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ASEAN STOCK WATCH 21  September  2010

ASEAN Markets Building to Rally

Shayne Heffernan

In Manila the Philippine Stock Exchange gained 74.02 points or 1.86 percent to close at a historic high of 4,053.32.

The day’s rally was led by a buying binge on mining/oil, financial and industrial counters, which jumped by 7.97 percent, 2.47 percent, 2.45 percent, respectively. Value turnover was large at P12.96 billion which included some block transactions.

There were more than three stocks that advanced for every single one that declined.

Index heavyweight Philippine Long Distance Telephone Co. led the day’s ascent, alongside Energy Development Corp., Philex Mining Corp., Metro Pacific Investments Corp., Philippine National Bank, Atlas Consolidated Mining & Development Corp., Megaworld Corp., Metropolitan Bank & Trust Co., Filinvest Land Inc. and First Gen Corp.

Since the start of the year, the PSEi had gained by another 1,000.64 points or about 33 percent, making it one of the best performing bourses in the region. In 2009, the PSEi rose by 63 percent but mostly on thinner trading dominated by local investors.

This year, foreign investors are buying into the local market in a big way, optimistic on domestic economic and corporate earnings prospects and the recent change in administration.

The Stock Exchange of Thailand (SET) composite index on Monday lost 0.51 point or 0.06 per cent to close at 923.06 points. The market value was 21.22 billion baht, with 4.23 billion shares traded.

PTT launched the new formats of Jiffy Market and Cafe{aac} Amazon at its Energy Complex Building on Vibhavadi Rangsit Road.

"As we have been working in the oil retail business, we believe other retail businesses like coffee shops will be very supportive to our core operation," Mr Prajya said.

PTT also plans to open more Cafe{aac} Amazon shops, bringing the total to 500 by year-end from 470 at 1,200 fuel stations nationwide today.

The oil and gas conglomerate aims to sell at least 20 million cups of coffee this year or more than 100 cups per outlet per day.

It expects to offer full Cafe{aac} Amazon franchises to interested investors next year. PTT now manages about 10% of the outlets and the balance are managed by investors, with PTT supplying raw materials.

Meanwhile, PTT and its partner Green Spot Co, the manufacturer and distributor of Vitamilk soya drinks, have joined to launch a new campaign for Cafe{aac} Amazon to lift sales during the vegetarian festival in October. Three new beverage menus using Vitamilk will be introduced at Cafe{aac} Amazon outlets.

Chanit Suwanparin, Green Spot's marketing general manager, said the soya milk market was growing about 6% annually since more consumers are looking for healthy products and want to make merits by forgoing animal-sourced milk on special occasions.

He expected Vitamilk sales to increase by 20% during the vegetarian festival. The company targets the campaign with Cafe{aac} Amazon will increase sales by at least 10% of total cups sold in October.

Green Spot also believes that besides regular Cafe{aac} Amazon's clients, Vitamilk's consumer base of over 30 million will be the target group of the campaign.

Central Pattana Plc (CPN), the SET-listed property arm of the Central Group, has set aside an extra 200 million baht to step up security measures at its malls, especially CentralWorld at the Ratchaprasong intersection, which will reopen late this month.

President Kobchai Chirathivat said the budget would be used to increase its security measures both inside and outside of all 15 Central shopping centres across the country. Of the total, about 150 million baht is being spent to install new security equipment at CentralWorld, which was heavily damaged by fires during the Bangkok riots on May 19.

"Well-prepared security measures will be in place before the fourth anniversary of the military coup on Sept 19, four months after the end of red-shirt protests in the Ratchaprasong area," he said.

Asked about the possibility of political rallies on Sept 19 at some symbolic sites including Ratchaprasong, Mr Kobchai said everybody had the right to stage demonstrations under the Constitution.

"I believe society has learned and experienced that nobody will benefit from the violence," he said.

For CentralWorld, Karoon Chandrangsu, a director at the Engineering Institute of Thailand, has given advice on the building design and safety, with more CCTVs installed in some areas.

CPN plans to spend 100 million baht in the fourth quarter on marketing events to draw customers to CentralWorld.

Top five most active values were as follows;

TRUE closed at 4.88 baht, down by 0.22 baht or 4.31 per cent.

TMB closed at 2.62 baht, up by 0.10 baht or 3.97 per cent.

ADVANC closed at 90.75 baht, up by 1.25 baht or 1.40 per cent.

BANPU remained at 648.00 baht.

KBANK closed at 106.00 baht, down by 1.50 baht or 1.40 per cent.

The FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) rose 2.72 points or 0.19% to closed at 1469.69 points on Monday. TNB was up 5 sen to RM9.06; CIMB jumped 4 sen to RM8.31; PLUS dropped 8 sen to RM4.15 while IOI surged 9 sen to RM5.69.

The ringgit was quoted at 3.1030 to the US dollar.

Malaysia Airlines has placed a firm order with Airbus for two more A330-200F freighters, following the conversion of two existing options.

In a statement, the company said the latest contract increased the airline’s firm orders for the type to four, all of which would be operated by the carrier’s subsidiary, MASkargo.

“We are confident that the A330-200F is set to become a game changer in the mid-size freighter market,” said MASkargo managing director Shahari Sulaiman, adding that the aircraft would enable MASkargo to efficiently match capacity closely to demand on many medium lift sectors across its cargo network, and especially those operating via intra Asia.

The A330-200F is the latest addition to the highly successful A330 Family. Offering the lowest operating costs in its size category, it is the only modern mid-size, long haul, all-cargo aircraft capable of carrying 65 tonnes over 4,000nm/7,400km or 70 tonnes over 3,200nm/5,900km.

Trading of Tanjong shares will be suspended from today to facilitate the takeover by Tanjong Capital, and in line with target, the process of delisting Tanjong will be completed by the end of this month.

So, after almost two decades of being a fixture in the local bourse and the London Stock Exchange (LSE), it’s time for this steadfast stock to bid farewell. (Its listing status in LSE had been cancelled since last month.)

Looking back, Tanjong has indeed come a long way to build its strength and resilience and became a favourite play, particularly among institutional investors, for the many years that it had been listed.

It is interesting to note that Tanjong’s roots were actually founded in England back in 1926 when it was then known as Tanjong Tin Dredging Ltd. After a corporate restructuring and the injection of gaming outfit Pan Malaysian Pools Sdn Bhd into its business stable in 1991, Tanjong assumed its present name and went on to list on the then Kuala Lumpur Stock Exchange (now Bursa Malaysia) and LSE.

Businessman tycoon T. Ananda Krishnan has been a key shareholder in Tanjong all along, with his 30.9% stake in the company being held through Usaha Tegas – his private investment vehicle.

Under the stewardship of Ananda – the man famous for his maverick business sense – Tanjong has grown steadily to become one of the stalwarts of Corporate Malaysia. With a market capitalisation of around RM8.5bil, Tanjong stood among the top 30 largest listed companies in the country, and it represented about 1.4% of the weightage of FTSE Bursa Malaysia Kuala Lumpur Composite Index.

In Indonesia the Jakarta Stock Exchange declined 13.67 points, or 0.4 percent, to close at 3,370.98, falling from a record.

Financial stocks were hit hardest after Bank Indonesia Governor Darmin Nasution said on Friday it would require lenders to disclose their prime lending rates, the rates they offer to their most creditworthy customers, to boost competition.

The requirement would be implemented by the end of the year, he said.

Bank Mandiri, the nation’s biggest lender by assets, tumbled 4.4 percent on Monday. Bank Rakyat Indonesia, the second-largest by assets, dropped 1.9 percent and Bank Internasional Indonesia, the biggest overseas unit of Malaysia’s largest bank, Maybank, fell 1.6 percent.

Made Suardhini, an analyst at Mandiri Sekuritas, said the new rule could lead to reduced net interest margins for lenders.

“Bank customers will be in a better bargaining position to ask for lower lending rates,” he said.

Abdul Ghofur Pahlevi, an analyst at Jakarta-based Andalan Artha Advisindo Sekuritas, said shares also dropped on speculation recent gains were excessive.

Coal and plantation stocks gained, however. Bumi Resources, Asia’s largest coal exporter, advanced 4.4 percent to Rp 2,025, its highest close since May. Bumi was the most active stock by value. Bayan Resources advanced 2.1 percent to Rp 9,650.

Perusahaan Perkebunan London Sumatra Indonesia, the second-biggest listed plantation company in the country, gained 1.5 percent.

Palm oil climbed to the highest level in more than a month. December-delivery futures, the most active contract, surged 4 percent to 2,733 ringgit ($881) a metric ton, the most since it started trading on June 17.

Cece Ridwanulloh, an analyst at Ekokapital Sekuritas, said that so long as capital inflow was sustained, October’s inflation figures would likely be low. Foreign investors still appeared to have an appetite for Indonesian stocks, which could yet keep rising, he added.

“Economic recoveries in the US and Europe have not been that strong while Asia’s economies are growing rapidly, giving foreign investors a lot of confidence about investing their money with us,” he said.

Overseas investors pumped $536 million into Indonesian equities last week, boosting net purchases for the year to $2.2 billion and helping drive the JCI to record highs.

Meanwhile, the rupiah was little changed, trading at 8,973 per US dollar as of the stock market’s close, compared with 8,975 at the end of last week, on speculation the central bank might intervene to limit its gains because it was hurting local exporters.

Darmin on Friday said any US dollar purchases would aim to “prevent the rupiah’s fluctuations from becoming too big.”

“Bank Indonesia will come in to cap excessive gains in the rupiah to help exports,” said Joanna Tan, a regional economist at Forecast Singapore.

Bank Rakyat Indonesia, the second-largest by assets, declined 1.9 percent to 10,200 rupiah.

Bank Internasional Indonesia, the biggest overseas unit of Malaysia’s largest bank, retreated 1.6 percent to 310 rupiah. Banks were the biggest drag on the composite index today.

The Indonesian central bank may require banks to disclose their “prime-lending rates” each month starting in November to boost competition to lower credit rates, Governor Darmin Nasution said in Jakarta on Sept. 17.

The planned regulation “could lead to reduced net interest margins,” said Made Suardhini, an analyst at Jakarta-based Mandiri Sekuritas.

Bumi Resources, Asia’s largest power-station coal exporter, gained 4.4 percent to 2,025 rupiah, the highest close since May 31. Bayan Resources advanced 2.1 percent to 9,650 rupiah.

Power-station coal prices at Australia’s Newcastle port, a benchmark for Asia, climbed 4.5 percent to $97.07 a metric ton in the week ended Sept. 17, gaining for the fourth week in five.

Indofood Sukses Makmur, Indonesia’s largest instant-noodle maker, rose 4.9 percent to 5,350 rupiah, the highest close since its trading debut in July 1994.

CIMG-GK Securities analyst Erwan Teguh upgraded the stock to “outperform” from “trading buy,” citing “investors’ strong appetite” for the initial public offering of Indofood’s unit.

Perusahaan Perkebunan London Sumatra Indonesia, the nation’s second-biggest listed plantation company, climbed 1.5 percent to 10,000 rupiah.

Palm oil climbed to the highest level in more than a month. December-delivery futures, the most- active contract, surged 4 percent to 2,733 ringgit a metric ton ($880), the most since it started trading on June 17.

Indonesia’s rupiah was little changed on speculation the central bank will intervene to limit gains in the currency that may hurt overseas sales.

The currency on Sept. 13 reached a one-month high of 8,923 versus the greenback before Japan, the biggest buyer of Indonesian exports, two days later bought dollars to weaken the yen from a 15-year high.

Bank Indonesia Governor Darmin Nasution said Sept. 17 any purchases of the U.S. currency would aim to “prevent the rupiah’s fluctuations from becoming too big.”

“Bank Indonesia will come in to cap excessive gains in the rupiah to help exports,” said Joanna Tan, a regional economist at Forecast Singapore.

The central bank “doesn’t want too volatile movements in the currency. We will continue to see fund inflows into Indonesia as the economic fundamentals are strong.”

The rupiah traded at 8,978 per dollar as of 3:50 p.m. in Jakarta, from 8,975 at the end of last week.

The currency touched a three-year high of 8,905 on Aug. 3, less than a week after Bank Indonesia Deputy Governor Hartadi Sarwono said policy makers would continue to guard against excessive gains.

Overseas investors pumped $536 million into Indonesian equities last week, boosting net purchases for the year to $2.2 billion and helping drive the Jakarta Composite index to a record. The measure fell 0.8 percent today.

Global funds increased holdings of the nation’s bonds by 64 percent in 2010 to 176.9 trillion rupiah ($19.7 billion) as of Sept. 17, according to the finance ministry’s website.

That helped the government’s benchmark bonds to extend last week’s gains, pushing yields to more than a one-month low.

Indonesia’s economy may expand 6 percent this year, President Susilo Bambang Yudhoyono said on Sept. 15. Growth slowed to 4.55 percent in 2009, from 6.1 percent the previous year, official figures show.


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