht (0.99%)

BANPU closed at 800.00 baht, up 18.00 baht (2.30%)

PTTCH closed at 144.00 baht, unchanged

SCC closed at 332.00 baht, up 6.00 baht (1.84%)

The Straits Times Index fell 19.57 points to end at 3,162.51.

Singapore’s industrial output grew 26.2 per cent in September compared with a year earlier.

Economists were forecasting a rise of about 19 per cent.

Data from the Economic Development Board showed that pharmaceuticals contributed strongly to the growth.

Singapore Exchange’s share price has fallen another 2.6 per cent after tumbling 6.2 per cent yesterday.

Several analysts downgraded the stock today citing various concerns with its proposed S$10.7 billion takeover of the Australian Stock Exchange.

Singapore Exchange has lost more than S$1 billion in market capitalisation since last Friday, when the media began speculating about its acquisition of the Australian Stock Exchange.

Volume was 1.65 billion shares.

Losers led gainers 347 to 141.

Singapore Exchange declined 2.57 per cent to S$8.72 as its merger plans with Sydney’s ASX faced fierce political opposition in Australia.

Sembcorp Industries retreated 1.71 per cent to S$4.59.

Olam International was down 2.2 per cent at S$3.08, Golden Agri-Resources fell 2.2 per cent to S$0.68, Noble Group lost 2.1 per cent to end at S$1.90, while Wilmar International dipped 0.8 per cent to S$6.42.

In Kuala Lumpur the Bursa Malaysia rose 0.37% to close at 1496.94 points on Tuesday.


Trading volume increased to 1375.01 mil shares worth RM1874.15 mil as compared to Monday’s 1131.13 mil shares worth RM1470.40 mil.

The Winners were TNB (+8 sen to RM8.88), KLK (+46 sen to RM19.40), GENTING (+8 sen to RM10.50), CIMB (+4 sen to RM8.08) and AMMB (+9 sen to RM6.07).

The Losers were AXIATA (-2 sen to RM4.44), HONG LEONG BANK (-6 sen to RM9.01), MAXIS (-1 sen to RM5.29), GAMUDA (-1 sen to RM3.83) and MAS (-2 sen to RM2.29).

The Finance Index added 0.30% to 13539.02 points, the Properties Index climbed 0.19% to 976.30 points and the Plantation Index rose 0.91% to 7623.22 points.

The market traded within a range of 5.13 points between an intra-day high of 1496.94 and a low of 1491.81 during the session.

Market breadth was positive with 454 gainers as compared to 361 losers.

In Manila, the Philippine Stock Exchange index gave up 7.34 points or 0.17 percent to clos e at 4,279.53.

The modest decline was led by the holding firms, property and services counters.

Gains posted by the financial, industrial and mining/oil counters tempered the day’s dip.

Value turnover was high at P33.37 billion including about P23 billion worth of special block sales on shares of Cebu Air Inc., which listed on the local bourse.

There was P17.75 billion in net foreign buying as offshore investors took up about 70 percent of Cebu Air’s IPO.

Despite the overall index dip, there were 61 advancers that narrowly edged out 58 decliners while 53 stocks were unchanged.

Newly listed Cebu Air, the most actively traded stock, saw its shares surge by about 6.4 percent.

Other gainers were Atlas Consolidated Mining & Development Corp., Aboitiz Power Corp., Metropolitan Bank & Trust Co., International Container Terminal Services Inc., Philippine National Bank, SM Prime Holdings Inc., Oriental Peninsula Resources Group Inc. and DMCI Holdings Inc.

On the other hand, the following stocks lost ground

Ayala Land Inc., Philippine Long Distance Telephone Co., SM Investments Corp., Robinsons Land Corp., Megaworld Corp., JG Summit Holdings Inc., Aboitiz Equity Ventures Inc. and Alliance Global Group Inc.

Robust trading activity has reflected investor optimism on local stocks, PSE chair Hans Sicat said during the Cebu Air listing ceremonies.

“It has accelerated by 33.9 percent year-on-year in terms of total value traded and by 31.8 percent in average daily value in the first nine months. I note that the local bid is as strong as ever, with the current share in total trades at 68 percent,” Sicat said.

“The increase in nominal levels demonstrate the belief that the Philippine market is more stable relative to certain peers and show a strong confidence level in the country’s prospects,” he said.

A premier energy company in Sri Lanka Laugfs Gas Limited expects to raise USD22million for its expansions and investments in the emerging opportunities from the post war era. Laugfs gas Limited is the only competitor for Shell Gas within Sri Lanka whilst it enjoys a market share of 28% in the overall market Gas segment and 65% in the industrial gas supplies whilst in the Auto Gas sector Laugfs dominates with a 90% market share.

Sri Lanka has been seeing considerable investor attention from many parts of the world since the war reaching an end in May 2009. Many funds have shown keen interest whilst many business ventures also have seen their entry to this dazzling island.

This IPO will be an eye opener for large organisations who wish to raise money from capital markets and many foreigners as well as large funds who seek for liquidity and high values in the Colombo Stock Exchange (CSE). Further the CSE needs these types of Share Issues to strengthen the market and to attract big guys in the industry to Sri Lanka.

The Investment

Laugfs Gas will raise USD15million from issuing 75 million voting shares and USD7million from issuing 52 million non-voting shares.

The Laugfs issue officially opens on the 4th of November 2010, but applicants are advised to apply early.

Preference will be given for employees who are given 10% the issue whilst 10% is offered to Dealers and Customers of Laugfs Gas Limited.

Laugfs will employee USD8million in the leisure sector USD4.5million in the core business and USD9.5million to settle financial facilities which might be obtained later at a lower finance cost.

Investor Promotions & Road Shows

Road shows for the Laugfs Gas IPO have been organised in Singapore on 25th and 26th and in Malaysia on 27th and 28th October 2010. Many locals funds and foreign funds have been showing keen interest whilst inquiries from the Middle East region has been positive.

Almost 94% of the revenue is generated from the Gas sector. Nevertheless, other sectors in the Laugfs Gas Group will generate more return to the investors in future as those sectors are considered as the emerging opportunities in Sri Lanka.

The future focus on tourism sector has been a key objective of the issue. Tourism arrivals have improved by 44% to reach 445,228 tourists up to September 2010.

The New York Times ranked Sri Lanka at the top of its 31 location list of places to visit in 2010. Further the Government has set an ambitious target of 2.5 million tourists by 2016. As such, penetration into North and East of the island and tourist locations is a key focus for Laugfs Gas Limited.

Sri Lanka is one of the fastest growing markets for Liquid Petroleum Gas in the South Asia. As per the Central Bank of Sri Lanka, imported quantity of LPG in year 2005 was USD67million for 149,000 metric tons whilst it increased to USD107million in 2009 for 146,000 metric tons.

In 2010 total consumption of LPG in Sri Lanka is expected to increase to 250,000 metric tons with considerable growth from local supply. At present 25% of the population uses LP Gas as a cooking fuel whilst most of them still use firewood which is easy to fetch though it is a costly firing fume.

Royal Dutch Shell PLC was offered bids for the stake in Shell Gas Lanka Limited a recent past whilst 49% is held by the state. Valuations

The earnings of the Laugfs Group based on 31 March 2010 financial year stood at LKR528million (USD4.7million) with a total market capitalisation of LKR8,485million / USD75million. (Voting – USD68million, Nonvoting – USD7million). Based on 4 months ended 31 July 2010 annualised earnings stood at LKR787 (USD7million).


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