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ASEAN STOCK WATCH 5  October  2010

ASEAN Markets are World Leaders

Shayne Heffernan

ASEAN Shares are surging while the rest of the world staggers under the weight of terror alerts and downgrades. Wall St dropped before earnings week and that will bring ASEAN markets lower at open today, however the earnings outlooks do not seem to be a big concern and indicators are it will not be a horrid week.

Today Keppel, Genting, PTT, Mandiri, DIGI, SCB, YAZG, COSC all look like good buys.

In Jakarta the JCI rose 22.38 points, or 0.6 percent, to close at 3,569.50, setting a new closing high for the seventh consecutive day.

Volume was heavy, with 6.96 billion shares worth Rp 5.79 trillion ($644.5 million) changing hands.

Winners and losers were evenly split at 108.

As the market continues to march higher, analysts are increasingly warning that Indonesian stocks have become overvalued, with the benchmark ripe for a correction, especially if global economic or financial events send investors fleeing to safe havens.

Janson Nasrial, an analyst from Amcapital Indonesia, said valuations were too high but estimated the JCI could still reach 3,650 by the end of the week as foreign investors continue to pump money into the market.

“Our market is still far from being a bubble because our recent economic conditions demonstrate very strong fundamentals,” he said. “However, investors should be aware that financial shocks could possibly occur without any warning.”

Overseas funds have bought $2.3 billion more Indonesian shares than they have sold this year, according to the Indonesia Stock Exchange.

Foreign holdings of local-currency government bonds jumped Rp 74.3 trillion ($8.3 billion) in the first nine months of this year to Rp 182.3 trillion.

Financial stocks gained on Monday. Bank Mandiri, the nation’s biggest bank by assets, gained 2.2 percent to Rp 7,000.

Finance director Pahala Mansury said Mandiri may increase the percentage of a planned rights offer available to local investors.

Bank Permata, partly owned by Indonesia’s largest automotive retailer Astra International, advanced 1.7 percent.

Permata plans to raise as much as Rp 2 trillion in a rights offer, it said in a statement published in Bisnis Indonesia.

Property stocks rose. Lippo Karawaci, the nation’s biggest property developer, climbed 7.1 percent. The company plans to pay Rp 50 billion as an interim dividend, its first dividend payout since 2007.

Astra Agro Lestari, the nation’s largest listed plantation company by market value, fell 1.4 percent as palm oil futures dropped the most in more than eight months, losing 2.9 percent to 2,653 ringgit ($762) a metric ton.

Meanwhile, the rupiah was little changed, trading near its highest level since June 2007, before a meeting today at which policymakers will probably keep the benchmark interest rate unchanged for a 14th month.

The currency has gained 5.2 percent this year as stock and bond investors boosted their holdings of Indonesian assets to take advantage of growth in Southeast Asia’s largest economy.

The central bank will leave the reference rate at a record-low 6.5 percent, according to 15 of 16 economists surveyed by Bloomberg News. Inflation slowed in September and policy makers last month ordered banks to lift reserves from November.

“Bank Indonesia is pretty sure the current rate will keep the rupiah stable against the dollar,” said Mika Martumpal, of the Commonwealth Bank in Jakarta.

An increase in rates would “encourage more inflows,” he said.

The rupiah traded at 8,928 per US dollar as of the stock market’s close in Jakarta, compared with 8,918 on Friday.

It touched 8,900 on Thursday, the strongest level since June 2007.

In Manila the Philippine Stock Exchange index racked up 76.48 points to finish at a new all-time high of 4,188.31.

The rally was across all counters but the property and holding firm indices benefited the most, respectively rising by 2.7 percent and 1.98 percent.

Value turnover improved to P6.17 billion after falling below P5 billion in previous days. Advancers overwhelmed decliners 96-41 while the remaining 41stocks were unchanged.

Dealers said cash investors were again on the mood to load up on local equities, taking advantage of the market’s downward correction last week.

Investors snapped up shares of Energy Development Corp., Aboitiz Power Corp., Philippine Long Distance Telephone Co., Metropolitan Bank & Trust Co., Metro Pacific Investments Corp.,

Megaworld Corp., Banco de Oro Unibank Inc., Ayala Corp., Ayala Land Inc., Alliance Global Group Inc., Manila Electric Co., Filinvest Land Inc., First Gen Corp., SM Investments Corp., Philippine National Bank and SM Prime Holdings Inc.

On the other hand, International Container Terminal Services Inc. and Lepanto Consolidated Mining Co. “A” fell on profit-taking.

Shares of Globe Telecom Inc. and JG Summit Holdings Inc. were unchanged.

The Stock Exchange of Thailand (SET) composite index on Monday lost 14.36 points or 1.47 per cent to close at 964.22 points. The market value was 48.92 billion baht, with 5.57 billion shares traded.

The Bank of Thailand is responsible for overseeing the baht’s exchange rate and controlling its continually increasing strength, Finance Minister Korn Chatikavanij said on Monday.

The Thai currency hit a 13-year high of 30.14 baht against the US dollar on Monday morning.

“The central bank will have to address the continuing strong baht. The Finance Ministry has already given its suggestions on the matter.

Thailand and Indonesia, the two largest economies in the 10-member Asean grouping, should join hands by increasing bilateral trade and teaming up to invest in third countries, say business leaders and policymakers.

More collaboration would also encourage companies to look beyond their borders and move closer to becoming regional or global companies, according to Thai representatives.

“We are trying to encourage companies in both countries to invest in each other and also to look at the possibilities of investing in the third country,” Suthad Setboonsarng, the Thailand Trade Representative (TTR) in charge of Asean, said at a meeting in Indonesia.

Indonesia, the largest economy in Asean, has become a hotbed for investments from various parts of the world. Its economy has improved rapidly, thanks to exports that have shown a sharp turnaround.

Mr Suthad, who was leading a delegation of businessmen to explore investment opportunities in Indonesia, said that with the rising population and the economic prosperity of Indonesia, Thai businesses need to start thinking of Indonesia as an export destination and possibly as a manufacturing hub for some products as well.

Indonesia, with nearly 240 million people, will see its population grow dramatically, making it a lucrative market for Thai businesses. Top five most active values were as follows;

PTT remained at 297.00 baht.

PTTEP closed at 160.00 baht, up by 2.00 baht or 1.27 per cent.

SCC closed at 324.00 baht, down by 10.00 baht or 2.99 per cent.

PTTCH closed at 132.00 baht, down by 3.00 baht or 2.22 per cent.

TOP closed at 56.00 baht, up by 2.00 baht or 3.70 per cent.

Singapore shares closed 0.85 per cent higher on Monday, with the benchmark Straits Times Index at 3157.45, up 0.85 per cent, or 26.55 points.

About 2.2 billion shares exchanged hands.

Gainers beat losers 343 to 205.

Shares of Singapore-listed Chinese shipbuilders Yangzijiang Shipbuilding (YAZG), Cosco Corp (COSC) and JES International (JSIH) rose on Monday following positive media and broker reports on the sector.

Shares of oil rig builders Keppel Corp (KPLM) and Sembcorp Marine (SCMN) rose as much as 2 percent and 1.3 percent respectively as investors were more bullish on the oil and gas sector.


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