ASEAN KEY DESTINATIONS
Asean Stock Watch- September 5
US stock indices dropped Friday after the country's unemployment rate remained flat in August.
US unemployment held steady at 9.1 percent for August and was virtually unchanged since July. The Bureau of Labor Statistics said the number of unemployed was 14 million, including 6 million who have been out of work for more than half a year.
The figure reflects the persistent sluggishness of the US economy. On Thursday, the government projected that unemployment would stay at about 9 per cent through to the end of 2012, and only start declining in 2013.
Markets have experienced more than a month of high volatility, in response to fears of recession and government debt woes in the US and abroad.
The blue-chip Dow Jones Industrial Average shed 253.31 points, or 2.2 per cent, to 11,240.26. The broader Standard & Poor's 500 Index lost 30.45 points, or 2.53 per cent, to 1,173.97. The technology-heavy Nasdaq Composite dropped 65.71 points, or 2.58 per cent, to 2,480.33.
For the week, the Dow lost 0.39 percent, and the S&P dipped 0.24 percent. The Nasdaq was flat, with an increase of 0.02 percent.
The US currency gained against the euro to 70.4 euro cents from 70.01 euro cents on Thursday. The dollar slipped against the Japanese currency to 76.8 yen from 76.88 yen.//DPA
When trading resumes in Jakarta on Monday after the week-long Idul Fitri holiday, Indonesia’s stock market is expected to open higher, supported by stable regional financial markets and slow inflation, analysts in Jakarta said.
“Regional markets were up by an average of 2.5 percent this week, so there is a good chance that the Jakarta Composite Index is set to open higher on Monday,” said Edwin Sebayang, head of research at the Jakarta-based MNC Securities.
The Hang Seng index in Hong Kong lost 1.8 percent on Friday but was up 3.2 percent for the week. The Nikkei 225 average in Japan dropped 1.2 for the day but had gained 1.7 percent in five days.
The JCI closed down 0.1 percent at 3,841.73 on Aug. 26, the latest day of trading and was little changed for the week.
Investors were monitoring the latest US employment report for signs of the state of the nation’s economy.
The government reported that in August, the unemployment rate was steady at 9.1 percent, suggesting that the US economy was at risk of slipping back into recession. Still, non-farm payrolls were unchanged in August after an 85,000 jobs gain in July.
The Dow Jones industrial average opened down 1.2 percent on Friday after rising 1.9 percent at the start of the week to Thursday.
Edwin said that global markets are starting to stabilize as US economic data showed the country was not stumbling into a recession.
“Economic indicators show that the US is actually far from recession, the economy was just slowing down,” he said.
He pointed to manufacturing activity, with the sector’s ISM index dipping to 50.6 in August compared to 50.9 in July — significantly higher than the consensus expectation of 48.5.
On Thursday, US weekly jobless claims were 409,000, slightly l ower than forecast of 410,000.
Edwin said that the market was also anticipating more stimulus from the Federal Reserve to spur the US economy.
The Fed was discussing a more aggressive rate policy to stimulate economic growth as well as a policy “linking rates to path of jobless rate,” Reuters reported on Wednesday.
Harry Su, head of research at state brokerage firm Bahana Securities, said the Indonesian market would take its cue from Asian markets’ openings on Monday morning. He was optimistic that this week’s positive sentiment would last through next week.
“Despite today’s [Friday] lackluster performance, regional markets were still positive for the week, and I think the Indonesian market should rise in tandem,” Harry said.
He added that he expected investors to see Indonesia, with its strong macroeconomy and limited reliance on exports, as a safe haven should the external volatility continue.
He recommended investors buy shares in domestic-oriented stocks such as banks, consumer goods and property developers.
The market is also anticipating Monday’s release by the Central Statistics Agency’s (BPS) of inflation data for August. The median estimate of five economists surveyed by the Jakarta Globe showed the consumer price index rising 4.74 percent.
In July, the inflation rate was 4.61 percent, with the month-on-month rate at 0.67 percent.
“Inflation doesn’t seem to be a threat because the month-on-month inflation is predicted to be between 0.75 percent and 1 percent,” Edwin said, “So, it is within the anticipated range.”
Still, markets remain volatile, some analysts said, because of uncertainty in the long term over the pace of global economic growth.
Ruben Sukatendel, a fund manager at BNI Asset Management, said there was potential for the JCI to open lower because of continuing concern over the financial crisis in Europe the slowdown in US growth.
“My clients are steered into mixed portfolios and we are also advising them to invest in bonds,” he said. “Index and stocks valuations are rather high already.”
BNI Asset Management manages more than Rp 5 trillion (US$585 million) in as sets.
The FBM KLCI and other stock markets in Asia traded down, as investors took in the poor job figures released in the US on Friday. With the US economy worsening and the European debt crisis appearing to be spread, stock markets are reflecting that bleak outlook.
The US employment figures showed the country has not added any new jobs in August, prompting fears the world's largest economy is grinding to a halt
Economists had expected an addition of about 70,000 new jobs, down from 117,000 in July, but the key employment figures showed unemployment remained steady at 9.1 percent.
The private sector put on 17,000 employees but the government got rid of just as many. Almost 50 per cent of those unemployed have been jobless for more than six months.
The figures are a disastrous result for the world's largest economy, which analysts are now predicting is perilously close to a double dip recession.
At 10.30am Monady, the FBM KLCI was down 4.3 points to 1,469.79. There were a total of 109 gainers and 292 losers with 195 stocks unchanged.
Nymex crude oil was down $0.53 to US$86.60 per barrel.
Spot gold was up US$7.10 at US$1,884 per ounce.
The Ringgit was traded at 2.9785 to the Dollar.
Philippine share prices may continue to move sideways with a dismal US jobs report seen to test the resiliency of the local market.
“The local market has proven it is resilient, keeping on the green despite a drop in most of its global peers,” said Jun Calaycay of Accord Capital Equities Corp.
“This reflects the optimism on the prospects of the broad economy despite a less-than-forecasted 3.4 percent gross domestic product pace in the second quarter,” Calaycay added.
The main composite index is moving sideways, hovering around its medium term 50-day exponential moving average.
“The MACD still indicates more consolidation but it could be gearing up for the next run that everyone is waiting for,” said Bonner Dytoc, senior instructor at Absolute Traders and Consulting Services Inc. MACD refers to the moving average convergence-divergence, and is a technical indicator of the direction of the market.
On Friday, Wall Street plummeted after no jobs were added in the US last month, its worst employment data in 11 months, renewing fears that the world’s biggest economy may be headed for a recession.
The Dow Jones Industrial Average erased its gains for the week after losing 253 points or 2.2 percent to 11,240.26.
AB Capital Securities Inc. attributed the pullback on hiring as a response to the recent US credit rating downgrade and the plunge in stock prices.
“If the jobs data in the US fail to create any volatility, we could see the PSEi move within a narrow range of 4,300 to 4,400,” the brokerage said.
Local investors will closely watch out for the August inflation data that will be released on Tuesday. Expectations are it should remain within the government’s official target range.
“Benign changes in consumer prices will keep the BSP’ fingers off the interest hike button, the argument for which is further diminished by the GDP number. Implementing a hike at this time may be counterproductive,” said Calaycay.
If the Bangko Sentral ng Pilipinas decides to keep key interest rates steady, this will magnify the return potentials of equities, raising its attractiveness, particularly following a bloodbath early last month.
Mining stocks had been the object of profit taking in recent sessions—proof that funds may have shifted to the financial and property sectors, Dytoc said.
“Those may be the areas we should take a look at as they could be the next ones to push the index to higher levels,” he added.
Singapore shares opened lower on Monday, with the benchmark Straits Times Index at 2,784.30 in early trade, down 1.96 percent, or 58.79 points.
Around 89.9 million shares exchanged hands.
Losers beat gainers 193 to 17.
Thai stocks opened down 10.29 points at the start of trade Monday morning. The Stock Exchange of Thailand (SET) main index opened at 1,054.89 points, down 0.97 percent from Friday’s close. The trade value was 1.61 billion baht.
The SET50 index lost 8.19 points, or 1.10 percent, to stay at 734.11 points, with a total turnover of 1.25 billion baht.
The SET100 index opened at 1,600.54 points, down 17.34 points, or 1.07 percent, with a total trade value of 1.41 billion baht.
The SETHD index dropped 8.48 points, or 0.82 percent, to stand at 1,020.39 points, with a total trade value of 378.74 million baht.
The Market for Alternative Investment (MAI or mai) index opened down 0.21 point, or 0.07 per- cent, to stand at 297.97 points, with total transaction value of 45.86 million baht.
The top five most active shares:
PTTEP stood at 163.00 baht, down 4.00 or 2.40 percent.
KBANK stood at 125.50 baht, down 2.50 or 1.95 percent.
PTT stood at 325.00 baht, down 3.00 or 0.91 percent.
DTAC stood at 71.25 baht, up 0.25 or 0.35 percent.
SCC stood at 323.00 baht, down 5.00 or 1.52 percent.
Shares on both national stock exchanges Thursday maintained their upward trend for the week, with the VN-Index closing out the shortened trading week at 435.29 points, a gain of 2.5 percent over Wednesday's level.
The exchanges were dark Friday in celebration of National Day.
Meanwhile, the value of trades on the HCM City Stock Exchange yesterday edged up about 3 percent to VND805.3 billion (US$39.1 million), with volume reaching 50 million shares.
The daily combined market value in both Ha Noi and HCM City continued at around VND1.3-1.5 trillion ($63.1-72.8 million) throughout the whole week.
"However, trading in large quantities will soon deplete whatever capital is being directed toward the market," BIDV Securities Co analyst Hoang Anh Tuan wrote in a note.
Many investors had doubted if the market could maintain its upward momentum until the final session of the week.
"However, Circular No 22, newly issued by the State Bank of Viet Nam to amend capital adequacy provisions applicable to banks, has made investors more optimistic about market prospects," said Tan Viet Securities Co analysts.
The circular allows banks to lend up to 80 percent of deposits and will help credit institutions with capital shortages beef up credit growth that has so far fallen short of this year's 20-percent growth target.
"The increase in net capital available to commercial banks signals positive credit flows in the near future," said Bao Viet Securities Co analyst Tran Hai Yen.
Banking shares advanced strongly yesterday, with most of the leading banks hitting their ceiling prices, including Vietinbank (CTG), Eximbank (EIB) and Vietcombank (VCB). On the Ha Noi Stock Exchange, Asia Commercial Bank (ACB) also hit the 5-percent limit.
PetroVietnam Finance (PVF) and real estate developer Vincom (VIC) also reached their ceiling prices. Among bluechips, only property developer Hoang Anh Gia Lai (HAG) lost ground.
On the Ha Noi Stock Exchange yesterday, the HNX-Index also rose by 3 percent to end the trading week at 75.36 points, with 216 out of 386 codes posting gains.
Market value dropped 16.2 per cent from the previous session, however, to just VND620.9 billion ($30 million), while volume on the northern bourse slid 19.4 percent to just 53.2 million shares. Kim Long Securities Co (KLS) was the most-active share with 6.8 million traded.
Foreign investors were net sellers on the southern bourse, unloading a net of VND21.4 billion ($1 million), while they were net buyers in Ha Noi by a net value of only VND1.7 billion ($82,500).
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