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||Asean Affairs 25 October 2012
ASEAN Market Preview
The Commerce Department said on Wednesday that new home sales increased 5.7 percent to a seasonally adjusted 389,000-unit annual rate -- the fastest pace since April 2010, when sales were boosted by a tax credit for first-time home buyers.
Although sales in August were revised down to a 368,000-unit rate from the previously reported 373,000 units, the tenor of the report was relatively strong, with the median price of a new home rising 11.7 percent from a year ago.
The quickened pace in the housing sector is good news for the economy, but it remains one of the few bright spots.
The Chinese government has vowed to reform state-dominated industries and aid them in market entry, a senior official said Wednesday.
The country will stick to reforming its state-owned enterprises and helping them engage the market, said Wang Yong, director of the State-Owned Assets Supervision and Administration Commission (SASAC).
He made the comments while delivering a report on state-owned enterprise reform at the bi-monthly session of the Standing Committee of the National People's Congress (NPC), China's top legislature.
The country will speed up reforms for the railway, postal and salt industries so that companies in those sectors can relinquish their roles as supervisors and stakeholders, Wang said.
"More efforts will be made to reform the power, telecommunications, oil and petrochemical industries. Market entry into these sectors will be expanded based on the development of these industries," he said.
The government will push for large state-owned enterprises to go public or list their main businesses if conditions allow, Wang said.
The government will encourage companies that are not fit to be listed to hasten restructuring, as well as introduce corporate governance for companies solely held by the state, he said.
China has endeavored to reform its bulky state-owned enterprises since it introduced its market economy in the late 1970s.
Singapore, Hong Kong and New Zealand continue to be the easiest countries in the world to do business in, while local entrepreneurs in developing nations are finding it easier to do business than at any time in the last 10 years, according to the World Bank and IFC's latest Doing Business report.
The improvement in the ease with which people are saying they are able to do business in the world’s developing countries highlights “the significant progress that has been made in improving business regulatory practices across the globe”, according to a summary of the 282-page report’s findings.
The study looks at 185 countries, and examines such indicators as how long it takes to start a business, and how difficult and time consuming it is to submit tax returns, export or import goods, obtain credit and register a property.
Thai exports are likely to miss growth targets for 2012, a top official said Wednesday, as the global economic slowdown and a slump in rice shipments hit demand.
Export growth for the whole year could reach five percent – 10 percentage points lower than forecast – with sales to overseas markets slipping more than one percent between January and September to $172.35 billion.
“We probably cannot reach the figure of 15 percent for export growth,” Deputy Commerce Minister Poom Sarapol told reporters.
Imports were up 5.76 percent to $184.3 billion January-September, creating a trade deficit of $11.95 billion, compared with a $5.3 billion surplus in the same period of 2011, he added.
Thai rice shipments were worst hit, suffering a near 37-percent slump in the first nine months of the year, according to the commerce ministry’s estimates.
Analysts say a controversial government scheme launched by the Thai government to buy rice from farmers for 50 percent more than the market price has hit the competitiveness and created massive stockpiles of the grain.
“Thailand has lost 40 to 50 percent of (its share of) the world rice market,” Thanavath Phonvichai, an economist from the University of the Thai Chamber of Commerce, told AFP.
But the scheme has improved the lives of the farmers and bolstered domestic food security, the economist added, quoting research predicting that Thailand could regain its status as the world’s No. 1 rice exporter next year.
Thai exports showed signs of recovery in September, with shipments increasing 0.20 percent to $20.78 billion on the corresponding period in 2011.
Sunway REIT, Malaysia's largest Real Estate Investment Trust (REIT), aims to achieve RM7 billion in total assets under management in three to five years through a combination of acquisitions from the Sponsor (Sunway Bhd) and external acquisitions.
Sunway REIT Management Sdn Bhd Chief Executive Officer Datuk Jeffrey Ng said: "Our core investment assets are located in the thriving townships master planned and developed by our Sponsor. "For example, Sunway Resort City (SRC) is a bustling township where four of our assets are located with different exposure to the sub-sectors of the property market. "The retail mall, hotels and office are enjoying strong business synergies from the township.
Any potential assets of other sub-sectors within the township that may be acquired is expected to enjoy similar business synergies," he told Bernama in an email interview. Listed on the Main Board of Bursa Malaysia Securities Bhd on July 8, 2010, Sunway REIT is the largest REIT in Malaysia in terms of asset size at RM4.63 billion as at June 30, 2012, Ng said.
He said with a market capitalisation of RM3.99 billion (about US$1.3 billion) as at Oct 18, 2012, Sunway REIT is one of the largest retail-focused REITs listed on Bursa Malaysia. Ng said Sunway REIT was established with an initial portfolio of eight assets and has since grown to 11 assets spanning Selangor, Kuala Lumpur, Penang and Perak. On Oct 9 this year, Sunway REIT announced the proposed acquisition of Sunway Medical Centre for RM310 million, which is pending approval from the Securities Commission and Bursa Malaysia as well as the unitholders. With the acquisition, Sunway REIT's portfolio will expand to 12 properties with total portfolio size of RM4.94 billion.
As at June 30, the portfolio by property value comprises office (9 per cent), hotel (24 per cent) and retail (67 per cent), with most of the assets in Selangor (75 per cent), followed by Kuala Lumpur (17 per cent), Perak (1 per cent) and Penang (7 per cent). Ng said Sunway REIT does not intend to expand overseas as "we are of the opinion that there are many untapped pportunities in Malaysia especially in the larger cities.
"Sunway REIT will only consider overseas assets provided that they are opportunistic in nature with extensive asset enhancement initiatives and turnaround potential," he said, adding Sunway REIT continues to search for good quality assets across the nation. Ng was here recently for the The Asia Pacific Real Estate Association (APREA) Award presentation. Sunway REIT was picked as overall winner for the APREA Best Practices Award 2012 under the Emerging Markets category (comprising Malaysia, India, Phillipines, Thailand and Vietnam).
The rate of lending growth at the nation’s big lenders has fallen in the past five weeks, but there is a positive outlook for the rest of this year, a central banker said.
Halim Alamsyah, a deputy governor at Bank Indonesia, said the central bank has learned that loan growth by lenders has been in a slump since September, but it is likely that the country’s 119 commercial lenders will still deliver strong results across the year.
“It was due to slowing exports. Some companies reduced taking loans for working capital or any other types of loans,” Halim said in Yogyakarta on Monday.
Halim was confident that commercial bank loan value would expand by 23 percent to 24 percent this year, as consumer spending remains strong and helps lenders boost credit. He added that loans in the property sector also remain strong.
Indonesian lenders including Bank Negara Indonesia, Bank Rakyat Indonesia and Bank Mandiri are set to benefit from rising loan demand as consumers and corporations borrow to finance their businesses.
Lending by the country’s commercial banks grew 23.6 percent to Rp 2,400 trillion ($250 billion) in the first eight months of this year, according to data from the central bank.
Halim dismissed the impact of Bank Indonesia’s recent ruling to raise the down payments required to buy cars and motorbikes.
The 25 percent increase in vehicle down payments was part of Bank Indonesia’s ruling in June to curb excessive loan demand and bad debts.
Bank loans account for around 30 percent of the country’s gross domestic product.
Analysts said that loan growth in Indonesia remains strong because the central bank prefers to keep borrowing costs low to spur growth in Southeast Asia’s largest economy.
Bank Indonesia kept its benchmark rate at record low of 5.75 percent in early October. Indonesia’s central bank one of few policy makers in the region that has not tightened its monetary policy in the face of the global slowdown.
Gotianun-led East West Bank sees its 2012 net profit hitting P1.8 billion on the back of a double-digit growth in loans and an above-industry loan margin.
Based on materials disclosed to the Philippine Stock Exchange on Wednesday, EWB sees loans expanding by 35 to 40 percent this year. In April, when the bank was doing its road show for its stock debut, the target loan growth for this year was only 20-25 percent.
Alongside the faster-than-expected loan expansion, the bank’s net interest margins are seen settling at 5 percent.
In the first semester, the bank’s net profit grew by 3 percent year on year to P910.5 million, translating to a return on average equity of 13.1 percent. This put the bank on track with its full-year profit guidance. Last year, net profit amounted to about P1.7 billion.
In terms of portfolio mix, more than half of the portfolio was still in consumer lending.
This year, the bank said it started tapping into affiliate property firm Filinvest Land’s “more mature” portfolio, so far purchasing around P1 billion in receivables. “We’ll continue to work with FLI on increasing our mortgage book,” the bank said.
On Basel III, East West bank said its current projections showed that it would be compliant with this global adequacy framework by the time the Bangko Sentral ng Pilipinas implements it in 2014. “We are currently revisiting our financial projections to firm up when we’ll need additional capital,” the bank said. Basel III introduces a complex package of reforms designed to improve the ability of banks to absorb losses, extend the coverage of financial risks and have stronger firewalls against periods of stress.
The bank expects return on equity (ROE) to average 12 percent in 2012 due to its branch-expansion program as well as the additional capital raised early this year. But its medium- to long-term target is to attain an ROE of at least 15 percent.
After getting its universal license upgrade from the BSP, the bank said its current focus would still be in core banking operations but added that it was studying the feasibility of entering investment banking and leasing.
East West Bank last year took advantage of the BSP’s temporary liberalization of branch licensing in restricted areas ahead of the 2014 full liberalization. The bank is expected to have a significant presence in eight restricted areas within the National Capital Region by 2014, complemented by a nationwide footprint totaling at least 350 branches.
The bank has 193 branches as of October 19. New branches opened this year totaled 71. Average capital spending for each new branch is P7.1 million.
Yesterday in Asia
Tokyo closed 0.67 percent lower, shedding 59.95 points to 8,954.30, Seoul fell 0.67 percent, or 12.85 points, to 1,913.96 and Sydney ended down 0.82 percent, or 37.3 points, at 4,505.8.
Hong Kong ended 0.31 percent higher, adding 66.23 points to 21,763.78 while Shanghai edged up 0.07 percent, or 1.54 points, to 2,115.99.
Investors took fright at big falls in New York after poor earnings figures and guidance from DuPont, United Technologies, UPS, Xerox, Radio Shack and 3M suggested that the US corporate earnings boom is stalling.
– Taipei fell 0.31 percent, or 22.60 points, to 7,314.88.
Taiwan Semiconductor Manufacturing Co. shed 0.35 percent to Tw$85.4 while leading smartphone maker HTC rose 2.13 percent to Tw$263.5.
– Manila closed 0.62 percent lower, shedding 33.63 points to 5,398.69.
SM Investments dropped 1.57 percent to 816.50 pesos while Ayala Corp. fell 0.14 percent to 433 pesos.
– Wellington closed flat, edging down 2.81 points to 4,001.45.
Telecom rose 0.2 percent to NZ$2.48 and Contact Energy was up 1.9 percent at NZ$5.51.
– Singapore closed down 0.20 percent, or 6.20 points, at 3,044.73.
City Developments shed 1.04 percent to Sg$11.45 and United Overseas Bank slid 0.65 percent to Sg$18.40.
– Kuala Lumpur rose 0.19 percent, or 3.09 points, to 1,664.90.
UEM Land Holdings added 11.4 percent to 2.15 ringgit while RHB Capital gained 1.8 percent to 7.46. AirAsia Bhd lost 1.6 percent to close at 3.04 ringgit.
– Bangkok fell 1.18 percent, or 15.42 points, to 1,295.00.
Mobile telephone giant Advanced Info Service lost 4.25 percent to 203 baht, while Bangkok Bank slipped 3.26 percent to 178 baht.
– Jakarta closed up 0.12 percent, or 5.23 points, at 4,335.38.
Synthetic fibre manufacturer Asia Pacific Fiber rose 2.33 percent to 220 rupiah, state-controlled miner Aneka Tambang climbed 1.57 percent to 1,290 rupiah and cigarette firm Gudang Garam was down 0.99 percent at 50,050 rupiah.
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