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||Asean Affairs 18 September 2012
ASEAN Equity Preview
By Shayne Heffernan Ph.D.
Stocks rode a four-day streak of gains last week to advance 1.9 percent, getting a charge from the Federal Reserve's new stimulus measures that could keep equities buoyed for months. The Fed's action followed a decision by the European Central Bank to support debt-ridden euro-zone nations by purchasing their debt.
Financials, which were among the biggest gainers late last week, were among sectors leading the day's decline. The S&P financial index .GSPF fell 1.1 percent. Bank of America Corp (BAC.N) shares lost 2.5 percent to $9.31.
Apple said on Monday that pre-orders outstripped initial supply but it would deliver most phones as planned by Friday, the first day of delivery. Many would not be available until October, however.
It is not unusual for Apple products to sell out the first day but this time around Apple has doubled its first-day sales record. Last October, the company booked 1 million orders for the iPhone 4S, in the first 24 hours. That had beaten Apple's previous one-day record of 600,000 sales for the iPhone 4.
Singapore’s non-oil domestic exports (NODX) fell more than expected last month, raising the prospect of the city-state entering into a recession as exports to the EU plunged.
The trade-dependent Southeast Asian city-state said yesterday NODX fell 10.6 percent from a year earlier, hurt by a 10.4 percent drop in electronics and a 28.7 percent plummet in shipments to the EU, its largest market.
On a seasonally adjusted month-on-month basis, NODX shrank 9.1 percent after contracting 3.6 percent in July.
Electronics exports contracted 14.8 percent last month from July after seasonal adjustments, while non-electronics NODX shrank 7.1 percent, trade agency International Enterprises Singapore said in a separate e-mail.
“Although our baseline case is not for a quarter-on-quarter contraction, the chances are not minute. There is perhaps a 40:60 chance of contraction,” Oversea-Chinese Banking Corp treasury research head Selena Ling said.
Singapore’s economy shrank less than anticipated in the second quarter, thanks to a surge in pharmaceutical production in June, GDP data showed last month.
However, the government warned of continued uncertainties and downside risks and narrowed its growth forecast to between 1.5 percent and 2.5 percent for this year from an earlier 1 percent to 3 percent.
The chairman of the state telecom enterprise TOT Plc, Panthep Chamrasromran, tendered his resignation on Monday after months of bickering within the board.
Internal conflict was cited for Mr Panthep's decision, which will likely cause yet another delay in TOT's third-generation (3G) network expansion nationwide and other key projects.
Mr Panthep's resignation was followed by the resignation of seven other board members who represente the private sector.
Information and Communication Technology Minister Anudith Nakornthap acknowledged that Mr Panthep's resignation will definitely affect of many TOT's important projects, especially its 3G expansion plan.
KLCI index gained 14.55 points or 0.89% on Friday. The Finance Index increased 1.13% to 14763.2 points, the Properties Index up 1.40% to 1037.79 points and the Plantation Index rose 1.03% to 8467.14 points. The market traded within a range of 9.46 points between an intra-day high of 1642.95 and a low of 1633.49 during the session.
Actively traded stocks include AIRASIA, INGENS, HUBLINE, ASIAEP, MAYBANK, ASUPREM, MBFHLDG-WA, AXIATA , SCOMI and THHEAVY. Trading volume increased to 1066.32 mil shares worth RM2074.29 mil as compared to Thursday’s 961.10 mil shares worth RM1789.42 mil.
Leading Movers were MAYBANK (+13 sen to RM9.40), CIMB (+11 sen to RM7.69), GENTING (+16 sen to RM9.13), PETDAG (+120 sen to RM22.78) and AIRASIA (+15 sen to RM3.10). Lagging Movers were DIGI (-4 sen to RM4.90), SIME (-1 sen to RM9.80), BAT (-12 sen to RM63.38). Market breadth was positive with 561 gainers as compared to 209 losers.
Indonesian banks maintained strong profit growth in July amid improving efficiency and a rise in income from fees and securities, despite a central bank move to tighten mortgage and automotive loans weighing on lending.
The country’s 120 commercial banks posted collective profits of Rp 7.2 trillion ($752 million) in July, up 36 percent from the same period last year. The figures were derived by subtracting the January-June numbers from the seven-month data reported by Bank Indonesia on Friday.
In the first seven months, banks’ combined profit rose 25 percent to Rp 52.9 trillion.
Commercial banks lowered their BOPO ratio — a measure of bank efficiency that compare their operating expense to operating income — to 74.9 percent in July from 87.4 percent in the same month in 2011.
A lower BOPO ratio is preferable as that would mean a bank makes more income for every rupiah it loans, and its operating expenses are smaller.
Banks posted a 39 percent increase in other operating income — such as fees and gains from securities assets — to Rp 12.4 trillion.
The lenders also reduced their operating costs slightly to Rp 20.8 trillion, down 0.1 percent from last year.
Bank Indonesia in mid-June introduced requirements that raised the down payments consumers were compelled to make for motorcycle, cars and homes in a move to prevent a bubble in those sectors and curb excessive consumer loan growth.
Consumers who finance their motorcycle purchases via bank loan must pay a minimum of 25 percent of the price tag as a down payment. For passenger cars, that requirement is 30 percent.
The new rule also imposes a 30 percent down payment on the purchase of homes that cover more than 70 square meters.
There were no such rules prior to the mid-June requirement, but banks usually ask for 10 to 20 percent of the purchase price as down payment.
Central bank data showed that commercial banks disbursed Rp 17.4 trillion in loans in July, down 25 percent from the same period last year. In line with the declines in loan growth, commercial banks’ net interest income — the money it makes from loans minus deposits — dropped 30 percent to Rp 10.7 trillion in July.
Housing loans, however, more than doubled, to Rp 6.6 trillion from Rp 2.4 trillion. Overall, commercial banks’ outstanding loans climbed 25 percent to Rp 2,488 trillion in July.
Key infrastructure projects being pushed by the government under its Public-Private Partnership (PPP) program have elicited significant interest from several foreign corporate investors.
This was disclosed by PPP Center executive director Cosette Canilao, who said a number of Chinese, British and Japanese companies have bought prequalification documents with the aim of participating in the bidding for two key projects—the LRT Line 1 Cavite Extension project and the Naia Expressway Phase II project.
For the LRT Line 1 project, 33 firms bought prequalification documents from PPP Center, Canilao said. For the Naia Expressway Phase II project, she said there were 17 companies that bought prequalification documents.
“There were several investors who have signified interest to participate in the bidding for the projects, although we expect consolidation or the forming of groups [among those that bought prequalification documents] in time for the bidding,” Canilao said in a press briefing by economic officials of the Aquino administration on Monday.
“Interest in PPP projects has significantly increased even among foreigners. There were several Japanese companies, one or two Chinese firms, and several European companies,” Canilao added.
Under the PPP program, the government invites private enterprises to invest in public infrastructure. The objective is to help meet the country’s need for infrastructure development even as the government continues to suffer from a budget deficit.
The LRT Line 1 project calls for the extension of the mass transport system to the south of Metro Manila, particularly from the Baclaran to Bacoor in Cavite. The project likewise entails the enhancement of its operation and management.
The Naia Expressway Phase II project calls for the construction of an elevated expressway starting at the existing Skyway toward the existing Naia terminals.
The LRT Line 1 project is estimated to cost $1.4 billion while the Naia Expressway project will be worth $377.6 million. The government targets to bid out the two projects, plus six more PPP projects before the end of the year.
Yesterday in Asia
Sydney added 0.29 percent, or 12.5 points, to close at 4,402.5, Seoul lost 0.26 percent, or 5.23 points, to 2,002.35 and Hong Kong rose 0.14 percent, or 28.33 points, to 20,658.11.
Shanghai tumbled 2.14 percent, or 45.35 points, to 2,078.50, with shares tied to Japanese firms worst hit owing to a territorial dispute between Beijing and Tokyo that has sparked protests in China.
Tokyo and Kuala Lumpur were closed for public holidays.
– Taipei rose 0.31 percent, or 24.17 points, to 7,762.22.
Smartphone maker HTC surged 5.90 percent to Tw$314.0 while Hon Hai Precision was 0.52 percent higher at Tw$97.5.
– Manila closed 0.53 percent higher, adding 28.43 points, to 5,350.90.
Ayala Land gained 2.58 percent to 23.90 pesos while Philippine Long Distance Telephone Co. rose 0.69 percent to 2,890 pesos.
– Wellington climbed 0.66 percent, or 24.89 points, to 3,817.23.
Telecom gained 0.60 percent to NZ$2.50 and Fletcher Building was up 2.1 percent at NZ$6.94.
– Singapore closed up 0.27 percent, or 8.30 points, to 3,078.72.
Wilmar International gained 1.54 percent to Sg$3.29 and Jardine Cycle and Carriage rose 0.76 percent to Sg$49.06.
– Bangkok gained 0.19 percent, or 2.42 points, to 1,278.54.
Telecoms company ADVANC dropped 1.87 percent to 210.00 baht, while coal producer Banpu edged up 3.14 percent to 460.00 baht.
– Jakarta closed down 0.04 percent, or 10.47 points, at 4,255.28.
Telkom was down 4.2 percent at 9,250 rupiah and Bank Rakyat dropped 1.4 percent at 7,300 rupiah.
– Mumbai rose 0.42 percent, or 78.04 points, to 18,542.31.
Shayne Heffernan Ph.D.
Linda Johnson, Business Development Director - Private Client Group, Heffernan Capital Management
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