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ASEAN STOCK WATCH 7  September  2010

ASEAN Stocks Start Week Strong

Shayne Heffernan

As predicted at Ebeling Heffernan Jakarta broke though to new highs today above 3200, the JCI rose 52.87 points, or 1.7 percent, to close at 3,217.15. Volume was heavy, with 3.76 billion shares worth Rp 4.58 trillion ($508.4 million) changing hands. Gainers outnumbered decliners 149 to 65.

The JCI strengthened with help from a surge in capital inflows from overseas, thanks to positive sentiments about global recovery.

Among the major gainers were Dayaindo Resources International, a mining company, which was up 2.2 percent to Rp 94.

A unit of Dayaindo won a five-year contract to supply two million tons of coal a year to state power company Perusahaan Listrik Negara, with delivery starting this month, Kontan reported, citing corporate secretary Endang Wijaya.

Wijaya could not be reached to confirm the deal.

Indosat, the country’s second-biggest telephone company, advanced 5.1 percent to Rp 5,150, its highest close since June 3.

Indosat was upgraded to “overweight” from “equal-weight” at Morgan Stanley, which said revenue acceleration would lead to “much faster” earnings growth.

Media company Surya Citra Media surged 23 percent to Rp 3,325, closing at a record high. OSK Nusadana Securities Indonesia analyst Andrey Wijaya rated the company a “buy” in new coverage, saying the stock traded at a “steep discount” to regional peers.

Meanwhile, the rupiah rose to its strongest level in more than two weeks on speculation the central bank would seek a stronger currency as part of efforts to address the fastest inflation in more than a year.

Bank Indonesia ordered banks to set aside more funds as reserves after a Sept. 3 policy meeting, a move it said would absorb Rp 50 trillion of excess liquidity. It left its benchmark interest rate unchanged at a record-low 6.5 percent, supporting today’s advance in government bonds.

The rupiah climbed 0.2 percent to 8,987 per dollar as of 3:36 p.m. in Jakarta. It earlier reached 8,958, the strongest level since Aug. 18.

The currency has gained 4.5 percent this year, the third-best performance among Asia’s 10 most-actively traded currencies excluding the yen.

Bank Indonesia on Sept. 3 raised the amount of deposits lenders must set aside as primary reserves to 8 percent, from 5 percent previously, and Governor Darmin Nasution said inflation might average more than its 6 percent target for this year.

Consumer prices increased 6.4 percent in August from a year earlier, the most since April 2009, the government reported on Sept. 1.

KLCI fell 0.07% or 0.99 points to 1,434.68. Shares of Sunway Holdings Bhd gained five sen to RM1.68 in in Monday’s early trade after its joint-venture had won a RM384mil tender for a Singapore residential project.

On friday, the company said its unit, Sunway Developments Pte Ltd, and joint-venture partner Hoi Hup Realty Pte Ltd will pay S$165mil (RM384mil) to lease a parcel of state land from the Singapore government at Miltonia Close for 99 years to undertake a property development project.

Earlier in the month, the company announced that its wholly-owned unit, Sunway Construction Sdn Bhd, had secured two contracts worth RM69.88mil from Putrajaya Holdings Bhd for works within the Federal Government administrative centre.

Philippine Stock Exchange index added 9.34 points or 0.25 percent to 3,744.01, sustaining its rally for the fifth straight session.

The day’s gains, however, were tempered by profit-taking on some blue chips and second-liner stocks. In particular, the industrial counter remained attractive to investors (up by 1.34 percent) but the property sector succumbed to profit taking (down by 1.47 percent).

Value turnover remained heavy at P5.87 billion compared to the first-semester daily average value traded of a little over P4 billion. There were about two stocks that advanced for every single one that declined or stood unchanged.

Despite the index nearing record-highs, investors continued to gobble up shares of Aboitiz Power Corp., Metropolitan Bank & Trust Co., Philippine National Bank, Alliance Global Group Inc., DMCI Holdings, Banco de Oro, Energy Development Corp., Jollibee Foods Corp., Bank of the Philippine Islands, Philex Mining Corp., International Container Terminal Services Inc. and Manila Water Co.

On the other hand, investors pocketed gains by selling shares of Ayala Corp., Ayala Land, Philippine Long Distance Telephone Co., Metro Pacific Investments Corp., Megaworld Corp., Filinvest Land Inc. and SM Prime Holdings Inc.

The day’s gains were widely expected given last Friday’s 127.83-point or 1.24-percent surge in the closely watched US Dow Jones Industrial Index.

Better-than-expected economic data in the US, particularly on August jobs report, boosted risk taking across global markets.

The stock market run-up has in turn increased the demand for the Philippine peso.

Another day of gains on The Stock Exchange of Thailand (SET) composite index on Monday gained 1.62 points or 0.17 per cent to close at 931.52 points. The market value was 63.11 billion baht, with 8.04 billion shares traded.

The baht has been the third best performer in Asia this year, behind the Japanese yen and Malaysian ringgit, gaining 7% against the dollar since January.

Commerce Minister Porntiva Nakasai plans to meet with Finance Minister Korn Chatikavanij tomorrow to discuss preventive measures to ease the impact of the strengthening baht. Mrs Porntiva said concerns were growing, both among trade officials and exporters, some of whom see the baht moving as high as 30 to the US dollar this year, from around 31.20 at present.

"Our export growth target of 20% this year is unlikely to be achieved should the baht strengthen to the 30-baht range," she said.

The minister said she would also ask the Bank of Thailand, through Mr Korn, to think carefully before increasing interest rates again, since higher rates could attract even more foreign capital and place further pressure on the local currency.

The central bank has lifted its benchmark twice in the past three months, to 1.75%.

Top five most active values were as follows;

PTT closed at 302.00 baht, up by 11.00 baht or 3.78 per cent.

PTTCH closed at 114.50 baht, up by 8.00 baht or 7.51 per cent.

CPF closed at 23.20 baht, down by 1.60 baht or 6.45 per cent.

PTTAR closed at 25.50 baht, up by 0.50 baht or 2.00 per cent.

BANPU closed at 630.00 baht, down by 4.00 baht or 0.63 per cent.


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