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ASEAN STOCK WATCH 3  September  2010

ASEAN Flat Ahead of Jobs Data

Shayne Heffernan

ASEAN will trade flat today ahead of USA Jobs data tonight.

Wall St stocks rose, adding to the biggest rally in the Standard & Poor’s 500 Index since July, and Treasuries fell as an unexpected jump in home sales and a drop in jobless claims tempered concern the economic rebound is weakening. Oil advanced for a second day.

The MSCI Asia Pacific Index climbed 1.1 percent, and the MSCI Emerging Market Index advanced 0.6 percent.

Tonight we will see US Jobs data which will keep ASEAN flat today, Nonfarm payroll employment in July declined 131,000 after falling a revised 221,000 in June and after a 432,000 boost in May. Of the July government plunge, 143,000 came from a drop in Census Bureau payrolls.

State government fell 10,000 while local government dropped 38,000. Private nonfarm employment, which discounts the effects of hiring and firing temporary Census workers, accelerated moderately to a 71,000 increase, following a 31,000 gain in June.

Average hourly earnings improved to up 0.2 percent, following no change in June. The average workweek for all workers rose to 34.2 hours from 34.1 hours in June. Turning to the household survey, the unemployment rate was unchanged at 9.5 percent in July. More recently, despite a dip this past week, initial jobless claims in August have been running higher than during July and this implies sluggish payroll and unemployment numbers.

Employment indexes for the Philly and New York Fed manufacturing surveys were mixed as Empire rose while Philly slipped from positive to negative. Analysts will be tweaking their expectations with the ISM manufacturing and ADP reports just ahead of Friday’s employment situation.

Thai stocks ended flat on Thursday, erasing most of an early rise due to late selling in energy and petrochemical shares after a Thai court suspended some plants at the country’s top industrial estate. SET index closed at 920.54, up 1.20 or 0.13% in trade worth 47.81 billion baht on Thursday.

The court ruling, coming near the market close, involved the suspension of the operating licences of two projects at the Map Ta Phut industrial estate whose operations fell into categories of activities deemed harmful to the environment.

Confusion over the ruling was rampant and the selling was unjustified as only two of 76 plants involved would have their licences withdrawn.

The Thailand Development Research Institute (TDRI) has advised the government to propose a new telecom law to allow 100% foreign-owned companies in the Thai telecom market, reasoning it is the best way to prevent the use of nominees.

TDRI vice-president Somkiat Tangkitvanich said the new law should replace the Telecom Business Law that caps foreign holdings in a Thai telecom business at 49% under the Foreign Business Law.

The National Telecommunications Commission (NTC) recently issued a regulation prohibiting activities that are tantamount to “foreign dominance” in the sector, but such regulations deterred foreign investors from competing in the 3G licence auction, he said.

He said such regulations must be in the public interest, according to the law.

The NTC did not clarify why it came out with such regulations, even while it held investor roadshows in 10 countries before the 3G auction.

Stocks with most active value were as follows:

BANPU increased to 626.00 baht, up 8.00 baht.

PTT decreased to 269.00 baht, down 2.00 baht.

KTB increased to 14.90 baht, up 0.30 baht.

SCC decreased to 303.00 baht, down 2.00 baht.

BBL increased to 150.50 baht, up 1.50 baht.

Shayne Heffernan

The Jakarta Composite Index fell 0.4 percent to 3,122.15 after posting its biggest gain in four weeks a day earlier. About 6.99 billion shares worth Rp 9.17 trillion ($1 billion) changed hands. Decliners outnumbered gainers 139 to 59.

“Many investors started profit-taking moves,” said Merdeka Goeryadi, an analyst from UOB Kay Hian Securities, adding that he expected the sell-off to continue today.

Ahmad Riyadi, an analyst at Millenium Danatama Securities, said that despite investors banking gains, the long-term bullish outlook remained intact, noting the relatively small decline over Wednesday’s close.

Asian stock markets rose on Thursday as investors hungry for good news seized on stronger US manufacturing as a sign the world economy wasn’t slowing as much as feared.

“I think the fear of recession subsided so people are looking at the bright side until the next set of economic data like unemployment,’’ said Francis Lun, general manager at Fulbright Securities in Hong Kong.

Emerging-market stocks are trading at the highest valuations relative to advanced-country shares in more than two years as faster economic growth persuades the biggest investors to look past historical sell signals.

The MSCI Emerging Markets Index is valued at 14.1 times reported profits and 1.9 times net assets, compared with ratios of 14.9 and 1.7, respectively, for the MSCI World Index, according to Bloomberg. When developing-nation equities last traded at these levels in June 2008, the emerging gauge sank 48 percent in four months and trailed the MSCI World index by 16 percentage points.

On the local market, Tunas Baru Lampung, an operator of pineapple, palm oil and coconut plantations, fell 1.4 percent after palm oil futures dropped for a second day as declining exports in Malaysia, the world’s second-largest producer, weighed on prices. Sampoerna Agro slipped 0.9 percent.

Palm oil futures for November delivery fell as much as 0.2 percent to 2,529 ringgit ($807) a ton on the Malaysia Derivatives Exchange, after slumping 1.4 percent on Wednesday.

Mining firm Indo Tambangraya Megah dropped 5.6 percent after Thai parent Banpu said it planned to raise $395 million selling an 8.7 percent stake in the company.

The rupiah dropped on concern the central bank would curb appreciation to protect exporters after the currency rallied on Wednesday by the most since June.

The rupiah also declined on speculation companies were buying dollars ahead of next week’s Idul Fitri holiday, according to Lindawati Susanto at Bank Resona Perdania. The central bank will set interest rates today, with economists predicting borrowing costs will be kept unchanged at 6.5 percent to support growth.

“The market thinks that Bank Indonesia may not be comfortable if the rupiah is too strong,” said Lindawati, head of foreign-exchange trading at the bank.

The rupiah slipped 0.2 percent to 9,013 per dollar as of the stock market’s close. The currency on Wednesday strengthened 0.6 percent, the most since June 21. It has gained 4.2 percent this year, the third-best performance among Asia’s most-traded currencies excluding the yen.

Singapore’s Straits Times Index (STI) rose 3.83 points to end at 2,986.66, after weaker US equity futures erased some gains earlier in the day.

Overall volume traded was 1.72 billion shares worth S$1.64 billion. In the broader market, gainers outnumbered losers 271 to 185.

Strong US manufacturing data supported cyclical stocks with high exposure to China, with CapitaMalls Asia gaining 2.8% to S$2.17. Similarly, Noble Group rose 2.5% to S$1.65 and Neptune Orient Lines gained 0.5% to S$1.95.

Among the losers, gaming group Genting Singapore fell 2.2% to S$1.76 as investors booked gains on the stock’s recent rise.

KLCI rose 9.11 points to close at 1,441.07, with turnover at 1.075 billion shares worth RM1.87bil changing hands. Ahead of the announcement of the release of external trade data and overnight policy rate, there were 511 gainers, 256 losers and 258 counters traded unchanged on the Bursa Malaysia.

Leading gainers were British American Tobacco up RM1.46 to RM46.96, Petronas Dagangan up 80 sen to RM11.60, Nestle up 38 sen to RM40.48, PPB Group up 30 sen to RM17.40, and APM Automotive up 24 sen to RM4.55.

Leasing losers were LPI Capital rights down 36 sen to RM4.76, DFZ Capital Bhd down 32 sen to RM3.67, LPI Capital down 22 sen to RM11.90, Disccomp down 21 sen to 24 sen and SP Setia down 18 sen to RM4.40.

Extending its gains for the third straight day, the main-share Philippine Stock Exchange index surged by 2.03 percent or 72.95 points to 3,666.54.

There were about three gainers for every one decliner at the stock market.

Value turnover was heavy at P6.79 billion.

The financial, mining/oil and holding firm counters led the day’s rally, respectively rising by 2.97 percent, 2.92 percent and 2.85 percent.

Sentiment was upbeat as soon as the market opened, allowing the index to break into a new high for the year


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