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ASEAN STOCK WATCH Asean Affairs  13 September 2012

ASEAN Equity Preview

By Shayne Heffernan Ph.D.

U.S. stocks rose and the euro climbed to a four-month peak against the dollar on Wednesday after Germany's Constitutional Court approved the euro zone's new rescue fund, easing concerns about the region's debt crisis and leaving markets focused on prospective further easing by the Federal Reserve.

Economist Shayne Heffernan explains why the hope for QE3 is futile

QE3 will make no difference to the USA Economy, companies in the US are already sitting on a record cash hoard, adding to the cash with QE3 would run the risk of introducing inflation in to a high unemployment environment, a disaster for people and corporations.

 American economists are so used to studying the US economy as a seamless whole that they don't want to accept it has structural problems, because for them, structural problems are a developing countries' issue. Yet in a globalizing world, every country has to undergo some structural changes. The emerging economies, noticeably China, India and Brazil, are changing the global economic landscape.

Among all the changes, the reallocation of jobs poses the most serious challenge to developed countries. Products that used to be made in developed countries are now being produced in emerging economies at much lower costs. As a result, developed countries might have lost forever the chance to create low-end jobs.

The Main reasons why there will be no QE3 are
    We are too close to the Presidential Election for the Fed to intervene in the Economy

    Low interest rates do not matter if banks are not lending to consumers and small businesses, and corporations that are able to borrow money will not lend or invest it. What ould be more effective is to make life easier for small business by dropping regulations and barriers to entry. Removing the rules imposed on banks under the ridiculous Volcker and Dodd-Frank legislation would also help.

    The  greatest beneficiaries of the lowest rate policy are the corporations that need money the least, so how does that help?

    Lower interest rates do not provide a sufficient reward to lenders for taking on riskier loans and home mortgages. Therefore home mortgages, consumer loans and small-business loans may be easier to get if rates were higher. Obama's war on Banks has not built a great economy, it has reduced the level of activity and risk banks are willing to take, small business is one of those risks.

    By keeping short-term interest rates pegged near zero and pushing long-term rates below 2%, the FED is advertising that it has no faith in the recovery. If it does not have faith in the economy, they why should anyone else have confidence? It confuses me no-end that when the economy is so bad that QE3 seems justified that the market would rally, why? If the economy is in such a state that intervention is needed that is not an environment to invest in at all.

    The current slow recovery has lasted more than three years. Therefore, one can expect the economy to enter a new recession sometime within the next one to two years. If that happens, the FED must have resources to fight it, firing off a QE3 now would put the future at risk.

    QE3 would only add to the cash hoards of corporations, without making a dent in economic growth or unemployment.

The best thing the FED can do for now is sit on the sideline and wait for the actions it has taken in the past to have their full effect. Doing nothing is sometimes the best action of all.

What they could do is work to increase the pressure on Europe to reach a final outcome, not an endless political round about, if that means Europe collapses then, OK.


Raimon Land Plc (RML) will turn a profit this year after several consecutive years of losses.

The Stock Exchange of Thailand-listed developer expects to realise annual revenue of at least 7 billion baht from 2012-14.

Chief executive Hubert Viriot said the company had a sales backlog of 18.3 billion baht as of the end of June, to be realised from the second half of this year until 2014, mainly from its large, often-delayed condominium project, The River.

About 11 billion baht of the backlog sales are from The River, which started transfers in June.

One-third are from 185 Rajadamri, 10% from Zire Wongamat and, in Pattaya, 5% from Unixx and Northpoint.

In order to realise revenue in 2015, Raimon Land needs to launch new projects this year.

It is looking for 1 billion baht worth of land in the Rama IX-Ratchadaphisek and Ekamai areas.

One of the two new projects will be launched in December with a project value of 2-3 billion baht.

"Our plan is to develop middle-market and high-end projects within 200 metres of BTS and MRT stations at prices ranging from 90,000 to 150,000 baht a square metre or 2-10 million baht a unit," said Mr Viriot.

Raimon Land will use its Unixx brand for projects with unit prices of 2-5 million baht or 100,000 baht per sq m on average, and The Lofts brand for projects with unit prices of 5-15 million baht or 150,000 baht per sq m. Company research showed 18,957 condominium units at 34 projects were launched in Bangkok in the first half of this year.

Some 47% were mid-priced or 2-5 million baht.

Low-end development or units priced less than 2 million baht dominate launches on the outskirts, representing 48% of the total.

To date, 61% of these new launches were sold.

In Pattaya, 14,309 condominium units at 31 projects were launched in the first half from 31 projects.

Beachfront condos accounted for only 19%, with starting prices of more than 5 million baht.

Some 22% were sea-view projects, priced mainly from 2-5 million baht.

Most (59%) were inland, targeting budgets of less than 2 million baht.

To date, 55% of these new units have been sold.

Raimon Land has five projects on hand _ two in Bangkok and three in Pattaya.

It posted a second-quarter net profit of 101 million baht compared with a net loss of 49 million in the same period last year.

The good performance was due largely to a 528% increase in revenue to 1.12 billion baht and an increase in gross margin to 33% from 29%.

First-half net profit was 30.7 million baht compared with a net loss of 84.6 million in the same period last year, on revenue of 1.32 billion baht, up by 106% year-on-year.

As of June 30, the company;s accumulative loss was 628 million baht, which it said will be cleared this year.

Singapore and Vietnam

Singapore and Vietnam signed three agreements on Wednesday, paving the way for closer bilateral cooperation in areas such as finance and public administration.

This comes as the Vietnam Communist Party's General Secretary, Nguyen Phu Trong's three-day official visit to Singapore begins on Wednesday.

Mr Trong and Prime Minister Lee Hsien Loong witnessed the signing of the agreements at the Istana.

Vietnam will send senior officials to Singapore for study visits and attend executive education programmes on development in areas like urban planning and transport management.

Earlier, both leaders exchanged views on international issues and agreed on the importance of achieving peace, stability and development in the region.

Mr Lee said both countries cooperate closely at all levels.

Mr Lee said: "Economic and business links continue to deepen. Bilateral trade in the first seven months of this year rose 13 per cent year-on-year to almost S$10 billion. "Singapore is also Vietnam's fourth largest foreign investor, with projects in electronics, housing, healthcare, ports and other areas."

"Our Connectivity Framework Agreement is now in its seventh year. It is an excellent platform to further our economic cooperation, including between our private sectors," added Mr Lee.

Singapore and Vietnam mark 40 years of diplomatic relations next year.

Both countries are working towards signing a Strategic Partnership agreement, which will open up more areas for cooperation.

<p align="center"><strong>Trai Thien USA Inc (PINK:TRTH)</strong></p>

Trai Thien USA is a fast-growing Vietnam-based dry bulk shipping company operating a 21,990 DWT fleet comprised of six geared bulk vessels specializing in providing ocean transportation services for raw material input items such as coal, ore, grain, lumber, cement, steel and fertilizer throughout the Southeast Asia region.

After China, the primary sources of future bulk demand are India, Brazil and Vietnam.  The region contains three of the four global BRICs (Brazil, Russia, India, China), seen by economists as the future growth leaders in the world economy.

The Asia Pacific region accounts for 60% of the world’s population and almost 70% of world sea-borne trade in bulk commodities.

In order to meet anticipated continued growth in demand from an expanding base of overseas and domestic Vietnamese customers, as well as to expand the geographic regions that it can service to include potentially more profitable routes in East and South Asia.

The Company’s Vietnam-based operations are located in Ho Chi Minh City, which together with the surrounding areas, accounts for more than seventy percent of Vietnam’s total annual cargo traffic.

Pink Sheets                         TRTH

Revenue Growth                  148%

Target Price 2013                 $3.40

HCM Rating               Strong Buy</td>

The emerging economies of the Asia Pacific (ASEAN) region will continue their growth pattern despite the continuing financial crisis in Europe according to the Asian Development Bank.

Free Trade Agreements including ASEAN, AFTA, CAFTA, ASEAN +3 will more than triple regional trade.

· Year-end 2011 revenues increased over 20.9% as compared to the previous fiscal year, from $12,232,991 in 2010 to $14,794,939 in 2011.

· Income from Operations increased over 148% from 2010 to 2011, from $1,051,543 to $2,615,000

· Net Income increased from a loss of $539,452 in fiscal 2010 to a positive $1,377,391 in 2011.

· The Company is operating a 21,990 DWT fleet comprised of six geared bulk vessels specialized in providing ocean transportation services for raw material input items such as coal, ore, grain, lumber, cement, steel and fertilizer throughout the Southeast Asia region.

The HCM Trade Forecast is predicting that world trade will grow by 73% in the next 15 years, with merchandise trade volumes in 2025 hitting $43.6trillion compared to today’s $27.2trillion.

Investing in Tra Thien

ASEAN +3 is the Association of Southeast Asian Nations (ASEAN), the People’s Republic of China (including Hong Kong), Japan, and South Korea.  Home to 600 million people, ASEAN has a combined gross domestic product (GDP) of US$1.8 trillion with total trade valued at $2 trillion among the countries.

ASEAN is set to explode as an economic force in 2015 as financial, trade and investment rules become integrated and seamless. ASEAN last year secured $78.5 billion in investments. Regional trade also increased by 32.9 percent to more than $2 trillion and Trai Thien is well positioned to capitalize on the growing Inter-ASEAN +3 trade.

ASEAN is beefing up various frameworks for cooperation and development within the region and with its trading partners, in preparation for regional economic integration by 2015.

The changing trade barriers have seen fast paced growth in agricultural and mineral exports around the region, these changes have already reflected themselves on the books at Trai Thien USA as revenue has almost tripled in the last year.

The Trai Thien fleet has the distinct advantage of having been designed to suit the region, while huge Dry Bulk Carriers service many areas. Most of the trade in agriculture and minerals is done from ports in ASEAN that cannot accommodate the large ships, nor can the large ships be loaded and unloaded at these smaller ports due to the lack of stevedoring infrastructure.

Trai Thien smaller fleet can service these ports directly, removing the additional costs of trans-shipping and adding savings in terms of cash and time to purchasers.

Based on corporate and market growth and given a conservative set of ratios in our financial model, we see Trai Thien trading over $3.40 in 2013.

The Fleet

• Fleet of highly versatile geared bulkers with average capacity of 3,700 DWT and average age of 3 years.

• Optimal payload capacity for growing small and medium production sector that dominates economic activity throughout the region.

• Focus on dry bulk commodities such as forestry products, grains, cement, steel, ore and coal.

• Vessels equipped with deck-side cranes which provide flexibility in cargo handling and accessing and servicing underdeveloped, lower cost secondary ports throughout the region.

• Draft efficiency and deck-side gears reduce dependency on major ports and reduce risk exposure to growing operational inefficiencies affecting them.

• In order to meet anticipated continued growth in demand from an expanding base of overseas and domestic Vietnamese customers, as well as to expand the geographic regions that it can service to include potentially more profitable routes in East and South Asia, Trai Thien has made deposits to acquire six larger 7600 DWT capacity new-buildings, which depending on the company’s ability to meet additional capital resource requirements, are expected to be delivered in 2011 and 2012.

• Depending on the ability to raise approximately $50m in external funding required to cover outstanding balances due on vessels in construction, for which there is no assurance, the Company will focus on what it believes to be more profitable 7000-8000 DWT vessels in order to meet growing demand for larger payload capacities while still maintaining an ability to broadly access the secondary coastal and river ports that characterize the trade.

• Located in Ho Chi Minh City, the economic heart of Vietnam's trade and transportation activity.

• ASEAN satellite market benefits from geographic proximity to major world economic activity drivers China and India.

<strong> </strong>

<strong>Trai Thien and China</strong>

<strong> </strong>Our research indicates that rising trade in ASEAN +3 will propel the ASEAN trade bloc of Southeast Asia nations to become China’s largest trading partner by 2015.

The China Council for the Promotion of International Trade said the 2010 ASEAN-China Free Trade Agreement removed trade barriers, and that the value of imports and exports between China and ASEAN states could surpass $500 billion within three years.

As China moves away from its dependency on export markets and encourages more trade with countries with which it has signed FTAs, the value of goods moving between the ASEAN bloc and China is forecast to increase at a faster rate than imports and exports between China and its more established trade partners.

"Thanks to zero tariffs, preferential trade policies and geographic advantages, both the increasing speed and scale of that trade will be in the forefront globally and ASEAN will become China's No. 1 trading partner by 2015," said Zhang Wei, vice chairman of the China Council for the Promotion of International Trade.

First quarter 2012 trade between China and the ASEAN nations — Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam — increased 9.2 percent year-over-year. That is compared with a 2.6 percent gain in trade between China and the U.S. and a 1.6 percent decline in trade between China and the EU.

That growth followed the 24 percent increase in trade between ASEAN and China last year when the ASEAN bloc surpassed Japan to become China’s third-largest trade partner after the EU and the U.S.

Trai Thien is located at the geographic centre of ASEAN +3 and is perfectly placed to capture increasing market share in a rapidly growing market.


PT Garuda Indonesia is reporting significant financial progress in the first seven months of the year due to a 16 percent increase in passenger numbers.

The airline announced on Tuesday that non-consolidated revenue, which excludes subsidiary results except for low cost carrier Citilink, were US$1.7 billion in the seven-month period ending in July, up 13.7 percent increase from $1.49 billion in the same period last year.

The profit report reverses the $2 million net loss booked at the end of the first half.

The increase was supported by a higher number of passengers served by the airlines in the January-to-July period, 10.02 million, up 16 percent from 8.64 million in the same period last year.

The growth in passenger numbers was backed by increase in flight frequency to 73,469 in the first seven months of the year, up 12 percent to from 65,486 in the same period last year.

“Our operations are very positive. However, we are seeing lower on-time performance due to increasingly crowded airports,” Garuda president director Emirsyah Satar said.

Garuda’s on-time performance rate was 84.8 percent at the end of July, down from 87.2 percent at the end of July last year.

“We are expecting that there will be quick investment in developing airports so that more planes will be able to take off and land,” Emirsyah said.

Despite more frequent flights, Garuda kept its operating expenses down to $1.66 billion in the January-to-July period, up only 11 percent from $1.49 billion in the same period last year.

Garuda booked net profits of $30.7 million in the first seven months of the year, up a whopping 187 percent surge from $10.7 million in the same period last year.

The airline typically expects better results in the second half of the year, according to Emirsyah.

“We don’t know what will happen in the future. However, we have seen that second half is usually better than the first half because we will serve more passengers, including flights for haj pilgrims,” Emirsyah said.

Garuda’s consolidated financial performance for the first half showed a net loss of $2 million.

Given that its subsidiaries usually report positive performance, Garuda finance director Handrito Hardjono said that the airline would likely have a similar positive report at the end of the third quarter.

Garuda’s fleet comprised 95 planes at the end of the first half. According to Emirsyah, the company was expecting the delivery of 10 new aircraft by year end for a total fleet of 105 aircraft.

As part of expansion plans, Emirsyah said that Garuda would likely boost its fleet to 244 planes by the end of 2015, up from a previously announced goal of 194 planes.

The additional aircraft to be procured will reportedly be French-made turboprop ATR 72 aircraft or Canadian-made Bombardier Q400 turboprop aircraft.

“We remain evaluating the ATR and Q400. We will order around 50 units and hope that we can complete the plan by the year end. The turboprops will be operated by Citilink, hopefully next year,” Emirsyah said.

According to Emirsyah, a turboprop — which usually serve short-range routes and carry around 70 passengers — would cost about $20 million per aircraft.


 KLCI index lost 0.46 points or 0.03% on Wednesday. The Finance Index increased 0.49% to 14438.3 points, the Properties Index dropped 0.11% to 1014.86 points and the Plantation Index down 0.56% to 8327.38 points. The market traded within a range of 7.46 points between an intra-day high of 1616.47 and a low of 1609.01 during the session.

Actively traded stocks include INGENS, AIRASIA, SCOMI, UEMLAND, SIME, MAYBANK, NICORP, INGENS-WA, OLYMPIA and DIGI. Trading volume decreased to 804.44 mil shares worth RM1601.75 mil as compared to Tuesday’s 961.10 mil shares worth RM1789.42 mil.

Leading Movers were CIMB (+12 sen to RM7.40), DIGI (+11 sen to RM4.93), PETCHEM (+3 sen to RM6.42), UMW (+9 sen to RM10.08) and IHH (+3 sen to RM3.12). Lagging Movers were AIRASIA (-17 sen to RM3.02), IOICORP (-7 sen to RM5.00), TENAGA (-8 sen to RM6.55), TM (-1 sen to RM5.96) and SIME (-5 sen to RM9.75). Market breadth was positive with 409 gainers as compared to 292 losers.


Tycoon George Ty’s GT Capital Holdings Inc. acquired on Wednesday a total of 66.15 million shares of the Global Business Power Corp. (GBPC), worth an estimated P2.32 billion.

In a disclosure to the Philippine Stock Exchange on Wednesday, GT Capital said the shares it acquired from the Global Business Holdings Inc., which represented 12 percent of GBPC’s outstanding capital stock, were priced at a fixed P35.13 per share.

This acquisition has raised GT Capital’s direct holdings in GBPC to 51 percent.

GBPC is a joint venture among several companies whose main players are Global Business Holdings Inc. and First Metro Investments Corp., a subsidiary of the Metropolitan Bank and Trust Co. and a member of the Metrobank Group of Companies.

At present, GBPC has claimed to be the leading independent power provider in the Visayas, with a combined total capacity of 633 megawatts of power supplied to the Visayas region.

GBPC president Arthur N. Aguilar earlier said the company has been mulling to go public in 2013, upon the firming up of its expansion plans in both Visayas and Mindanao, should there be favorable market conditions by then.

These projects included the proposed 82-megawatt facility in Toledo, Cebu, whose capacity will be fully used by the copper mines of Carmen Copper Corp., a subsidiary of the Atlas Consolidated Mining and Development Corp. This project is being undertaken by Toledo Power Corp.

The other project, being undertaken by the Panay Energy Development Corp. (PEDC), is the expansion of the existing 164-MW coal plant in Iloilo by another 82 MW.

These two proposed power facilities by the GBPC, Aguilar had said, might help address the need for additional capacity in the Visayas grid by 2015 and 2016.

Mindanao, meanwhile, has “always been an interest” for GPBC, which is now eyeing to build its first power facility in the electricity-starved island.

While declining to cite specific details, Aguilar said they have been looking at a greenfield coal-fired power plant, should they decide to push through with the project.

Yesterday in Asia

Tokyo surged 1.73 percent, or 152.58 points, to 8,959.96 with better-than-expected July economic data helping to lift sentiment, while Seoul jumped 1.56 percent, or 30.03 points, to 1,950.03.

Sydney was 0.82 percent higher, adding 35.5 points to 4,361.3, Hong Kong jumped 1.10 percent, or 217.51 points, to 20,075.39 and Shanghai added 0.28 percent, or 6.00 points, to 2,126.55.

– Singapore closed up 0.44 percent, or 13.26 points, at 3,029.66.

United Overseas Bank gained 1.88 percent to Sg$19.47 and Keppel Corp. advanced 0.99 percent to Sg$11.26.

– Taipei rose 1.14 percent, or 85.32 points, to 7,570.45.

Leading smartphone maker HTC surged 6.46 percent to Tw$280.0 while Hon Hai Precision added 2.88 percent to Tw$93.0.

– Manila closed 0.41 percent higher, adding 21.05 points to 5,207.10.

Philippine Long Distance Telephone rose 0.94 percent to 2,798 pesos and SM Investments ended 0.14 percent up at 722 pesos, while Ayala Corp. gained 0.48 percent to 423 pesos.

– Wellington rose 1.20 percent, or 44.76 points, to 3,789.72.

Fletcher Building gained 1.5 percent to NZ$6.72 and Telecom was flat at NZ$2.51.

– Jakarta added 0.45 percent, or 18.74 points, to 4,174.10.

– Kuala Lumpur was flat, edging down 0.46 points to 1,613.78.

AirAsia dived 5.3 percent to 3.02 ringgit while UEM Land Holdings shed 4.1 percent to 1.64 ringgit. CIMB Group rose 1.7 percent to close at 7.40 ringgit.

– Bangkok added 0.93 percent, or 11.64 points, to 1,259.96.

– Mumbai added 0.82 percent, or 147.08 points, to 18,000.03, in the highest closing level for the markets since February 23.

SpiceJet rose 7.12 percent to 31.6 rupees and rival Jet Airways rose 5.04 percent to 353.4 rupees.


Shayne Heffernan Ph.D.  

Linda Johnson, Business Development Director - Private Client Group, Heffernan Capital Management
3 Raffles Place #07-01
Bharat Building Singapore 048617
Tel: +65 6329 6408 Fax: +65 6329 9699
Email :
Suite 53 Athenee Tower
63 Wireless Road, Lumpini, Pathumwan, Bangkok 10330
New York 347 5th Avenue, Suite 1402-508 NY, NY 10016


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This year in Thailand-what next?

AseanAffairs   04 January 2011
By David Swartzentruber      

It is commonplace in journalism to write two types of articles at the transition point between the year that has passed and the New Year. As this writer qualifies as an “old hand” in observing Thailand with a track record dating back 14 years, it is time take a shot at what may unfold in Thailand in 2011.

The first issue that can’t be answered is the health of Thailand’s beloved King Bhumibol, who is now 83 years old. He is the world's longest reigning monarch, but elaborate birthday celebrations in December failed to mask concern over his health. More


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