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ASEAN STOCK WATCH 8  October  2010

ASIAN Markets to Consolidate

Shayne Heffernan

ASEAN Markets are expected to open lower today as the market awaits NYSE:: Alcoa earnings and the start of the earnings season.

Stocks were flat in over night trading and there is little availbe to lift the ASEAN markets off all time highs today.

We expent to see consolidation in all Asean markets in the moring session and some buying to return late in the day.

Best buys today are Genting Singapore, PTT, CIMB

In Singapore the STI closed down 0.7% or 23.42 points lower at 3,166.65 lower on Thursday on profit-taking ahead of September US jobs data due out on Friday.

Losers outnumbered gainers 316 to 149. Overall volume traded was 1.55 billion shares worth S$1.81 billion.

The STI hit a 28-month high on Wednesday on continued improvement in risk sentiment globally that has seen safe haven assets like the US dollar plumb to multi-year lows against major currencies.

However, an unexpected decline in a private-sector US jobs survey released on Wednesday prompted some caution among investors ahead of September non-farm payrolls data due out on Friday.

Among the losers, property group Overseas Union Enterprise fell 6.6% to S$2.85 after a unit of Indonesia’s Lippo Group sold shares in OUE in a secondary market placement.

Gaming company Genting Singapore retreated 2.4% to end at S$2.03 while Sembcorp Marine fell 0.7% to S$4.30.

In Kuala Lumpur the Bursa Malaysia rose 0.12% to close at 1481.45 points on last-minute buying of index-linked stocks after trading in the negative territory on mild profit taking.

Most Actively traded stocks included KBUNAI, SAAG, JCY, DIALOG, TIMECOM, BJCORP, AXIATA, UEMLAND, TENAGA and CIMB.

Trading volume declined to 841.88 mil shares worth RM1523.02 mil as compared to Wednesday’s 954.74 mil shares worth RM1657.03 mil.

The Winners were BAT (+244 sen to RM49.94), CIMB (+6 sen to RM8.19), AXIATA (+2 sen to RM4.50), YTL (+10 sen to RM7.60) and YTLP (+2 sen to RM2.33).

The Losers were MISC (-8 sen to RM8.77), MMC (-6 sen to RM3.07), PUBLIC BANK (-2 sen to RM12.56), AMMB (-3 sen to RM5.94) and TNB (-2 sen to RM8.92). Market breadth was negative with 299 gainers as compared to 410 losers.

The Finance Index added 0.08% to 13498.71 points, the Properties Index climbed 1.19% to 940.50 points and the Plantation Index rose 0.08% to 6911.61 points. The market traded within a range of 5.68 points between an intra-day high of 1481.93 and a low of 1476.25 during the session.

In Jakarta the Index rose 11.71 points, or 0.3 percent, to 3,603.40, its ninth-straight record close. Volume was heavy, with 9.6 billion shares worth Rp 8.83 trillion ($989 million) traded. Decliners outnumbered gainers 132 to 89.

Saiful Adrian, an analyst at Ciptadana Securities, said he saw more upside ahead for the JCI despite the recent gains, which have seen the index climb 17 percent in the past five weeks.

He said profit-taking was relatively light, and predicted the index would reach 3,800 “in no time” given the strong economy and the global hunt for higher returns.

Metals producers advanced as prices continued to rise.

Timah, the country’s biggest tin company, rose 3.2 percent and Aneka Tambang, a state-run gold and nickel producer, advanced 2 percent.

Tin futures increased 1.9 percent to $26,412 a metric ton in London, set to extend Tuesday’s record.

Gold for immediate delivery jumped to a record for a second day, rising 0.6 percent to $1,348 an ounce in London.

Lippo Karawaci, the country’s biggest property developer, gained 4.6 percent on Wednesday, a day after soaring 8.3 percent on news that it would sell some of its malls, hospitals and hotels to raise capital in order to triple its assets by 2015.

Meanwhile, the rupiah gained 0.2 percent to 8,923 against the dollar as of the market’s close on Wednesday, contributing to this year’s 5.2 percent advance.

Analysts said the rupiah rally was triggered by unceasing demand for high-yielding assets in light of near-zero interest rates in Japan and the United States.

Bank Indonesia on Tuesday kept its benchmark rate at 6.5 percent for a 14th-straight month, while the Bank of Japan effectively lowered its policy rate to zero and pledged to buy up to $60 billion of assets.

The US Federal Reserve’s key rate is zero to 0.25 percent, and Chairman Ben S. Bernanke said on Monday that a first round of asset purchases had lifted the economy and further buying would likely help more.

“The American economy is still weak and the spread between the BI rate and the Fed funds rate is still wide,” said Rully Nova, a currency analyst at Bank Himpunan Saudara. “That’s supporting a stronger rupiah.”

However, further gains in the rupiah could be limited if the central bank began selling the currency for dollars to counter the appreciation that was putting exports at risk, he added.

The nation’s foreign-exchange reserves climbed $5.2 billion last month to a record $86.55 billion, the biggest increase since April, the central bank reported on Wednesday.

“Bank Indonesia will intervene in the rupiah so it won’t quickly move below 8,900,” Rully said.

Foreign holdings of local-currency government bonds climbed by Rp 78.8 trillion this year to Rp 186.8 trillion as of Oct. 5, figures from the Ministry of Finance showed.

Overseas funds have pumped a net $2.4 billion into Indonesian shares this year, according to exchange data.

SET index closed at 970.90, down 8.10 or 0.83% in trade worth 31.68 billion baht on Thursday.

The Bank of Thailand plans no extraordinary steps to arrest the rise of the baht, which broke the 30 barrier against the US dollar yesterday for the first time in 13 years.

Dollar depreciation was the key factor behind gains in currencies across the region. Dealers forecast the baht could reach 29 to 29.50 by the end of the year given the trend of dollar weakness.

Another dealer at a local bank said the baht was now up by 11.4% against the dollar for the year to date, compared with 10.8% for the Malaysian ringgit, 7.2% for the Singapore dollar, 6.1% for the Philippine peso, 5.4% for the Taiwan dollar and 12% for the Japanese yen.

“The main factor that drives baht appreciation is our surplus from trade in goods and services, rather than the interest rate differentials between local and overseas markets,” said Dr Atchana.

The central bank’s policy interest rate is now 1.75% against zero to 0.25% in the United States. India and Indonesia have higher interest rate differentials.

Dr Atchana said the strengthening baht would lessen the need for the central bank’s Monetary Policy Committee to increase interest rates to curb the inflation.

One factor causing the baht to strengthen rapidly has been the low price of equities, as the economy and the Stock Exchange of Thailand had underperformed regional peers during the past two years, she said.

Dr Atchana said the strong baht had not affected overall export trends yet, as the central bank found that trade partners’ economies were a more significant factor than the currency.

Stocks with most active value were as follows:

PTT decreased to 300.00 baht, down 2.00 baht.

PTTEP decreased to 166.50 baht, down 3.50 baht.

BANPU decreased to 740.00 baht, down 2.00 baht.

ITD increased to 4.82 baht, up 0.20 baht.

CPF decreased to 23.70 baht, down 0.40 baht.


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