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ASEAN STOCK WATCH 6  October  2010

ASEAN Exchanges to Set New Records

Shayne Heffernan

Wall St surged in overnight trading up around 2 % as investors cheered encouraging economic data and new steps by the Bank of Japan to stimulate its lackluster economy.

The combination gave investors reason to be optimistic about an improving business climate and the prospect of further steps by governments to pump new life into the global economy. It also underscored expectations that the Federal Reserve will undertake another round of quantitative easing.

ASEAN Markets will set new highs as confidence in a US recovery grows.

Singapore ended higher on Tuesday after spending most of the trading session in negative territory as investors waited for more economic cues on the state of the global recovery.

The blue-chip Straits Times Index (STI) closed 0.2% or 4.91 points higher at 3,162.36, as investors took profit earlier in the session following Monday’s gains.

Shayne Heffernan of Ebeling Heffernan has issued a strong buy on Yangzijiang Shipbuilding with a price target of $2.80 SGD. Today the stock closed at $1.80 SGD.

Yangzijiang Shipbuilding (Holdings) Ltd, is one of the largest shipbuilding enterprise in China with Jiansu Yangzijiang Shipbuilding Ltd. and Jiangsu New Yangzi Shipbuilding Ltd. With a shipbuilding heritage stretching back to 1956, the company is the first shipbuilding enterprise in China to enter the stock market in Singapore, becoming one the Straits Times index stocks on the Singapore Exchange. The Company covers an area of 2.2 million M2 with a wharf line of 3,000m and employs over 10,000 staff and workers.

In the broader market, gainers outnumbered losers 293 to 201. Overall volume traded was 1.91 billion shares worth S$1.67 billion.

Among the losers, Olam International fell 3.3% to S$3.20, as investors cashed in on a recent rally in the stock, which has climbed after news broke that the company is in merger talks with Louis Dreyfus Commodities.

Among the gainers, SIA Engineering rose 2.7% to S$4.63 on news it has won a contract to provide maintenance and repair services to the Airbus fleet of its parent company, Singapore Airlines.

Singapore is exploding as a financial centre with six companies recently announcing plans to raise a combined S$5 billion.

There have already been 26 new listings this year well up on the 22 IPOs in 2009.

Singapore investors see strong upside on these large IPO’s as confidence in the island state skyrockets.

In September around 2 billion shares were changing hands per day on the SGX, compared to 1 billion in June.

Singapore is a flush with liquidity, as is Hong Kong. And with the talk of QE2 in the US, expectations for liquidity continue to be pumped into Singapore and Hong Kong, as investors globally look to use and utilise those excess funds into markets that do provide real economic return.

GIC’s Global Logistic Properties is aiming to raise around S$3 billion, while Temasek’s Mapletree Investment Trust is looking for S$1 billion.

Meanwhile, Malaysian palm oil producer Mewah is raising S$600 million.

Other IPOs waiting to be launched include New Century Ship Building, Yamada Green Resources and XinRen Aluminium.

Market watchers said the companies coming into the market are being attracted by higher valuations.

But they warn that the outlook is slightly more bearish, going into next year.

Roger Tan, VP of SIAS Research said: “There’s definitely a pickup in liquidity for the month, but if you look at the current liquidity as compared to 2007-08, it’s still pretty low.

“The market has to grow larger, investor sentiments have to come back – these have to exist before we see further support of the IPOs.”

If the upcoming listings raise their expected amounts, it will bring the market capitalisation of new listings on the SGX this year to S$40 billion.

The Stock Exchange of Thailand (SET) composite index gained 5.06 points or 0.52 per cent to close at 969.28 points on Tuesday’s morning session. The trade value was 36.05 billion baht.

The increased exports, the stronger baht, and the higher interest rates have encouraged foreign capital to flow into the bond market in a large amount, said SET president Jarumporn Chotikasathien as reported by MCOT news online.

The capital had not overwhelmed the Thai bourse since foreign net buys totaled around 60 billion baht (2.0 billion U.S. dollars) in the past few months compared with foreign net selling of 58 billion baht (about 1.9 billion U.S. dollars) in May.

Consequently, it is likely that foreign capital would continue flowing into Asian regional and Thai bourses, he said, adding that the possible imposition of more measures to curb the capital inflow following the official assumption of the new governor had not dampened investment sentiment in SET because he saw no sign of such a Bank of Thailand (BoT) move.

Top five most active values were as follows;

PTT remained at 297.00 baht.

PTTEP remained at 160.00 baht.

ITD closed at 4.64 baht, down by 0.02 baht or 0.43 per cent.

SCC closed at 325.00 baht, down by 1.00 baht or 0.31 per cent.

PTTCH closed at 134.50 baht, down by 2.50 baht or 1.89 per cent.

In Manila Philippine Stock Exchange index shed 16.33 points or about 0.39 percent to close at 4,171.87.

Most sub-indices were in the red. Only the services and mining/oil counters bucked the day’s downturn. Dealers said some correction was needed to allow investors to reassess their current portfolio following the strong run-up since September.

Providing the impetus for profit-taking was the 78.41-basis-point or 0.72-percent decline in the Dow Jones Industrial Index overnight as a drop in U.S. factory orders reminded investors of the still fragile economic recovery.

Most Asian stock markets likewise slumped during the day.

At the local bourse, there were 57 advancers against 77 decliners while 46 stocks were unchanged. Value turnover stood at P6.3 billion.

Investors pocketed gains from Alliance Global Group Inc., Energy Development Corp., SM Investments Corp., Ayala Land Inc., Megaworld Corp., Lepanto Consolidated Mining Co. “A,” SM Prime Holdings Inc., Banco de Oro Unibank Inc., International Container Terminal Services Inc., JG Summit Holdings Inc., First Philippine Holdings Corp. and Metropolitan Bank & Trust Co.

On the other hand, the following stocks were buoyant for the session: Philippine Long Distance Telephone Co., Semirara Mining Corp., Metro Pacific Investments Corp., DMCI Holdings Inc., First Gen Corp., Philex Mining Corp. and Atlas Consolidated Mining & Development Corp.

In Jakarta Indonesia the JCI advanced 22.2 points, or 0.6 percent, to close at 3,591.70. About 7.7 billion shares worth Rp 5.16 trillion ($573.1 million) changed hands. Gainers outnumbered decliners 142 to 72.

The big gains in recent weeks have caused some analysts to warn of an impending correction. But Cece Ridwanulloh at Ekokapital Sekuritas said the stars were aligned for the JCI to see a significant rise to 3,900 to 4,000 by the end of the year.

Gains were led by the country’s biggest telecom, Telekomunikasi Indonesia, which climbed 2.6 percent. Bank Rakyat Indonesia, the country’s second-largest lender, rose 2.4 percent.

State-owned Bank Negara Indonesia rose 2 percent to Rp 3,775 on news it would provide Rp 600 billion in loans to finance weapons and equipment upgrades for the country’s Armed Forces.

Consumer goods giant Unilever Indonesia fell 0.6 percent to Rp 17,350, while Indofood Sukses Makmur, the country’s largest instant-noodle maker, rose 1.8 percent to Rp 5,650.

Meanwhile, the rupiah slipped for a third day, trading at 8,938 against the dollar as of the stock market’s close, compared with 8,928 on Monday, even after policy makers kept borrowing costs at a record low to support growth.

“BI is very concerned with achieving its economic growth target,” said Juniman, an economist at Bank Internasional Indonesia. “At the [benchmark] rate of 6.5 percent, foreign investors will still come to Indonesia. We expect the rupiah to strengthen.”

The central bank said on Tuesday that the economy may grow by 6 percent to 6.3 percent this year and 6 percent to 6.5 percent in 2011. It said it would try to avoid raising rates, counting on lending and reserve rules for banks to contain inflation.

BI Governor Darmin Nasution last month ordered local banks to set aside more cash in reserve to tame rising prices that would necessitate an interest rate hike if unchecked.

In Kuala Lumpur the Bursa Malaysia rose 0.68% to close at 1472.19 points on Tuesday, lifted by gains in Digi as the counter surged 18% to close at RM24.80.

The market traded within a range of 5.39 points between an intra-day high of 1472.32 and a low of 1466.93 during the session.

Most Actively traded stocks include PETRA-OR, KBUNAI, OILCORP, AXIATA, UEMLAND, TALAM, KNM, GENHK-C1, SAAG, and JCY.

Trading volume declined to 985.74 mil shares worth RM1505.40 mil as compared to Monday’s 1369.43 mil shares worth RM1706.80 mil.

Winners were DIGI (+380 sen to RM24.80), MAYBANK (+4 sen to RM8.94), GENM (+7 sen to RM3.53), AMMB (+7 sen to RM5.92) and CIMB (+2 sen to RM8.17).

Losers were AXIATA (-2 sen to RM4.43), PUBLIC BANK (-2 sen to RM12.56), MMC (-5 sen to RM3.15), SIME (-1 sen to RM8.50) and GAMUDA (-2 sen to RM3.87). Market breadth was negative with 319 gainers as compared to 411 losers.

The Finance Index added 0.38% to 13455.06 points, the Properties Index climbed 0.42% to 926.13 points and the Plantation Index rose 0.02% to 6847.91 points.

Petroliam Nasional Bhd (Petronas) saw its first quarter net profit surge 60% to RM12.3bil, driven by higher oil prices and better sales demand, but is uncertain on the outlook in the second half.

The group’s revenue for the three months ended June 30 of its 2010/11 financial year was up 26.3% to RM58.6bil from RM46.4bil a year ago, attributed to higher realised prices and better demand from emerging economies.

Crude oil prices averaged at US$78.65 per barrel for April till June 2010 due to favourable economic outlook in major economies and improved sentiments in the financial market, said its chief.

Petronas president and chief executive officer Datuk Shamsul Azhar Abbas anticipates that net profit for the current financial year will be better than the previous year based on better results seen for the first six months.


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