Sign up | Log in



Home  >>  Daily News  >>  ASEAN STOCK WATCH

ASEAN STOCK WATCH Asean Affairs  7 October 2012

ASEAN Equities Preview

By Shayne Heffernan Ph.D.

Economist Shayne Heffernan takes a look at the week ahead on equity markets

Main Points

Market Correction Expected
EuroCrisis to Worsen
Selling USA, Hong Kong, Thailand and Indonesia
Buying Shanghai and Singapore
Exiting USD and Euro
Buying Yen and SGD
The AAPL Effect will Reverse

Thanks to aggressive market manipulation by central banks around the world, the Standard & Poor's 500 index gained 5.8 percent over the third quarter. That sharp rally occurred even as companies were struggling. Earnings for that period are forecast to fall 2.4 percent from the year-ago quarter. If that happens, this would be the first earnings decline in three years, according to my Thomson Reuters data.

That manipulation was made easy as the Exchanges on Wall St are overweight AAPL to a ridiculous level, but as Apple has some issues, competitors flood the market, Q2 2013 may be a struggle at Apple Inc. With the new iPhone 5 and good Christmas sales expected.

Fourth-quarter estimates for S&P 500 companies show a 9.5 percent gain in profit from a year ago, according to my Thomson Reuters data. I do not think that is a realistic goal, and we may see some spectacular misses.

The earnings season will kick off on Tuesday with results from Dow component Alcoa NYSE:AA after the bell. Analysts expect Alcoa's third-quarter results to show it broke even, down from a profit of 15 cents per share a year earlier.

While estimates have come down sharply in all 10 S&P 500 sectors since the start of the year, technology is one area where the lower expectations are most notable. Slower growth in China is a big factor in that trend.

Earnings growth in the tech sector is expected to be just 2.3 percent for the quarter, compared with a July 1 forecast of 13.1 percent. Apple Inc NASDAQ:AAPL is a big driver of those gains.

Technology's profit growth has been crucial for the S&P 500. Minus technology, S&P 500 earnings are expected to be down 3.4 percent.

The tech sector is where the slowdown in China's economy is having the biggest impact.

With almost no revenue growth, U.S. companies have been topping Wall Street's earnings expectations in recent quarters through cost reductions. That path to beating profit forecasts, however, will become increasingly difficult as many companies have already made most of the obvious cuts. Those cuts of course reduce the growth in the revenue of service and product suppliers, and the cycle is due to bite the markets.

Asia’s worsening outlook is likely to be underlined when the IMF provides an update on the global economy in a twice-yearly report on Tuesday, in the run-up to weekend meetings of finance ministers from around the world in Tokyo.

But is it time to hit the panic buttons? Has Asia really lost its economic power? No not at all, but it is time to take a good look at your exposure, book some profits, hedge and make sure what you own represents value. Of all the regions in the world that are struggling to cope with the fallout from Europe and the United States, Asia has the most ammunition in its policy armory to respond.

Right now due to the relative low values I am shifting investments out of the USA, Hong Kong, Thailand and Indonesia towards Shanghai and Singapore both exchanges remain cheap in PE terms.

The European debt crisis and weakness in the United States have long been drags on Asian growth, but throw in China’s difficult leadership transition and the outlook is grim.

As Asia’s powerhouses China and India slow faster than many had expected, the ADB last Wednesday revised down its growth estimates for the region’s emerging economies to the lowest level since 2009.

Echoing assessments from the International Monetary Fund, the bank also warned of significant risks arising from the eurozone and the uncertain recovery in America, both of which are major export markets for Asian manufacturers.

The bank cut its 2012 growth forecast for developing Asia, which comprises 45 nations, from 6.9 percent in April to 6.1 percent — the lowest since 2009 when the region expanded 6.0 percent.

It also revised downward the 7.3 percent growth outlook for 2013 to 6.7 percent. The region expanded 7.2 percent in 2011.

China’s gross domestic product (GDP) was seen expanding 7.7 percent this year — slow by the country’s recent standards — before bouncing back to 8.1 percent in 2013, still well below the 9.3 percent achieved last year.

The Manila-based lender said India would see GDP growth slow to 5.6 percent in 2012 before picking up to 6.7 percent next year.

Analysts are wondering when will China crack the whip and provide the policy stimulus its economy needs to avoid a hard landing, but is it even possible? The only access China has to drive exports is to weaken the RMB, a move that would be met with strong resistance, as the Americans seem to think they are the only ones allowed to manipulate currency values to improve exports and hinder imports.

"the slowdown in the USA and the debacle that Europe has become have impacted Asia, but the slowdown in China,  is far more important than either for Asia" Shayne Heffernan said in a note to traders on the weekend.


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


Comment on this Article. Send them to
Letters that do not contain full contact information cannot be published.
Letters become the property of AseanAffairs and may be republished in any format.
They typically run 150 words or less and may be edited
submit your comment in the box below 




1.  Verifier

1. Verifier

For security purposes, we ask that you enter the security code that is shown in the graphic. Please enter the code exactly as it is shown in the graphic.
Your Code
Enter Code

Today's  Stories    9 October 2012   Subsribe Now !
• Thai PM unveils $90bn infrastructure plan  Subcribe: Asean Affairs Global Magazine
• Obama signs Myanmar finance bill into law Asean Affairs Premium
• Thailand UAE ties come closer
Research Reports
on Thailand 2007-2008

•Textiles and Garments Industry

•Coffee industry

•Leather and footwear industry

•Shrimp industry

• TIME 2012 will be held during colorful...
• IMF cuts global growth forecast
Asean Analysis              28 September 2012
Advertise Your Brand
• Asean Analysis- September 28, 2012  
• Asean Weekly- September 28, 2012 Sponsor Our Events

Asean Stock Watch     9 October 2012 

• Asean Stock Watch- October 9, 2012 p
• Asean Stock Watch- October 7, 2012

ASEAN NEWS UPDATES      Updated: 04 January 2011

 • Women Shariah scholars see gender gap closing
• Bank Indonesia may hold key rate as inflation hits 7 percent

• Bursa Malaysia to revamp business rules
• Private property prices hit new high in Singapore • Bangkok moves on mass transport
• Thai retailers are upbeat
• Rice exports likely to decline • Vietnamese PM projects 10-year socioeconomic plan


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


Home | About Us | Contact Us | Special Feature | Features | News | Magazine | Events | TV | Press Release | Advertise With us

| Terms of Use | Site Map | Privacy Policy  | DISCLAIMER |

Version 5.0
Copyright © 2006-2020 TIME INTERNATIONAL MANAGEMENT ENTERPRISES CO., LTD. All rights reserved.
Bangkok, Thailand