ASEAN KEY DESTINATIONS
Asean Stock Watch- October 4
The Dow Jones Index fell 258.08 points, or 2.36 percent to close at 10,655.30, a 13-month low as investors dumped bank shares on fears that Greece’s worsening financial crisis could cause a large European lender to fail.
S&P 500 fell 32.19 points, 2.85 percent to close at 1,099.23. All S&P sectors were lower, led by financials and energy.
Nasdaq dropped 79.57 points, or 3.29 percent at 2,335.83.
Stocks in Indonesia plunged after Greece said it would not be able to meet some of the targets in its austerity plan, heightening concerns that the embattled euro zone country may not be able to secure a financial bailout to avoid default.
The Jakarta Composite Index dropped 200.32 points to 3348.71 at the close of Monday’s trading. The 5.6 percent decline wiped out almost of its gains of the previous four trading days, and it was the biggest decline among major indexes across the region. Of the 436 stocks that traded, 263 declined and only five rose.
“Greek problems are weighing on sentiment,” said Joseph Pangaribuan, an analyst at brokerage Samuel Sekuritas.
Finance ministers from the 17 euro zones members were scheduled to meet overnight to discuss measures to make Greece comply with plans to reduce its deficit in order to receive emergency loans to pay its bills.
Greece said on Sunday that its budget deficit relative to gross domestic product would be higher than targets set by the European Union and the International Monetary Fund. Commodity-related shares fell on concern that Greece’s woes would slow economic growth as consumer demand in Europe weakened for goods such as rubber and palm oil.
The Jakarta Agricultural Index, a basket of 18 stocks, dropped 8.6 percent. Other sectors, such as banking and mining, fell by more than 6 percent.
Astra Agro Lestari, the largest listed plantation operator, dropped 10 percent to Rp 17,300. Bakrie Sumatera, which has rubber and palm-oil producing farms, tumbled 12 percent to Rp 250.
Investors ignored an inflation report that showed that the rate of consumer price rises in Indonesia had eased in September from August, leaving little need for Bank Indonesia to raise its key policy rate any time soon and prompting some to speculate on the prospects for a cut.
Joseph said the falling commodity prices, coupled with slowing global economic growth, might push the central bank to lower its interest rate.
Indonesian banks were among the biggest losers on the JCI, falling alongside lenders across the globe on concern that Greece’s fiscal problems might endanger European lenders that have large holdings of Greek debt. “Investors were worried that this meeting in Europe would not result in significant policy that will help lenders over there,” Joseph said.
The rupiah weakened 1.2 percent against the US dollar to 8,925.
The ringgit continued to slide against the greenback as foreign investors exited the stock market while the heightened expectations of a US double-dip recession and the unfolding eurozone debt crisis prompted investors to cut their exposure to emerging market assets.
The currency fell 1.5 sen to RM3.204 against the US dollar amid a 1.41 percent drop to 1,367.52 in the local bourse’s benchmark FBM KLCI where stocks with high foreign shareholdings were among the worst performers.
Year to date, the ringgit has weakened against 10 of 17 major currencies tracked by Bloomberg, but has strengthened versus the Australian and Canadian dollars.
Yields of US Treasuries, the world’s most liquid bond market, have fallen as investors sought safety from volatility and uncertainty led by the world’s biggest bond fund, Pacific Investment Management Co, as they rebalanced against risk.
Currency strategists said dimmer economic prospects, a pause in benchmark interest rate hikes and fears of a eurozone contagion had accelerated capital outflows leading to the ringgit’s medium-term weakness.
A currency strategist said investors appeared to be quickening their exit from emerging market assets ahead of a slew of US economic data on manufacturing and employment scheduled for release today and throughout the week, which were expected to further strengthen the case for a US recession.
Philippine share prices and the peso resumed their slide on Monday mainly because of the worsening debt situation in Europe.
At the Philippine Stock Exchange, the composite index lost 133.82 points, or 3.35 percent to 3,865.83 on the first day of the one-hour extension of trading.
The broader all-shares index plunged 77.28 points, or 2.70 percent to 2,781.95 with all sub-indices closed in the red, led by mining and oil, which fell 5.70 percent to 19,335.07.
Holding firms dropped 4.70 percent to 2,984.38, the property index lost 3.28 percent to 1,352.60, and financials shed 3.03 percent to 889.95.
The industrial and services sub-indices fell 132.24 points to 6,547.11 and 28.08 points to 1,386.54, respectively.
Losers dominated gainers, 127 to 33, while 24 stocks were unchanged. A total of 7.5 billion stocks worth P3.16 billion changed hands.
Trading ended at 1 p.m. as the local bourse in preparation for the local bourse’s plan to link up with other Southeast Asian markets.
Jun Calalycay of Accord Captail Equities Corp. blamed the drop in share prices on the negative developments in the US and Greece.
Calaycay, however, said that there is still hope in the short-term since Greece would not be allowed to default on its debts.
“What we are experiencing now is a crisis of confidence,” he said.
In a research note, AB Capital Securities said the PSEi has turned bearish technically when it breached several key support levels two weeks ago.
“With the bearish tone in the market likely to persist, it will be important to take note of where the next key support levels will be. The initial support for the PSEi is at the 3,700 level, where it held support during the sell-off of last month. However, we believe that the said support is fragile and should give in on the next try,” AB Capital said.
Asian currencies opened October on a weak note, tumbling against the US dollar Monday amid lingering concerns over Europe’s fiscal problem.
At the Philippine Dealing System, the peso shed 27 centavos to close at 43.990 against the greenback from last Friday’s 43.720.
Traders noted that the dollar-peso pair was resisting the 44.040 level after Greece’s admission it will not meet its deficit reduction target despite austerity measures, thus sparking risk aversion in the already volatile market.
The currency pair opened at 43.900 and moved to a high of 44.040 and to a low of 43.860, averaging at 43.931 at the end of intra-day trading.
Traders said the Bangko Sentral ng Pilipinas might have sold at least $300 million to smoothen volatility.
Singapore shares opened lower on Tuesday, with the benchmark Straits Times Index at 2,565.99 in early trade, down 2.11 percent, or 55.41 points.
Around 76.5 million shares exchanged hands. Losers beat gainers 158 to 26.
Thai shares nosedived 5.12 percent on Monday to hit a new 14-month low amid fears Greece may default on its government debt following revelations it would probably miss its deficit targets set out under a massive bailout package.
The Stock Exchange of Thailand (SET) Index tumbled 46.90 points to close at 869.31 points in trade worth 26.63 billion baht. The sharp sell-off was dominated by blue chip stock sales led by PTT, PTT Chemical (PTTCH), Bangkok Bank (BBL) and Kasikornbank (KBANK).
The Thai market dropped more than other major markets in the region including Hong Kong, which was down 4.38 percent. Japan was off 1.78 percent, Shanghai 0.26 percent and Singapore 2.05 percent.
In contrast, gold prices rose as investors abandoned riskier commodities, commodities-linked currencies and equities in a favour of precious metals and the US dollar.
Gold was trading yesterday above US$1,600 (B49,900) an ounce while the local gold price was at about B24,400 per one baht weight.
Sukit Udomsirikul, senior vice-president for retail strategy at SCB Securities, said European shares fell sharply yesterday after Greece's figures showed it would miss its deficit targets this year and next, which might result in the country having to seek more bailout funds from international lenders.
Greek bondholders or financial institutions would need to take a bigger haircut than in an earlier agreement.
"It's still uncertain how European governments can help Greece avoid a debt default ... Downside risk remains but a rebound could be seen if there is some good news released," he said.
Many listed Thai firms' earning growth remains strong, and they look set to report decent third-quarter performances. So investors should buy good stocks, he added.
Shares on Vietnam's stock exchanges yesterday picked up where they ended last week and continued to decline.
Inflation and monetary policy remained a standing worry for most investors, said independent analyst Nguyen Viet Hung. Many investors were apprehensive that inflation would heat up again in the final months of the year since the prices of goods traditionally increased as the Tet (lunar New Year) holiday approached.
In addition to inflation fears, the central bank's signals that tighten monetary policies would be maintained further depressed investors, Hung said.
SME Securities Co analysts said that third-quarter earnings reports would be one of the primary factors influencing investor pyschology this month. If results of companies with shares that were already highly attractive to speculators, such as securities and financial shares or real estate developers, exceeded expectations, the market could enter another rising phase, they said.
On the HCM Stock Exchange, the VN-Index lost another 1.28 percent of its value from Friday's close to conclude yesterday's session at 422.12 points. The value of trades also declined by 61 percent from Friday, reaching just VND495 billion (US$23.8 million) on a volume of only 29.5 million shares.
Decliners outnumbered advancers by 184-48. Eight of the 10 leading shares by capitalisation lost value, with insurer Bao Viet Holdings (BVH) plunging to its floor price. In this group of shares, only Sacombank (STB), up 1.8 per cent, and dairy producer Vinamilk (VNM), up 0.8 percent, managed gains.
On the Hanoi Stock Exchange, the HNX-Index also fell yesterday by 1.35 percent to finish the day at 70.38 points. Trades remained sluggish, with just 36.7 million shares traded, worth about VND363.5 billion ($17.5 million). Losers outnumbered gainers by 211-59.
Kim Long Securities (KLS), the most-active share nationwide, saw 3.6 million shares traded but lost 3.4 percent of its value to close at VND11,400 per share.
Foreign investors were net buyers on both exchanges yesterday of a combined VND9 billion ($432,700) worth of shares. However, in the past month, they were net sellers of a total of VND1 trillion ($48 million).
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