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ASEAN STOCK WATCH Asean Affairs  24 October 2012

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A total of 145 of the S&P 500 .SPX companies have reported results so far. Sixty-three percent have missed analysts' expectations for revenue. By contrast, since 1994 an average of 62 percent of companies have exceeded estimates. Over the past four quarters 55 percent of companies have beaten.

Stocks fell on Tuesday, putting the Dow industrials on track for the biggest drop since June 21, after a series of weak quarterly results from bellwether companies.

Economist Shayne Heffernan of expects ASEAN Markets to Sell Off in morning trade making Singapore and CHina good buying.

ASEAN and the RMB

A "renminbi bloc" has been formed in East Asia, as nations in the region abandon the US dollar and peg their currency to the Chinese yuan — a major signal of China's successful bid to internationalize its currency, a research report has said.

The Peterson Institute for International Economics, or PIIE, said in its latest research that China has moved closer to its long-term goal for the renminbi to become a global reserve currency.

Since the global financial crisis, the report said, more and more nations, especially emerging economies, see the yuan as the main reference currency when setting their exchange rate.

And now seven out of 10 economies in the region — including South Korea, Indonesia, Malaysia, Singapore and Thailand — track the renminbi more closely than they do the US dollar. Only three economies in the group — Hong Kong, Vietnam, and Mongolia — still have currencies following the dollar more closely than the renminbi, said the report, posted on the institute's website.

The South Korean won, for example, has appreciated in sync with the renminbi against the dollar since mid-2010.

China has long vowed to raise its currency's global sway, along with the rise of its economy, which became the world's second-biggest last year.

The goal has seen significant development in recent years as the country promotes renminbi-denominated cross-border trade and gradually loosens control over its capital accounts.

As a result, Hong Kong has quickly risen to be the world's biggest offshore renminbi trading center, with about 600 billion yuan ($95 billion) in deposits.

According to the latest report by the Society for Worldwide Interbank Financial Telecommunication, or SWIFT, renminbi-denominated trade accounted for 10 percent of China's total foreign trade in July. The figure was zero just two years ago.

From July 1 to Aug 31, global payments in the renminbi rose 15.6 percent, according to SWIFT, as payments in other currencies fell 0.9 percent on average.

The renminbi had a market share of 0.53 percent in August and has overtaken the Danish krone to become the 14th-highest global payment currency, the member-owned cooperative said.

Cross-border trade settled in renminbi will triple to 6.5 trillion yuan ($1.03 trillion) within three years as relations with the world's second-largest economy grow, Royal Bank of Scotland Group PLC was quoted as saying by Bloomberg on Oct 9.


Keppel Corp third-quarter net profit fell 15 per cent from a year earlier, due mainly to lower margins from the company's offshore and marine division.

For the three months ended September, net profit of the world's largest oil rig builder came in at S$346 million, down from S$406.1 million it made in the same period a year ago.

However, it is still above the S$324 million average forecast from analysts.

For the nine months ended September, the company's net profit climbed 47 per cent to S$1.62 billion.

The company's third-quarter revenue came in at $3.22 billion, up 19 per cent from the same period a year earlier.

But the rise in costs outpaced the company's revenue growth.

Material and subcontracting expenditure climbed 33 per cent to S$2.3 billion, while staff costs rose 9.8 per cent to S$395 million.

Meanwhile, net profit for Keppel's offshore and marine division fell 29 per cent year-on-year in the third quarter to S$241 million.

However, Keppel Corp remained upbeat about its growth opportunities in the sector.

"In Offshore & Marine, E&P spending remains buoyant, supported by sustained Brent oil prices of above US$100 per barrel," said Choo Chiau Beng, CEO of Keppel Corporation.

"Oil companies have strong impetus to continue sanctioning projects. Recent discoveries in the North Sea, as well as deepwater Mexico and both coasts of Africa, have also fuelled optimism for further exploration work," he added.

In a statement to the Singapore Exchange, Keppel Corp said its offshore and marine segment had secured S$7.3 billion in new orders from Brazil, Kazakhstan and Singapore in the third quarter.

This brings its net order book to S$13.1 billion at the end of September, with work extending to 2019.

Mr Choo said: "We remain resolved in executing our backlog of projects well, while sharpening our technology edge at the same time."


A new report from IFC and the World Bank finds that Thailand remains among the world’s most business-friendly countries.

Released today, Doing Business 2013: Smarter Regulations for Small and Medium-Size Enterprises notes that Thailand made paying taxes less costly by reducing the corporate income tax from 30% to 23%.

“Government agencies in Thailand have been collaborating to promote a friendly business environment," says Annette Dixon, World Bank Country Director for Thailand. “This, along with other measures such as improving the quality of education quality and promoting innovation, will help Thailand attract investors and remain competitive".

Thailand has also made starting a business easier by allowing the registrar at the Department of Business Development to receive the company’s work regulations. This has reduced the number of procedures needed in registering a company in Thailand.

“Thailand continues its efforts to reduce the cost and time of doing business. This, combined with reforms aimed at improvingskills and promoting greater competition in the services sector ,would promote greater investment and improve business operations,” says Kirida Bhaopichitr, World Bank Senior Economist for Thailand.

Thailand ranks as the 18th economy worldwide in Ease of Doing business and 6th in East Asia. Singapore and Hong Kong SAR, China, continue to provide the world’s most business-friendly regulatory environments for local entrepreneurs.

The report finds that 23 economies in East Asia and the Pacific have made their regulatory environment more business-friendly since 2005. During that time, China made the greatest progress in improving business regulations for local entrepreneurs. The report also notes that 11 of 24 economies in East Asia and the Pacific improved business regulations in the past year.
“This year, Taiwan, China, joined the global list of top 20 economies on the ease of doing business, which uses data for indicators that measure regulation affecting 10 key areas of the life cycle of local businesses,” said Augusto Lopez-Claros, Director, Global Indicators and Analysis, World Bank Group. “Taiwan, China, implemented regulatory reforms in two areas measured—protecting investors and dealing with construction permits. The Republic of Korea, already among the top 20, continued to make it easier to do business through regulatory reforms in four areas.”

Singapore tops the global ranking on the ease of doing business for the seventh consecutive year, while Hong Kong SAR, China, holds onto the second spot. Joining them on the list of the 10 economies with the most business-friendly regulations are New Zealand; the United States; Denmark; Norway; the United Kingdom; the Republic of Korea; Georgia; and Australia.


Bumi Armada Bhd's contract to provide its floating production, storage and offloading (FPSO) unit in the Okoro-Setu field, off Nigeria, has been extended another year.

It said on Tuesday Afren Energy Resources Ltd had exercised the first of the five one-year extensions from the original contract for the FPSO Armada Perkasa with effect from July 1, 2013.

The Malaysia-based international offshore oil and gas services provider said the contract extension was estimated at RM100mil.

Bumi Armada CEO Hassan Basma said its Armada Perkasa unit had been operating for Afren since 2008 with 99.8% uptime and it achieved its 1,000 days without loss time injuries in July this year.

"This contract extension underscores our international expansion and consolidation in our strategic markets of Africa, particularly in the Gulf of Guinea," he said.

The Armada Perkasa, which is 211.2 m long and weighs 58,557 deadweight tonnes, has a production capacity of 27,000 barrels per day of liquids and storage capacity for 360,000 barrels.


The permit system for mineral resources projects is set for an overhaul after the government on Monday issued a ruling intended to prevent future overlapping claims in the mining industry and to curb excessive issuance of new permits.

The Energy and Mining Resources Ministry regulation will adopt a model similar to that used in the oil and gas industries, said Thamrin Sihite, director general for coal and mineral resources at the ministry.

Under the present structure, a company can apply for a mining business permit, known as an IUP, for a specific parcel of land with a local government as long as it adheres to that government’s terms and condition.

But under the new rules, a potential miner must place a bid to compete with other companies in a process monitored by the central government, which then passes on the winning bid to a local government.

“We will define a number of mining areas, which will then be offered to interested bidders,” Thamrin said on Monday.

Thamrin said the number of IUPs issued has been uncontrollable since the regional autonomy law was passed in 2001, allowing local governments to issue mining permits.

“Before regional autonomy, we only issued up to 500 mining business permits, but since then the number has reached 10,000,” he added.

Thamrin said that the development had led to the emergence of overlapping claims on mining areas.

“In one particular case, we found that a local government issued a permit for an area bigger than its own size,” he said.

More than half of all mining business permits, totaling 10,566, have yet to receive approval from the government, Thamrin said.

He said that overlapping ownership claims could be reduced by defining a certain area for mining activities, which in turn would reduce the potential for land conflict, which can sometimes be fatal.

In December 2011, residents in Bima, West Nusa Tenggara, opposed mining operations of a joint venture between Sumber Mineral Nusantara and Australian-listed Arc Exploration. A deadly tussle ensued with police officers, who opened fire, killing at least three protestors.

Two months after the deadly incident, the government announced that it would halt issuing new mining business permits temporarily.

Thamrin said the government discussing with lawmakers lifting the mining permit moratorium, but first it must be certain that incidents like the one in Bima will not be repeated.

Analyst Pri Agung Rakhmanto, the executive director at Reforminer Institute, a think-tank of the energy and mineral industry, gave cautious support to the government’s move.

“The move is indeed positive, but it also indicates that the mining industry is being poorly managed if merely introducing a tender mechanism is considered a breakthrough,” he said.

Pri Agung questioned the basis of the government’s decision to issue mining business permits.

“Should the government map Indonesia’s mining potential properly, there will be no problems,” he added. “Mining mapping should be the foundation of mining industry management.”

Ladjiman Damanik, a deputy chief at the Indonesian Mining Professional Association, said the government needed to evaluate the blueprint for determining mining sites before undertaking its change in policy.

“The government has yet to decide which areas are for mining, plantation and forestry,” he said.

Ladjiman noted that most of the conflict over land stemmed from a lack of understanding of mining activities.

“A miner can have the exploration rights for an area of 10,000 hectares, but it never means that the production area will also be 10,000 hectares. But the people don’t understand this and they just protest,” he said.


The peso rose on Tuesday as investors speculated that the central bank of Japan would inject more funds to stimulate growth of the Japanese economy, a move that could spur demand for emerging-market assets.

The local currency closed at 41.315 against the US dollar, up by 7.5 centavos from the previous day’s finish of 41.39:$1.

Intraday high hit 41.29:$1, while intraday low settled at 41.335:$1.

Volume of trade amounted to $690.45 million from $738.65 million previously.

The appreciation of the peso, which came with the rise of other key Asian currencies against the greenback, came as some investors took the view that the Bank of Japan will inject more funds, such as through bond purchases, to spur the lackluster growth of the Japanese economy.

Traders expect that portions of the funds to be injected, if indeed there would be, will be used by holders to buy emerging-market assets and thus cause rise of Asian currencies in the weeks or months ahead. Consequently, they said, demand for such assets actually rose as yield-seeking investors took advantage of potential income opportunity.

Yesterday in Asia

Tokyo closed mixed as profit-taking offset earlier gains on a weaker yen. The Nikkei 225 index inched up 0.04 percent, or 3.54 points, to 9,014.25.

The euro had hit a five-month high of 104.60 yen in morning trade – extending a surge in New York late Monday following data that showed a sharp drop in Japanese exports.

Sydney closed flat, adding just 2.1 points to end at 4,543.1, while South Korea ended 0.76 percent, or 14.78 points, lower at 1,926.81.

Chinese shares ended down 0.86 percent, or 18.31 points, at 2,114.45 as investors await a turnaround in the domestic economy.

– Taiwan fell 35.56 points, or 0.48 percent, to 7,337.48.

Hon Hai Precision shed 0.47 percent to Tw$84.7 while Taiwan Semiconductor Manufacturing Co. was 0.35 percent lower at Tw$85.7.

– Manila ended 0.14 percent higher, adding 7.53 points to 5,432.32.

SM Investments gained 1.16 percent to 829.50 pesos and Metropolitan Bank and Trust rose 0.81 percent to 93 pesos.

– Wellington closed 0.40 percent, or 16.10 points, higher at 4,004.26.

Telecom gained 0.8 percent to NZ$2.48 and Vector was up 1.4 percent at NZ$2.90. Auckland Airport climbed 1.1 percent to NZ$2.70.

– Jakarta closed down 0.26 percent, or 11.23 points, at 4,330.15.

Retailer Ramayana Lestari Sentosa rose 2.8 percent to 1,100 rupiah and cigarette firm HM Sampoerna climbed 2.07 percent to 54,200 rupiah. Palm oil firm Sinar Mas Agro Resources dropped 2.86 percent to 6,800.

– Kuala Lumpur ended up 2.95 points, or 0.18 percent, at 1,664.90.

UEM Land Holdings added 3.2 percent to 1.93 ringgit while PPB Group was up 2.3 percent to 13.44. AirAsia ended down 1 percent at 3.09 ringgit.

– Singapore closed up 0.17 percent, or 5.26 points, at 3,050.93.

Singapore Airlines fell 0.75 percent to Sg$10.57 while Sembcorp Industries gained 0.55 percent to Sg$5.48.

– India fell 0.44 percent, or 83.42 points, to 18,710.02.

Private steelmaker Jindal Steel fell 2.43 percent to 390.9 rupees while wind energy giant Suzlon Energy declined 3.43 percent to 15.5 rupees.

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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