ASEAN KEY DESTINATIONS
Asean Stock Watch- September 30
Stocks went on a roller-coaster ride Thursday, as investors parsed through positive news in U.S. and Europe. After storming out of the gate in the morning, the Dow and S&P 500 bounced between positive and negative territory before a late rally put both firmly higher.
Investors initially dove into stocks following better-than-expected readings on U.S. economic growth and some signs of stabilization in Europe.
But lacking conviction that a broader recovery could come along or that Europe indeed has the tools to stave off a sovereign debt crisis, investors lost appetite for risk by mid-afternoon. The market bounced up and down before rallying into the close.
"The market has been trading more on hope in general and hope on Europe," said Jim Barnes, senior fixed-income portfolio manager at National Penn Investors Trust. "The only thing that's improving are people's comments, but we haven't seen any type of credible plan that looks like it could be implemented."
The Dow Jones industrial average (INDU) closed up 143 points, or 1.3 percent. The S&P 500 (SPX) closed up 9 points, or 0.8%, after earlier being up as much as 2.2 percent. The Nasdaq Composite (COMP) fell 11 points, or 0.4 percent.
Investors stayed in financial stocks, which were among Thursday's biggest winners. Morgan Stanley (MS, Fortune 500), JPMorgan Chase (JPM, Fortune 500), Bank of America (BAC, Fortune 500), Goldman Sachs (GS, Fortune 500), and Citigroup (C, Fortune 500) closed the day up between 1 percent and 6 percent.
Tech stocks were the laggards, led by an 11 percent drop in Netflix (NFLX). The company has incensed subscribers by raising prices to offset its costs. And its latest move to rebrand its DVD-by-mail service has met with a lukewarm reception at best. In fact, Netfix's stock has dropped nearly 50 percent in the past month alone.
Before the market opened, Germany's parliament approved expanded powers for the eurozone's bailout fund. Europe's debt crisis has kept investors on edge for months.
Anticipation of Germany’s approval of the European stabilization funds helped to lift Indonesia’s stock benchmark index for a third straight day on Thursday.
The Jakarta Composite Index gained 24.01 points, or 0.7 percent, to 3,537.18, extending a two-day, 5.8 percent rise. The advance narrowed JCI’s year-to-date loss to 4.5 percent from Monday’s 11 percent.
A moderate volume of 3.53 billion shares valued Rp 4.12 trillion ($453 million) were traded on Thursday. Gainers outnumbered decliners, 110 to 93.
Germany’s parliament on Thursday approved a measure to boost a fund that would help alleviate the debt of euro zone nations including Greece, a move seen as helping to avoid pushing Western economies into recession.
Any improvement on Europe’s debt crisis would be a welcome relief for JCI traders, and local sentiment has already started to return, said Mohammad Alfatih, an analyst at Samuel Sekuritas.
“Investors are doing some bargain hunting on blue chips,” Alfatih said.
Based on data from the Indonesia Stock Exchange (IDX) on Thursday, foreign investors accounted for 66 percent of total daily trading by value. However, foreign investors sold Rp 210 billion more than they bought on Thursday.
IDX head Ito Warsito said he was confident that foreign investors would return soon enough.
“Where else will they go? In Asia, Indonesia is one of the strongest in up-trend economic growth while China and India’s markets are overheated,” he said
Banks and automobile distributors rose ahead of a key inflation report to be released on Monday. Alfatih said investors are taking into consideration the fact that the rate of inflation hasn’t accelerated much in September and that the central bank is likely to lower its key interest rate, helping to support economic growth.
In trading on Thursday, Bank Mandiri, the largest lender by asset, gained 4 percent to Rp 6,450, while Bank Tabungan Pensiunan Nasional rose 5.6 percent to Rp 3,300.
Astra International, Indonesia’s largest auto distributor, rose 3 percent to Rp 64,500. Its biggest rival, Indomobil Sukses Internasional, gained 4.9 percent to Rp 10,700.
Semen Gresik, the biggest cement maker, climbed 2.4 percent to Rp 8,550. On Thursday, the company’s finance director said that it plans to raise as much as $1 billion next year to finance its expansion. The company expects to invest about $2.4 billion in the next four years.
The rupiah gained 0.6 percent to trade at 8,925 against the dollar as investors moved back into Indonesia’s sovereign bond market. According to the Indonesia Bond Pricing Agency, the 10-year bond yield improved to 6.94 percent on Thursday from 7.11 percent a day earlier.
Share prices on Bursa Malaysia open higher in early trading Friday in line with the rebound of share prices in global stock markets after the German authorities approved an increase in euro-zone rescue funds and positive US economic news, dealers said.
As at 9.11am, the FTSE Bursa Malaysia KLCI (FBM KLCI) gained 7.89 points to 1,395.35 after opening 3.12 points higher at 1,390.58.
The Finance Index added 110.181 points to 12,716.57, Plantation Index rose 10.94 points to 7,017.39 and the Industrial Index increased 1.15 points to 2,552.41.
The FBM Emas Index jumped 55.48 points to 9,441.53, FBM70 Index surged 84.43 points to 10,025.71, the FBMT100 advanced 57.95 points to 9,299.17 and the FBM Ace added 11.16 points to 3,627.56.
Gainers beat losers 169 to 29 with 108 counters unchanged, 1,175 untraded while 23 others were suspended.
Turnover stood at 87.1 million shares worth RM77.7 million.
Actives, SP Setia warrant gained 8.5 sen to 87.5 sen, Trinity Corporation rose half a sen to 5.5 sen, OSK Holdings added 24 sen to RM1.63 and UEM Land Holdings earned three sen to RM1.84.
Heavyweights, Maybank gained seven sen to RM8.05, CIMB Group Holdings rose six sen to RM6.94, Sime Darby slipped two sen to RM8.46 and Petronas Chemicals added seven sen to RM5.62
Philippine share prices posted marginal gains on Thursday as investors hunted for bargains despite the weakness in overseas markets on renewed Greek debt woes.
At the Philippine Stock Exchange, the composite index inched up 1.51 points, or 0.04 percent to 3,877.62, while the broader all-shares added less than a point, or 0.61 percent to 2,787.78.
Advancers led decliners, 75 to 61, while 38 stocks were unchanged. A total of 7.98 billion stocks worth P5.18 billion changed hands.
“Weakness was pronounced during the local mart’s early session Thursday, although last-minute shopping pushed barometers a notch higher,” said Freya Natividad, investment analyst at 2TradeAsia.com.
Overnight, the Dow Jones Industrial Average fell 179.79 points, or 1.6 percent to 11,010.90 after German Chancellor Angela Merkel said the second bailout package for Greece might have to be renegotiated.
While the PSE index managed to keep its 3,700 support, volatility is expected as the local equities market remains at the mercy of external developments.
“Sentiment might glide if another sharp contraction is felt in US equities, while others check momentum progression at the foreign exchange markets,” Natividad said.
While the safe move for now is to stay on the sidelines, a possible option is to look at utilities and high dividend-yield issues, said Maria Arlysa Narciso of AB Capital Securities Inc., citing Philippine Long Distance and Telephone Co. as the firm that offers the highest dividend yield among the blue chips at about 10 percent.
“The uncertainty in the Euro zone and the weak economy of US drag global outlook and sentiment lower. As for the Philippines, while we are still faring better, our exports sector is seeing signs of contraction as our major trading partners suffer,” said Narciso.
Immediate support is at 3,830 with resistance at 3,900.
Asian currencies were mostly lower Thursday amid renewed risk aversion as investors again began to doubt Europe’s ability to avert its worsening debt crisis.
At the Philippine Dealing System, the peso shed 18 centavos to close at 43.630 against the US dollar from 43.450 the previous trading day.
The dollar-peso pair opened at 43.630, with bids ranging to a high of 43.710 and to a low of 43.570.
Total trading volume surged to $958.610 million from $774.770 million on Wednesday.
The currency pair is expected to trade within a 43.200 to 44.000 range during the last trading day of the month.
Singapore shares opened higher on Friday, with the benchmark Straits Times Index at 2,713.33 in early trade, up 0.19 percent, or 5.20 points.
Around 119 million shares exchanged hands.
Gainers beat losers 71 to 44.
Thai composite stocks index (SET) closed on Thursday at 926.21, down 5.39 points, or 0.58 percent amid Bt 26.04 billion turnover.
Blue chip SET-50 index was at 644.66, down 4.94 points, or 0.76 percent.
Top five active (value) stocks: PTT, BANPU, ADVANC, SCC, JAS.
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