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ASEAN STOCK WATCH Asean Affairs  23 October 2012

ASEAN Market Preview

Japan logged a record trade deficit for the April-September half-year, as sovereign debt troubles in Europe coupled with rising tensions with China over a territorial dispute caused Japanese exports to plunge, the government said Monday.

According to Japan's Finance Ministry, for the first half of fiscal 2012 through September, Japan saw trade deficit surging 90. 1 percent from a year earlier to 3.22 trillion yen (41 billion U.S. dollars), marking the worst deficit since records began in 1979.

In the same period, the ministry noted that trade to Europe slumped by 16 percent, creating Japan's first deficit with the European Union that stood at 92.1 billion yen (1.1. billion U.S. dollars) while the value of exports to China, the world's second- largest economy and Japan's largest trading partner, retreated 8 percent to 59 billion yen.

In September alone, Japan's deficit stood at 558.6 billion yen (7.04 billion U.S. dollars), marking the third successive month of increase and the largest recorded for September, the ministry's preliminary data showed.

The Dow industrials and the S&P 500 ended flat on Monday after a late-day bounce, as worries about slower global growth hitting corporate sales were offset by earnings that beat expectations.

Based on the latest available data, the Dow Jones industrial average inched up 2.38 points, or 0.02 percent, to end unofficially at 13,345.89. The Standard & Poor's 500 Index edged up just 0.62 of a point, or 0.04 percent, to finish unofficially at 1,433.81. The Nasdaq Composite Index gained 11.33 points, or 0.38 percent, to close unofficially at 3,016.96.


Thailand’s integrated national petroleum and petrochemical company, PTT PCL, returned to the international dollar bond market after an absence of seven years as it priced on October 18 a dual-tranche offering totaling US$1.1 billion that achieved low coupons.
The Reg S/144A deal comprises of a 10-year tranche amounting to US$500 million, which was priced at 99.605% with a coupon of 3.375% to offer a yield of 3.422%. This represented a spread of 160bp over the US treasuries, or 40bp inside the initial guidance of 200bp area.
The other tranche was for 30 years amounting to US$600 million, which was priced at 98.702% with a coupon of 4.50% to offer a yield of 4.58%. This was equivalent to a similar spread of 160bp over the US treasuries, or about 50bp back of the initial guidance of between 200bp and 210bp.
With a similar spread on both tranches, PTT became one of the few issuers which managed to price with flat 10-year and 30-year curves. The only other issuers to have done that in Asia were CNOOC, which arranged a 10-year and 30-year bonds totaling US$2 billion in April 2012, and Sinopec, which launched a triple tranche of five-year, 10-year and 30-year bonds totaling US$3 billion in May this year.
PTT last tapped the international bond market in July 2005, highlighting the scarcity value of the credit and the opportunistic nature of the latest fund raising. The pricing set new record low coupons in both the 10-year and 30-year tenors for an overseas debt offering from the PTT Group. The 3.375% coupon for the 10-year and the 4.50% coupon for the 30-year were the lowest ever coupons achieved by a Thai issuer in both tenors to date, with the 30-year rate also the lowest ever so far achieved by an Asian national oil and gas champion in the end of the curve.


Private equity giant Blackstone Group and technology park developer Embassy Property Developments will look at listing a real estate investment trust (REIT), which owns and operates income yielding office space portfolio, on the Singapore Stock Exchange.

REITS are companies that hold real estate investments in rent income assets.

Last week, Blackstone sealed a Rs 1,015 crore deal with Embassy for a 50% stake in Pune Dynasty Projects, a special purpose vehicle (SPV) in which Embassy holds three of its FDI-compliant commercial business parks.

The business parks include Manyata Embassy Business Park and Embassy Golf Links Business Park, in Bangalore, and Embassy TechZone in Pune. Together, the three business parks yield annual rental income of about Rs 700 crore.

This news of Blackstone investing in Embassy's tenanted office portfolio was first reported by TOI on July 11. "We are looking to build the commercial rentyielding assets in this SPV and at a later date will look at making this entity into a REIT, which can be listed," said Jitendra Virwani, CMD, Embassy Group. In 2007, Virwani tried a REIT listing in Singapore. But at that time the markets tanked and the issue did not happen.


FBM KLCI was in the red on Monday, just after the index closed at a record high last Friday.

Astro, which was listed last Friday with an offer price of RM3, came under selling pressure and saw active trade.

At the close, the FBM KLCI was down 4.4 points or 0.26% to 1,661.95. Turnover was 1.28 billion shares valued at RM1.46bil. There were 259 gainers, 407 losers and 336 counters unchanged.

Bloomberg reported most emerging-market stocks retreated as a bigger-than expected decline in Japanese exports countered speculation Chinese policy makers will introduce measures to boost equities

Among the key regional markets, Taiwan's Taiex fell 0.48% to 7,373.04; South Korea's Kospi gave up 0.12% to 1,941.59, Singapore's Straits Times Index shed 0.11% to 3,045.67.

However, Japan's Nikkei 225 rose 0.09% to 9,010.71; Hong Kong's Hang Seng Index added 0.68% to 21,697.55, Shanghai's Composite Index was up 0.21% to 2,132.76 and Singapore's Straits Times Index

US light crude oil rose 63 cents to US$90.68 and Brent 58 cents higher at US$110.72. Spot gold rose US$3.62 to US$1,725.37.

The ringgit was quoted at 3.0529.


Indonesia's foreign direct investment rose 22 percent in the third quarter from one year ago, after posting 30 percent growth at the previous quarter, the investment board told reporters on Monday, driven by the base chemical, mining, and transportation industries.

Total FDI in July to September gained 22 percent year-on-year to Rp 56.6 trillion ($5.9 billion), after 30.2 percent annual growth in the second quarter.

Indonesia's economy is projected to grow 6.1-6.5 percent in 2012, relying on foreign direct investment and domestic consumption.
The country has drawn strong portfolio funds and FDI in recent months after it regained investment grade status from two rating agencies.

Indonesia recorded total FDI of Rp 175.3 trillion in 2011, rising 18 percent from a year earlier.


Japanese industrial giant Sumitomo Corp. may make another bid for the long-term contract to maintain the Metro Rail Transit (MRT) train line on Epifanio de los Santos Ave.

In an interview, a top Sumitomo executive said the company should be given credit for keeping the MRT running relatively smoothly despite a shortage of spare parts for most of the train line’s outdated equipment and systems.

“We know the business very well since we were the operations and maintenance (O&M) contractor for 12 years until last Friday,” said the official, who requested anonymity due to the sensitivity of the matter.

“But still, prudence dictates that we step back and take a more objective look at the opportunity,” the official said.

The official said Sumitomo kept MRT running despite challenges posed by old coaches and lack of spare parts. “We have a name to protect so we made sure MRT was convenient and safe for our riders. Up to our last day as contractor last Friday, we kept all the 73 coaches running well,” the official said. “We turned over the whole system completely and properly, with the process lasting up to the early hours of Saturday.”

The official said Sumitomo remained supportive of the government and its efforts to improve its infrastructure and grow the economy. “The Philippines is a bright economic spot. Sumitomo is a global conglomerate. It makes sense for the two to work together for their mutual benefit.”

Until last Friday, Sumitomo was responsible for the upkeep of the MRT train line. Sumitomo never directly participated in the maintenance of the MRT. Instead, it had partnered with a local subcontractor, TES Philippines.

Local firm PH Trams-CB&T was appointed to replace Sumitomo for an interim period of six months. During that time, the government said it would start a bidding process to find a company that would handle the train line’s maintenance for the long term.

In a briefing Monday, the Department of Transportation and Communications said it was considering suing MRT Corp. (MRTC), the Edsa train line’s private concessionaire, for letting Sumitomo’s contract expire without finding a new replacement.

Yesterday In Asia

Tokyo ended 0.09 percent higher as late bargain-hunting wiped out the morning session’s losses sparked by Wall Street’s sharp fall and poor September trade figures. The Nikkei added 8.03 points to 9,010.71.

Hong Kong added 0.68 percent, or 145.79 points, to 21,697.55 – a 14-month high – boosted by the Hong Kong Monetary Authority’s intervention in currency markets on Friday to lessen the local dollar’s rise against the greenback.

Investors said the move – the first since December 2009 – showed confidence in Hong Kong as an investment destination.

Shanghai rose 0.21 percent, or 4.46 points, to 2,132.76

But Sydney closed down 0.66 percent, or 30.1 points, at 4,541.0, while Seoul was 0.12 percent, or 2.25 points, off at 1,941.59.

– Taipei fell 0.48 percent, or 35.72 points, to 7,373.04.

Taiwan Semiconductor Manufacturing Co. shed 0.81 percent to close at Tw$86.0 while Hon Hai Precision was 0.82 percent lower at Tw$85.1.

– Manila closed 0.14 percent lower, shedding 7.57 points to 5,424.79.

Philippine Long Distance Telephone Co. slipped 0.07 percent to 2,668 pesos and SM Investments dropped 0.48 percent to 820 pesos.

– Wellington was closed for a public holiday.

– Kuala Lumpur fell 4.4 points, or 0.26 percent, to close at 1661.95.

AirAsia lost 1.3 percent to 3.12 ringgit, YTL Power eased 1.2 percent to 1.61 and UEM Land rose 2.2 percent to 1.87.

– Singapore declined 0.11 percent, or 3.25 points, to 3,045.67.

United Overseas Bank was up 0.27 percent to Sg$18.60 while Keppel Corp. sank 1.33 percent to Sg$11.14.

– Bangkok ended up 0.21 percent, or 2.71 points, at 1,310.42.

Telecoms company Advanced Info Service lost 0.47 percent to 212 baht, while Bangkok Bank fell 2.39 percent to 184 baht.

– Jakarta closed up 0.23 percent, or 10.12 points, at 4,341.38.

Mobile phone provider Indosat rose 2.48 percent to 6,200 rupiah and cement firm Indocement Tunggal Perkasa was up 1.63 percent at 21,850 rupiah. Consumer goods company Hero Supermarket dropped 1.95 percent to 3,775.

– India ended up 0.59 percent, or 111.13 points, at 18,793.44.

Engineering giant Larsen and Toubro rose 2.17 percent to 1,668.2 rupees and software exporter TCS rose 2.26 percent to 1,319.5.

Shayne Heffernan Ph.D.  

Linda Johnson, Business Development Director - Private Client Group, Heffernan Capital Management
3 Raffles Place #07-01
Bharat Building Singapore 048617
Tel: +65 6329 6408 Fax: +65 6329 9699
Email :
Suite 53 Athenee Tower
63 Wireless Road, Lumpini, Pathumwan, Bangkok 10330
New York 347 5th Avenue, Suite 1402-508 NY, NY 10016


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This year in Thailand-what next?

AseanAffairs   04 January 2011
By David Swartzentruber      

It is commonplace in journalism to write two types of articles at the transition point between the year that has passed and the New Year. As this writer qualifies as an “old hand” in observing Thailand with a track record dating back 14 years, it is time take a shot at what may unfold in Thailand in 2011.

The first issue that can’t be answered is the health of Thailand’s beloved King Bhumibol, who is now 83 years old. He is the world's longest reigning monarch, but elaborate birthday celebrations in December failed to mask concern over his health. More






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