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ASEAN STOCK WATCH 8  September  2010

Early Buying Opportunity in ASEAN

Shayne Heffernan

ASEAN Markets are set for a lower open after a fall over night in the USA. Buy early today as we expect a rally may come as soon as mid afternoon.

US stocks fell in very light volume on Tuesday as investors seized on renewed concerns about European banks as a reason to sell shares after strong gains last week.

Banks, energy companies and chipmakers were the biggest decliners. Some analysts said the drop after Wall Street’s best week in the past two months shows the market is likely to remain range-bound.

Singapore closed higher on Tuesday, with the benchmark Straits Times Index at 3,036.09, up 0.05 per cent, or 1.51 points.

About 1.31 billion shares exchanged hands.

Losers beat gainers 252 to 184.

China’s state-owned Sinochem Corp has invited Temasek, the Singapore sovereign wealth fund, to join a consortium that may bid for Canada’s Potash Corp.

China, which typically buys about 7 percent of the output of Potash Corp, fears a BHP takeover might jeopardize supplies it will require to feed its huge population in coming years.

Potash Corp shares on Tuesday rose $1.11 to $149.61 on the New York Stock Exchange, or 15 percent more than the BHP offer price, reflecting anticipation of a higher bid eventually.

Shares of BHP closed down 1.4 percent in London, partly on concerns that Australia’s new Labor government might impose a new resource tax on iron ore and coal miners.

SingTel Southeast Asia’s largest telecoms firm, is unlikely to bid for Cable & Wireless Worldwide (CWP) as the company wants to focus on the Asia-Pacific region, Citigroup said on Tuesday.

“SingTel had clarified its preference to focus on acquisitions in the Asia Pacific region where it can build scale and drive revenue growth via penetration,” Citi analysts Arthur Pineda and Ravi Sarathy said in a note to clients after a meeting with the Singapore firm.

“This to us indicates that there is likely to be limited interest on the part of SingTel in acquiring C&W Worldwide, contrary to UK press reports.”

Shares of C&W rose to their highest level since a profit warning in July on Monday after a weekend report in the Independent on Sunday newspaper said the Singapore firm was considering a bid.

The Stock Exchange of Thailand (SET) composite index on Tuesday lost 7.63 points or 0.82 per cent to close at 923.89 points. The market value was 48.84 billion baht, with 7.71 billion shares traded.

PTTAR, the country’s largest integrated aromatics refinery, expected its refining margin excluding any impact from oil stocks to stay at a high $5.0-5.5 a barrel in the second half, Chief Executive Chainoi Puankosom told reporters late on Monday.

“The economy should continue to do well in the second half, which should help boost demand,” Chainoi said, referring to economic growth in Asia, especially from China.

New refining output is entering global markets, but Chainoi said the impact should be compensated by the closure of some refineries in the Unites States and Europe, which should cut refining capacity there by 2 million barrels a day.

The gross integrated margin, which includes the petrochemical business, and refining profit margin are key indicators to gauge the profitability of companies in the oil and petrochemical sectors.

Top five most active values were as follows;

PTT closed at 292.00 baht, down by 10.00 or 3.31 per cent.

KTB closed at 15.10 baht, up by0.70 or 4.86 per cent.

PTTCH closed at 115.50 baht, up by1.00 or 0.87 per cent.

CPF closed at 24.20 baht, up by 1.00 or 4.31 per cent.

TMB remained at 2.56 baht.

Bond Issues expected by Reuters


** Italian-Thai Development Pcl ITD.BK will sell bonds worth up to 2 billion baht in two tranches, with a three-year issue carrying a coupon of 5.50 percent and five-year bonds having a coupon of 6.25 percent.

The bonds would be offered to both institutional and retail investors between Sept. 13 and 15.

** Property Perfect Pcl PF.BK will sell bonds worth up to 1 billion baht ($32 million). The bonds will have a maturity of 1.5 years with a coupon of 5.50 percent and will be offered to investors between Sept. 6 and 8.

Q4 2010

** PTT Pcl (PTT.BK), Thailand’s largest energy firm, plans to raise up to 10 billion baht through bond issues in the fourth quarter of this year to refinance maturing debt.

– Pruksa Real Estate Pcl PS.BK, Thailand’s second-largest property developer by market value, expects to issue bonds worth up to 5 billion baht with maturities of 3-5 years in November.

– Banpu Pcl (BANP.BK), Thailand’s largest coal miner, plans to sell some of its planned bonds worth up to 20 billion baht ($636 million) this year to fund the purchase of Australia’s Centennial Coal Co Ltd (CEY.AX).

– Hemaraj Land and Development Pcl HEMR.BK plans to sell about 700 million baht ($22.3 million) by private placement later this year.

– PTT Chemical Pcl (PTTC.BK) plans to raise funds worth up to 3 billion baht ($96 million) this year by issuing bonds or loans to repay project investments.


– PTT Aromatics and Refining Pcl (PTTAR.BK) plans to sell up to $500 million of bonds in the five years to 2014.

– True Corporation Pcl TRUE.BK is to sell up to 30 billion baht ($954 million) of bonds with a maturity of up to 20 years. The proceeds from the bond issue will be used to repay debt and expand business. [ID:nWEN0629].

– Home developer Sansiri Pcl SIRI.BK plans to sell up to 3 billion baht ($96 million) of 10-year bonds in one or several tranches.

– Major Cineplex Group Pcl MAJO.BK is to sell up to 800 million baht ($25 million) in bonds for expansion and repaying short-term debt.

– Central Pattana Pcl CPN.BK plans to sell up to 5 billion baht ($159 million) of bonds with maturities of 10 years.

– Home developer Prinsiri PRIN.BK plans to sell 1 billion baht ($32 million) of bonds to finance expansion.

– Supalai SPAL.BK plans to sell up to 4.5 billion baht ($143 million) of bonds this year to finance expansion.

KLCI shed 0.41 points to 1,434.27.

Pacific & Orient Bhd (P&O) and Jerneh Asia Bhd climbed in Tuesday’ early trade, spurred by the recent announcements of their potential sale.

At 10.14am, P&O rose 11 sen to RM1.15 while Jerneh added six sen to RM3.16.

Last month, P&O confirmed that it received the central bank’s approval to begin preliminary negotiations for a proposed disposal of stake in its insurance unit to Britain’s Prudential Holdings Ltd.

Jerneh Asia announced in December last year that Bank Negara Malaysia had no objection in principle for it to commence talks with relevant parties for the disposal of an 80% stake in Jerneh Insurance Bhd. The remaining 20% is held by Paramount Corp Bhd.

Paramount Corp however dipped four sen to RM4.13.

Petronas has filed a draft prospectus for an initial public offering of its entire petrochemicals business, moving a step closer towards creating country’s second largest IPO after Maxis.

The draft prospectus on the Securities Commission website did not state how much Petronas Chemical Group is seeking to raise but banking sources have put the value of the firm at over US$2 billion (S$2.7 billion) Petronas Chemical Group’s IPO is one of two offerings to be launched by government-run Petronas in response to Prime Minister Najib Razak’s call to reduce state ownership in the private sector and boost liquidity in the stock market.

But according to the draft prospectus, Petronas will remain a controlling shareholder of the firm will 20 over business units. Under the terms of IPO, Petronas Chemical will buy a Malaysian port from Petronas in exchange for almost half of its authorised share capital of 15 billion shares.

That has raised investors concerns that the firm will remain an illiquid stock like many of the government-linked companies that make up more than half of the benchmark FTSE Bursa Malaysia KLCI Index.

The Philippine Stock Exchange index gained another 31.41 points or 0.84 percent to 3,775.42.

Foreign investors continued to make local stocks sizzle, contributing about P1 billion in net buying for the day. The index is now trading at its highest since closing at 3,788.26 on Nov. 7, 2007.

The PSEi has sustained its rally for six straight days, gaining a total of 216.75 points or 6.1 percent. With the six-day run-up, the local index is now nearing its all-time high of 3,873.50 recorded on Oct. 8, 2007.

The day’s gain was aided by the 4.7-percent rise of the property counter, which bounced back from the previous day’s profit-taking.

The financial sector was also buoyant on the back of gains eked out by major banking players while the industrial and mining/oil counters ended with slim gains.

On the other hand, the holding firms and services sectors fell on profit-taking.

Despite the overall gain that sent the index to a 34-month high, 63 advancers were edged out by 69 decliners while 39 stocks were unchanged. Many stocks are becoming more attractive to profit-taking after a six-day run-up.

Value turnover eased to P4.62 billion from the P5.87 billion turnout in the previous day.

Dealers said the market was still seeing some opportunity to load up on selective stocks but the temptation to pocket gains has been escalating given the six-day rally.

Banking stocks Metrobank, BPI and Banco de Oro alongside property giants Ayala Land and Megaworld Corp. led the day’s gains.

In a statement, the PSE said it continued “to undertake several initiatives to broaden the market’s breadth and depth including the introduction of new investment products and the successful roll-out of a new trading system last July.”

The JCI advanced 13.74 points, or 0.4 percent, to 3,230.89, marking a third-straight day of record results. Some 5.2 billion shares worth Rp 3.7 trillion ($411 million) changed hands.

Gainers outnumbered decliners 111 to 74. Foreign investors poured $166 million into the market in the shortened week at the end of Ramadan.

The market will be closed today for the Idul Fitri holiday, reopening on Sept. 15.

The Jakarta bourse, Asia’s second-best performer this year, has racked up inflows of $1.62 billion this year, already topping $936 million in full-year 2009.

Among the biggest gainers, auto-distributor Astra International, rose 2.1 percent, and Bank Danamon Indonesia jumped 4.7 percent.

Media Nusantara Citra surged 24 percent to Rp 390, its biggest increase since June 2009. The TV broadcaster’s shares had lagged the JCI but caught up amid a rally in media stocks, said Arief Budiman, an analyst at Phillip Securities Indonesia.

Perusahaan Perkebunan London Sumatra Indonesia, the second-largest listed plantation firm by market value, gained 1.6 percent as palm oil futures rose 1.8 percent in Kuala Lumpur on Monday.

United Tractors, the top heavy equipment seller, rose 1.3 percent after it was upgraded to “hold” from “sell” by Sucorinvest Central Gani, citing a lower country-risk premium for Indonesia.

The rupiah fell 0.3 percent to 9,018 per dollar in Jakarta, its first fall in three days, on speculation the central bank would intervene to curb volatility in the currency before the holidays.

The currency retreated from a two-week high after Bank Indonesia Governor Darmin Nasution said he wanted to avoid raising rates and as a slide in the euro bolstered demand for dollars.

“The central bank wants to maintain low volatility before the holidays,” said Aris Setiawan, of Bank Chinatrust Indonesia. “There were concerns about the euro declining.”

The currency has risen 4.1 percent this year, the third-best performer among Asia’s most-traded currencies excluding the yen.

The central bank held its benchmark interest rate at a record-low 6.5 percent on Friday to support growth. President Susilo Bambang Yudhoyono targets an average 6.6 percent annual economic growth through the end of his term in 2014.


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