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ASEAN STOCK WATCH 9  September  2010

ASEAN Markets to Move Higher

Shayne Heffernan

ASEAN will get a boost from overnight trading on Wall St, markets will open higher and should close strongly as investor sentiment turned positive, shrugging off bad Fed Numbers and another Euro Bank scare.

The Dow Jones industrial average .DJI rose 46.32 points, or 0.45 percent, at 10,387.01. The Standard & Poor's 500 Index .SPX added 7.03 points, or 0.64 percent, at 1,098.87. The Nasdaq Composite Index .IXIC climbed 19.98 points, or 0.90 percent, at 2,228.87.

Bursa Malaysia Kuala Lumpur Composite Index dropped 0.13 points or 0.01% to closed at 1434.14 points on Wednesday, in line with the trend of regional markets.

TNB dropped 3 sen to RM8.95; CIMB dipped 5 sen to RM7.95; PLUS rose 2 sen to RM4.17 while Maybank slipped 1 sen to RM8.41.

Petronas Chemicals Group Bhd, which is headed for a listing on the Main Market this year, made an after tax profit of RM2.59bil for its fiscal year ended March 31, 25% lower than the RM3.45bil posted a year ago after the cyclical nature of the industry, economic conditions and higher feedstock costs affected earnings.

Revenue was also lower at RM12.2bil against RM12.37bil while after tax profit margins were 21.3% compared with 27.9% for 2009.

The group, controlled by state oil firm Petroliam Nasional Bhd (Petronas) had total assets of RM26.89bil as at March 31.

The figures were part of the information revealed in Petronas Chemicals’ draft prospectus which was posted on the Securities Com-mission (SC) website yesterday.

Scomi Engineering Bhd is expecting greater revenue contribution from its overseas projects with the start of the Mumbai RM1.84bil monorail project.

President Syahrunizam Samsudin said overseas projects would be the main growth driver for the company as the local rail industry was small.

“We expect overseas projects, including projects from India, to contribute at least 80% to our future revenue,” he said at a media briefing during a plant visit yesterday.

Syahrunizam said the Mumbai project was a good test bed to showcase Malaysian expertise globally in an industry that was currently dominated by two major players – Bombardier of Canada and Hitachi of Japan.

The Philippine Stock Exchange added 29.45 points or 0.78 percent to close at 3,804.73, a new three-year peak.

With this seven-day run-up, the local index is now nearing its all-time high of 3,873.50 recorded on October 8, 2007.

“There’s euphoria in the market,” said Eagle Equities Inc. president Joseph Roxas. “When everyone is expecting the index to correct (downwards), it has refused to correct.” Roxas said the market initially opened lower but strong buying on dips merely allowed the index to bounce fiercely to break past the 3,800 barrier.

The local equities market has thus defied an overnight pullback in Wall Street, which sent the closely watched Dow Jones Industrial Index lower by 107.24 points or 1.03 percent to 10,340.69.

Roxas said optimism on the local market was still being fueled by good local corporate earnings. Even as the index had fallen after hitting record highs in late 2007, he pointed out that corporate earnings have remained strong.

Since the start of this year, the PSEi has now rallied by 752.05 points or 25 percent to become one of the best performing markets in the world.

Wednesday’s rally was led by the mining/oil, financial and holding firm sectors whose counters respectively climbed by 2.21 percent, 2.12 percent and 1.88 percent, respectively. The property sector, however, was down by 1 percent on profit-taking while the services counter stood unchanged.

Value turnover was still heavy at P6.3 billion. Advancers overwhelmed decliners at a two-to-one ratio.

Investors loaded up on stocks of SM Investments Corp., Metropolitan Bank & Trust Co., Megaworld Corp., Philippine National Bank, DMCI Holdings Inc., Aboitiz Power Corp., Filinvest Land Inc., Semirara Mining Corp., Energy Development Corp., Banco de Oro Unibank Inc., Alliance Global Group Inc., Metro Pacific Investments Corp., Bank of the Philippine Islands, SM Prime Holdings Inc., Philex Mining Corp., Ayala Corp. and International Container Terminal Services Inc.

On the other hand, telecom giant Philippine Long Distance Telephone Co. fell on profit-taking. Ayala Land Inc. also led the property counter lower despite the gains eked out by other property firms.

The blue-chip Straits Times Index (STI) fell 0.8% or 24.67 points to close at 3,011.42, after initially fallinas low as 3,002.65, as traders took their cue from fall of 1.03 percent on Wall Street Tuesday.

Gainers beat losers 255 to 196. Overall volume traded was 1.67 billion shares worth S$1.18 billion. The hardest hit were the blue chip companies.

On the Singapore Exchange, CapitaMalls Asia ended down 2.2% at S$2.20 as the malls developer gave up its sharp gains made in recent sessions after its recent joint acquisition with CapitaLand of Singapore’s Bedok Town Centre site.

Among banks, OCBC fell 2% to close at S$8.77 while DBS lost 1% to S$14.12 and UOB shed 0.2% to S$18.90.

Stocks of commodity firms also fell. Noble Group was down 1.8% to S$1.68, Golden Agri-Resources fell 0.9% to S$0.58, Wilmar International lost 0.5% to S$6.35.

Glencore International, the world’s largest commodities trader, has quietly acquired a $200 million stake in Bumi Resources, Indonesia’s largest coal producer.

Bakrie financial director Eddy Soeparno said Glencore had bought the stock since June. “We have an option to buy back the stake from Glencore within two years,” Soeparno said. Based on Bumi’s average closing share price and the rupiah’s exchange rate, the deal may mean Glencore has about a 5 percent stake in Bumi.

Eddy said Glencore — a marketing agent for Bumi coal — saw Bumi shares appreciating.

Bumi director Dileep Srivastava confirmed on Wednesday that Glencore had been acquiring shares but would not say how many.

“Based on [Bumi’s] financial records released on June 30, no one company owns more than 5 percent of Bumi’s shares, except for Bakrie & Brothers, which owns 21 percent in several blocks,” he said.

Bakrie & Brothers is the holding company controlled by the family of Aburizal Bakrie, a business tycoon and politician.

Privately held Glencore has become a global marketing agent outside Japan for Kaltim Prima Coal, Bumi’s main coal mining unit.

Glencore supplies metals, minerals, oil products, coal and agricultural products to companies in more than 40 countries. Its sales turnover for the 2009 fiscal year was $106.4 billion, and its assets were $66.3 billion at the end of 2009.

Glencore spokesman Carlos Perezagua declined to comment.

A source at Bakrie & Brothers said the investment holding firm did not have enough cash to increase its stake in Bumi but also saw a potential upside for the miner’s shares.

Bumi stock has tumbled 29 percent this year, underperforming the Jakarta Composite Index’s 27 percent rise, because of concerns about corporate governance and high debt. Its forward PE ratio is 6.15, versus 10.36 for rival Adaro Energy.

The Stock Exchange of Thailand (SET) composite index on Wednesday lost 0.01 point or 0.00 per cent to close at 923.88 points. The market value was 34.65 billion baht, with 5.17 billion shares traded.

Despite growing concerns about the strength of the baht, the dollar value of exports from Thailand is expected to increase by 22.9% this year, according to the Center for International Trade Studies at the University of the Thai Chamber of Commerce (UTCC).

Aat Pisanwanich, the director of the centre, said its forecast called for growth in a range from 20.6% to 25.2% to between US$183.86 billion and $190.76 billion, or an average of 22.9% to $187.13 billion at the end of this year.

The figures represent a major upward revision from an earlier forecast of 10-15%, largely because of robust growth in the first half of the year.

For the first six months, Thai exports earned $93.07 billion, up 36.6% year-on-year, prompting the Commerce Ministry to raise its official target to at least 20% to $189.9 billion.

The centre forecast the growth rate for the second half would become slow to between 7.7% and 15.9% to a range of $90.8 billion and $97.7 billion.

Exports for the third quarter are expected to gain 17.6% to $48.3 billion and $45.9 billion in the fourth, up 6.3%

Siam Cement Group (SCG) and PTT Chemicals Plc (PTTCH) expect some of their suspended projects in Map Ta Phut will be operational within this year as most are not on the government’s list of harmful activities.

Cholanat Yanaranop, president of SCG Chemicals, said five or six of SCG’s 18 suspended projects in the industrial estate had completed construction and were ready to operate immediately once they receive operating permits.

The others could come onstream within the next year, he said, adding that the group was committed to completing health impact assessment (HIA) reports of all 18 halted projects.

“We are waiting for relevant government agencies to complete further processes required (after last Thursday’s court ruling). We cannot immediately start up production without permission,” Mr Cholanat said.

Veerasak Kositpaisal, president and chief executive of PTTCH, said most of the company’s seven suspended projects could start production within this year if state agencies confirm within the next week that the activities are not on the harmful list.

“We are going to finish HIA reports as fast as we can,” he said. “Only the projects that might fall into the harmful list would require us to go through all processes required under the 2007 constitution.”

Based on last week’s court ruling, the expansion of ethylene oxide and ethylene glycol by TOC Glycol, a subsidiary of PTTCH, is on the harmful list. Not on the list are other major projects including a high density polyethylene (HDPE) venture of PTTCH itself (50,000 tonnes a year), another by subsidiary Bangkok Polyethylene with capacity of 250,000 tonnes, and a venture to produce 50,000 tonnes of ethanolamine.

Despite the suspension of some projects, PTTCH can achieve its sales target of 100 billion baht this year. However, he noted that PTTCH would focus more on investment abroad, as half of its total sales now come from overseas.

Top five most active values were as follows;

PTT closed at 289.00 baht, down by 3.00 baht or 1.03 per cent.

KTB closed at 15.30 baht, up by 0.20 baht or 1.32 per cent.

ADVANC closed at 97.50 baht, up by 1.00 baht or 1.04 per cent.

PTTCH closed at 116.00 baht, up by 0.50 baht or 0.43 per cent.

TRUE closed at 7.45 baht, down by 0.25 baht or 3.25 per cent.


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